Human resource professionals and executive level managers are constantly trying to determine how they can justify the costs associated with the personal and professional development of their employees. Numerous studies and countless hours of research have been spent on how to measure Training Return on Investment (ROI). Results of these studies and research indicate:
Training reduces the rate of turnover and absenteeism. As we are all aware, the costs associated with turnover are second only to the costs associated with healthcare benefits for most employers.
Benefits associated with training include:
Improved job satisfaction
Improved teamwork
Increased organizational commitment to the workforce
Clearer defined promotional requirements and opportunities for employees
Improved succession planning
A 1995 US Census Bureau survey conducted by the University of Pennsylvania of 3,000 businesses with 20 or more employees indicated a 10% increase in an employee's average educational level yielded an 8.6% increase in production output.
A 2003 Manufacturing Performance Institute Survey of 947 manufacturing plans throughout the United States indicated:
11.5% (109 companies) had no employee development and training programs
20.1% (191 companies) had no Leader/Supervisor development and training programs in place
The Manufacturing Performance Institute Survey identified six (6) best practices for manufacturing plants.
These practices are:
Recruiting and hiring
Performance management
Employee development and training
Leader/Supervisor development and training
Teaming
Safety/Health
The measurable benefits associated with plants that encompassed these best practices were:
Median annual labor turnover was 2% compared with 6% for all manufacturing locations surveyed
Median gross profit margin was 52% where the best practices were embraced, compared with 30% for all plants
Per unit manufacturing costs were reduced at 62.5% of facilities where the best practices were embraced compared with 50.7% of all facilities
In 1959, Donald Kirkpatrick, a professor of marketing at the University of Wisconsin created what is still one of the most widely used approached to evaluate the effectiveness of workplace training program.
His four levels of evaluation are:
Level 1: Reaction - a measure of satisfaction
Level 2: Learning - a measure of learning
Level 3: Behavior - a measure of behavior change
Level 4: Results - a measure of results
Here are questions that should be asked at each level:
Level 1: Reaction Were the participants pleased? What do they plan to do with what they learned?
Level 2: Learning What skills, knowledge, or attitudes have changed? By how much?
Level 3: Behavior Did the participants change their behavior based on what was learned in the program?
Level 4: Results Did the change in behavior positively affect the organization?
by Joe Giordano,
Owner of Consulting, Training, and Development Services,
(410) 860-6664.
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