Posted by CareerBuilder UK on 3 August 2015 in HR Glossary, Recruiting Workflow & Efficiency, HR Management & Strategy | No Comment

HR-Glossary_R

Return on training investment (Training ROI) describes the relationship between investment and return in training and development. The figure is calculated as follows:

ROI in % = ((Benefits – Costs)/ Costs) * 100

The "benefit" is often difficult to quantify: for example, it may be based on knowledge, performance, motivation, willingness to learn or commitment. These factors, in particular, can be crucial for a company's long-term success.

If, for example, a company invests in an extra-occupational study programme for an employee, the ROI can be determined as follows:

Knowledge acquired from the course improves the employees skills, which in turn leads to greater productivity and commercial success (higher turnover).

Employee course fees: €10,000

Additional turnover generated by the employee (benefit): €24,000

ROI in % = ((24,000 – 10,000)/ 10,000) * 100 = 140%

In this example, the investment in training the employee has clearly been worthwhile.

 

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