The Myth of Training ROI

Notice that the effectiveness metrics focus on quality, and the Efficiency metrics focus on quantity. Your training is moving in the right direction if your effectiveness costs are going down and your efficiency ratios are going up.

Effectiveness and efficiency are noble and honorable metrics, but they ignore the demand for training and the business reasons for doing the training. The next two metrics address those concerns.

Applicability: The applicability ratio shows how the training is aligned with the business objectives. What good is raising employee skill ratings and putting more employees through training if the organization does not need those skills? The applicability ratio is a simple calculation, but it is rather difficult to gather the supporting data.

To calculate the applicability ratio, divide those training costs that are identified for specific skills in “demand” by the organization by the total for all training costs. This can be done for a particular course or for the entire training operation.

For example, five courses are offered, of which three identify specific skills that the organization needs to meet its business objectives. The cost of each student is $1,000. Sixty employees take the courses tied to business objectives, and 20 employees take the other two courses. The applicability ratio was (60 x $1,000)/(60 + 20) x $1,000) or 75 percent, meaning that 75 percent of the training costs apply to specific business objectives.

The value of the applicability ratio is that, implemented correctly, it promotes the integration of training for specific business objectives by adding organizational rigor to the training process.

Appropriateness: The appropriateness ratio shows that the right learning objects are delivered to the right people. Having excellent training is wasted if you are teaching computer programmers how to sell, or if you are teaching social workers how to program computers. It is similar to the applicability ratio, but provides more accountability by measuring the training of the specific people assigned to specific business objectives. Such training can be linked by job function, project, team or business objective.