Steps in calculating ROI (past year question)

APRIL 2009 Question 4(b)
Discuss the steps involved in calculating return on investment in training exercise. (17 marks)

1. Identify outcomes
2. place a value on the outcomes
3. determine the change in performance after eliminating other potential influences on training results.
4. obtain an annual amount of benefits from training by comparing results after training to result before training.
5. determine the training cost
6. calculate the total benefits by subtracting the training cost from benefits.
7. calculate ROI by dividing operational result by costs. the ROI gives an estimate of the dollar return expected from each dollar invested in training.

Return on training investment

Return on training investment :-

• company spend money for training program so they want to know whether they are getting sufficient return on their training investment (ROI)
• improvement factors include increased in productivity, reduction of waste and improve employee retention.

Investment in Training may involve :-

• time spent by workers
• classroom for training 
• training cost

for further information you can refer to this slide.