ROI Approach Essay

QUSTION 2.2

Process for implementing the ROI approach

STEP 1: CREATE MEASUREMENT AWARENESS

The first step in the process of implementing the ROI measurement approach involves creating an awareness of the significance of measurement. This usually happens when a training manager realises the importance of measuring ROI in training. Sometimes training managers are put under pressure by line managers to provide evidence of the value of training, and this also leads to an awareness of ROI.

Awareness of the value of measuring ROI is also created through attending seminars and conferences where training managers and consultants from different industries discuss the need for and importance of ROI. For example, a large South African banking group made

Have learners reached the required levels of competence? Are they doing their jobs better? These questions can be answered only if assessment has been done to determine whether the learners can be declared competent.

STEP 8: CALCULATE ROI

An assessment of learner competence is followed by the most important measurement of the ROI cycle, which is the calculation of the ROI ratios. These ratios are calculated by using the formula we gave you earlier to determine the costs and benefits of the training conducted. Here are some examples of typical measurements that could be used to convert the benefits of training to a rand value.

Once these benefits have been converted to a rand value, the ROI formula is used to calculate the return on the training investment. ROI is presented as a percentage, for instance 87%, which means that the training added value to the organisation.

STEP 9: EVALUATE TRAINING IMPACT

Evaluating the impact of training means deciding how the organisation can use the results of the ROI calculations. A ROI report must be written in which the ROI figures are interpreted, conclusions drawn and recommendations made to

• put ROI results on the intranet for all staff to see.

• use training meetings to share ROI results and lessons learnt.

• inform the skills development facilitator of ROI results.

• report ROI results in the company newsletter and on notice boards.

• award prizes for the best ROI figures reported.

• state ROI figures in brochures used for marketing future training programmes.

• write articles about ROI success stories and lessons.

• send e-mails to learners informing them of ROI data.

• include ROI data in training reports.

• deliver presentations on the ROI approach to line managers.

STEP 11: DEVELOP AND IMPLEMENT THE TRAINING IMPROVEMENT PLAN

Using the ROI approach can help training staff to identify opportunities for improvements in training programmes. Training courses with a low or negative ROI ratio can be redesigned, improved or scrapped. The training team can do another ROI calculation later to help them determine whether the programme has improved. The ROI must be calculated after every training programme and the results compared with previous ROI