ROI on training: How to measure your investment

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The bottom line—it's something your organization thinks about. Let's be honest, you and your organization think about it a lot. And, at the same time, you also think about training—a lot.  So when it comes to giving your team the best traning solution and also satisfying that bottom line (both time and money), things can get a little tricky, right? But they don't have to. Last time we checked, you’re not one to shy away from a challenge. With some simple comparisons and a little math, figuring out your ROI on training isn’t quite so daunting. Here's how you can fight skill depreciation within your company and maximize time and money. 

First and foremost, remember that not all tech training is created equal—and the options can seem practically endless. Choosing the right training method that provides the best value is crucial, so start by taking a look at what’s out there and what's available to your tech team. Seminars and boot camps deliver when it comes to intensive training on a single subject. They're also ideal for employees who can step away from their daily duties to immerse themselves in the topic at hand. For folks who learned best in a traditional setting, classroom training has the benefits of pacing and student support resources. And online classroom training takes those same benefits while breaking down geographical barriers, making lectures available anywhere via the glory of the internet. And lastly, online learning caters to pros that want to go at their own pace when it comes to mastering a specific skill or subject.

How to calculate ROI on training

To figure out the ROI of any given training option, you’ll need to zero in a few variables:

Cost: How much does the training cost? Fees should be easily advertised on training materials, so that’s a piece of cake. Don’t forget to add in application fees, books, travel costs and any other course materials required. The other component to cost is time. How much time will be invested in the training? Start with instruction time and then don’t forget to factor in travel time and time spent on homework, too.

Return: How much time will you and your team save as a result of the new skill learned? Calculate the productivity value based on the hours saved multiplied by the employee’s hourly rate of pay.

Plug in these numbers into our formula: do some easy number crunching and you’ll be on your way to determining ROI: Training ROI = Productivity value - cost/total cost

You can also use our handy ROI calculator in the second section of this page. Try it out. 

An example: ROI on training

How about we look at an example? Here goes:

Susan is an IT manager with an annual salary of $85,000. She enrolls in an online training course from Pluralsight that requires five hours of instruction time, which she’ll take over the course of five days on her lunch hour. Her costs are as follows:

Cost of class: $29.95 (monthly, individual subscription price)

Cost of Susan’s work time: $0, since Susan is working on the class during her lunch hour

Materials required: $0, since Susan will be supplied with everything she needs through the course

Productivity: Susan estimates she’ll save 10 hours per month because of this new skill. Productivity value: $408.70; 10 hours x $40.87 (Susan’s salary broken down on an hourly basis)

ROI = ($408.07 - $29.95) / $29.95 = 1262%

Numbers-oriented folks love this formula because it helps assign a quantitative value to a decision-making process that can otherwise be challenging to navigate.

If ROI isn’t your deciding factor in choosing a training method, we’ve got some help for you, too. Check out our chart comparing the characteristics of the four popular training methods mentioned above. Seeing the differences side-by-side could send you confidently in the right direction.

So what’s the best deal? Check out our guide on how to assess the value (aka ROI) of different types of tech training.

Get the report: ROI on training 

Contributor

Pluralsight

Pluralsight is the technology learning platform. We enable individuals and teams to grow their skills, accelerate their careers and create the future.