Evaluate Training Budgets: What's Your Training ROI?

Evaluate Training Budgets: What's Your Training ROI?

This article was updated on July 10, 2018.

Businesses invest a lot in training employees. So it's important for finance and HR leaders to evaluate training budgets and the subsequent ROI of that training. According to Deloitte, 84 percent of executives rated learning as very important for business growth. Measuring the impact of training on development and productivity may be an imperfect science, but there are certainly benefits when it comes to keeping talent happy, measuring performance and managing your bottom line.

Training Shows You Care

A commitment to training signals to employees that a business cares about its human capital and is willing to invest in its most valuable resource. It develops your brand and boosts your employer value proposition in the market. Talented candidates and employees value training and development opportunities highly. It sets you apart, especially among millennials — who prioritize professional development — and will make your organization an attractive destination.

The ADP Research Institute® report, The Evolution of Work: The Changing Nature of the Global Workforce, noted that people are interested in using "tech to learn anything, anytime, anywhere." In fact, the report states that this trend was viewed positively by 82 percent of all workers surveyed, the highest rate of positive emotion for any of the 19 workforce trends identified in the report.

Training offers an array of benefits to employees and employers alike, including increased productivity, enhanced flexibility, reduced levels of absenteeism and higher retention rates. As far as organizational outcomes, training is a catalyst for improvements in competitiveness, morale, profitability, market reputation, customer happiness and market share.

Models to Measure ROI: TDRp

According to, investing in employees' training will develop workers who "are going to do better work for you in the long run." Unfortunately, there's no single method for measuring training ROI, but several options are available.

Nonprofit Center for Talent Reporting (CTR) crafted the Talent Development Reporting principles (TDRp) in an effort to define reporting standards for human capital. The method measures ROI of training programs by outcome, effectiveness and efficiency.

  • Outcome — defined as the goal — includes revenue, market share, quality and cost reduction as well as talent-oriented outcomes like engagement, retention and attraction.
  • Effectiveness focuses on how well employees absorbed the material and leveraged it in their work.
  • Efficiency looks at the relationship between the cost of training and its benefits.

By leaning heavily on HCM data from your systems, your organization can focus on these three areas and determine what is working for your employees and what might need enhancement.

An Outside Perspective

Using outside training for your team depends on your resources and goals. External course developers can often bring a useful perspective into your business, and compared to creating a source from the ground up, an off-the-shelf training course can be customized for your employees. Additionally, outsourced trainers are sometimes less expensive and more flexible. You should also consider the value of adopting available technology, such as Learning Management Systems, for self-paced training. Such technology is especially appreciated by tech-savvy, younger-skewing workers who prefer to have more control of when and how they access training.

Training remains a key driver of recruitment, employee engagement, succession planning and organizational success. Financial leaders who are striving to give their HR leaders as much support as possible should therefore regularly evaluate training budgets and the ROI of training.