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There is considerable discussion about how to calculate training ROI. Here are some points to consider based on our vast experience of helping our clients “move the needle”.

[one_half last=”no”][fontawesome icon=”building” size=”medium” style=”normal” color=”theme” link=””][color]Is the training related to a change event like a system implementation or acquisition?[/color] Figures are available from multiple sources that generally agree that most system implementation failures (80%) are due to a lack of training. If an organization spends $2M on an ERP, CRM or proprietary system then there is the potential for a $2M loss if users fail to adopt the system. If the change event is not related to technology but something like an acquisition or merger, the loss may be recognized in terms of error rates, customer confusion and dissatisfaction and work duplication. ROI corresponds to loss prevention and the overall ROI for the business arguments for purchasing the system or acquiring the company in these instances.[/one_half] [one_half last=”yes”][fontawesome icon=”legal” size=”medium” style=”normal” color=”theme” link=””][color]Is the training related to compliance with government regulations?[/color] Then the ROI is directly related to the penalties for non-compliance.

[fontawesome icon=”money” size=”medium” style=”normal” color=”theme” link=””]The more difficult ROI to calculate is the unknown improvement potential because of customer service, sales or management training. Quite honestly that is a guess and a business risk that depends on the decision-makers experience and basis for median expectations of employee performance. In other words, if the manager has empirical data or past experiential reasons to expect an individual or team to produce $X million more then there is an argument that sales training can yield an $X million return. That varies by job function, of course.

[/one_half] [one_half last=”no”][fontawesome icon=”medkit” size=”medium” style=”normal” color=”theme” link=””][color]Is the training a remedy to a specific problem; for example, dropped calls, lost sales, accounting errors, legal compliance?[/color] If so, the odds are good that someone has quantified the loss as a dollar figure and that is why it has surfaced as a priority. Thus, training ROI corresponds to the quantifiable loss, although some of the problem may be process or management related rather than skills or training.[/one_half] [one_half last=”yes”][fontawesome icon=”group” size=”medium” style=”normal” color=”theme” link=””]If the training is purely professional development that focuses more on individual preferences rather than business needs, the question becomes, [color]What is the value of this employee? What is employee retention worth to our organization?[/color] IT professionals seem to have especially high requirements for new skill development to maintain certifications and cutting edge technology skills. In these cases, sometimes the organization is investing in the person, not the technology. Just keeping the CIO or IT Director may depend on offering training.

[/one_half]These points can help you start to evaluate the training project’s value to your company.  Engage Intulogy to assist with your project and we’ll help you not only determine the return on investment, we’ll help you realize that return.

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