training evaluation

POWER HR FORUM

RETURN ON TRAINING INVESTMENT

ROTI

A White Paper

MESSAGE FROM HONORARY SECREATRY

Evaluation of Training has always been an important concern in our member

organizations as training is used by them as a method to develop their human

resource, build their competence as per dynamic business environment for

sustainable development and they are spending gregariously on this. Huge

expenditures are one part for justifying the training during evaluation process but

most important ones are measuring the learning achieved through training,

application of those learnings at workplace and how actually they are impacting

the business outcomes. Ultimately all organizations are spending so much for

achieving the later results only and to evaluate if their training practices are

achieving the desired results, they have been looking for some credible available

model for training evaluation.

To facilitate the needs of our Human Resource function in our member

organizations and helping them to evolve as HR Business Partners, Power HR

Forum has come out with a white paper on Return On Training Evaluation ROTI,

based on Phillips training evaluation model. This Model illustrated step by step

how training process need to be designed, what factors need to be considered

while deciding training objectives at different levels, how to do training evaluation

at different levels.

We really hope this white paper, Return On Training Investment will help our HR

fraternity to carry out their training initiatives in a more impactful manner with

more holistic approach.

Subhasis Ghosh

Executive Director (HR), NTPC &

Honorary Secretary Power HR Forum

Training Evaluation: A Framework

Contents

1. Introduction ............................................................................................................................. 1

2. Rationale to Measure ROTI (Return On Training Investment) ................................................ 1

3. Stakeholders in the ROTI ......................................................................................................... 2

4. Levels of Evaluation ................................................................................................................. 2

5. Evaluation Process ................................................................................................................... 3

Step 1: Develop Training Programme Objectives ................................................................... 4

Step 2: Develop Evaluation Plan ............................................................................................. 6

Step 3: Data Collection .......................................................................................................... 9

Step 4: Data Analysis ............................................................................................................. 9

6. The Outcome of Study ........................................................................................................... 11

7. Undertaking a Training Evaluation Project. 12

Case I: Training Evaluation is taken as an Afterthought...... 12

Case II: Training Evaluation as a Planned Initiative.. 13

Annexure I: Sample Feedback Form I & II14

Annexure II: Test of Learning17

Annexure III: Programme Cost Structure.20

Training Evaluation A Framework

1. Introduction

Capability and therefore Human Resource is aunique source of abundant advantage for any

organization. Organizations are using training as one of the tools forcapability

enhancement. Providing appropriate training has become the strategy of the best

companies to get highest quality output from the employees. It has now become an

undisputed effective business tool and is linked the business outcomes.

Worldwide, training and performance improvement programmes have been reported

ashigh as3.6% of an organizations payroll, 1.3% of revenues and 5.9% of profit (as per ASTD

2013 research report).

Aptly, we shall use the term ROTI (Return On Training Investment) here for our framework

on training evaluation.

2. Rationale to Measure ROTI (Return On Training Investment)

The large investment and the need to demonstrateits values, are two of the primary drivers

placing an emphasis on the evaluation of training programmes. In the past, with

manufacturing industry in predominant, effectiveness of training could be easily measured

by production output. Not so much now a days, where training covers domain like

management and development of organizations, teams, individuals and information. And

measuring value of training is difficult in case of these softer issues. In addition to these

trends, following issues are driving the current need to measure the results of training and performance improvement programmes:

1. To build the credibility of the training function, training managers and training

processes;

2. To fulfill clients (those funding the training programmes) requests for evaluation data to

be sure of the appropriateness of investment;

3. To justify the training budget and competing for scarce organizational resources

4. To evaluate the training method used and the use of time for trainer and employees.

5. To provide evidence to management/stakeholders on success of training programmes.

6. To identify areas for improvement in total cycle of training process.

Return On Training Investment-ROTI : A Framework

1

3. Stakeholders in the ROTI

As we see above, all of the stakeholders in the training process have different needs and

they need to be prioritized before one goes for training evaluation. Following stakeholders

can be associated as per the importance of their needs and requirements:

1. Training function/HR function

2. HR Head

3. Participants (past/present/future)

4. Reporting Officers

5. Internal Clients (making investment in training programmes)

6. Finance Function

7. Business Operations/Line Functions

4. Levels of Evaluation

Developing a credible and comprehensive evaluation process is much like putting together

the pieces of a puzzle. The first step of the puzzle is the evaluation framework. This

framework defines the levels at which training prorammes are to be evaluated and how

data is to be captured. The following framework is based on the work of Donald L. Kirpatrick, with an addition of fifth level by Jack J. Phillips.

Table 1: Training Evaluation Framework

Level Measurement Category What does it measures?

1 Reactions and Satisfaction - Participants reaction to training programmes, - Satisfaction with learning experience, contents, perceived

value of programme, and services like ambience

2 Learning - Extent to which participants improve knowledge, increase skills and acquire new behavioral changes

3

Application and implementation

- Specific application and implementation of the learning at work place

4 Business Impact - Outcomes with variables such as output, quality, time and cost as a result of application of learning

5 ROTI - Compares the monetary benefits of the business impact to the costs of the programme.

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Step 1: Develop Training Programme Objectives

The first step in training evaluation process involves defining the training programme objectives

i.e. what intended outcome the programme aimed at. Then the evaluation task become

checking whether these outcomes are achieved or not. Programme objectives range from a

basic level of achieving certain feedback ratings, to increased knowledge level to on-job

application.

Table-2 in the subsequent pages indicate details of different levels of training objectives

corresponding to different degree of complexity.

Table 2: Programme Objectives at Various Levels

Level What does it measures

Typical Objectives

1) Reaction &

Satisfaction

Participants

reaction and satisfaction to

the programme

The participants to rate the programme at 8/10 (say). It may

include the following:

1. Participants feedback on:

Faculty delivery

Course/reference material provided Interaction with faculty

Administrative arrangements

Ambience

Training coordination Fulfillment of learning objectives

Relevance to workplace requirement

2. Participants subjective responses on how they plan to put into practice the learning gained at their workplace

2) Learning Knowledge, skills,

behavioral changes

The main objective is to check if participants learning are at a higher level than before attending the training programme.

These can be specified by:

Difference between pre and post training test scores

Simulation/role play performance

Case Study analysis

Keeping certain cut-off marks in post test

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Level What does it measures

Typical Objectives

3) Application & Implementation

On job application of

knowledge / skills from training programme

At the workplace, the participants are expected to implement the knowledge and skills learnt during the training

programme to perform their jobs more effectively, as given below:

Write a business proposal requiring no correction

Preparing a presentation and deliver to audience

Shaft alignment of a pump, unaided and within timeframe

List requirements of spare parts before turbine is overhauled so that it is completed within stipulated time

Time/activity management with least procrastination

Demonstrate empathy with co-workers

Give feedback/coach juniors following correct procedures

Take up and complete TQM/benchmarking project in stipulated time

Take up and complete HR Audit project for specific HR domain

4) Business Impact Outcomes of application of learning at workplace

Because of the above mentioned on the job application of the knowledge and skills acquired, following business outcomes must be achieved. The given below illustrative examples are linked directly to application objectives, as above.

Reduced time and rework in preparing the documents

Decisions are quicker and objectively made as a result of focused presentation

Reduced dependency on others as a result of skills acquired resulting in manpower and time reduction

Reduced time between overhauls and less numbers of surprises, hampering progress of work

Timely completion of task assigned

Improved interpersonal relations in team resulting into more volume of work output

5) ROTI Monetary benefits

Compares the monetary benefits accrued because of the training programme to the cost of programme. The monetary

benefit is because of time saved, less number of manpower and input resources and increased production/sales.

For any training programme, its ROTI should be within the range of 130 % to 300 %.

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Step 2: Develop Evaluation Plan

After determining the objectives the next step is to develop the evaluation plan. This step

ensures that objectives determined for each evaluation level are addressed appropriately, as

given in Table 2. Before developing the evaluation plan, the levels to be evaluated need to be

determined for any programme. This is because as the level of evaluation increases, so does it

difficulty and expense. It takes time and resources to do a comprehensive ROTI study, so its not

feasible to do it for every training programme. Table 3 suggests the target coverage for the

evaluation to be done at every level along with ease and their usefulness.

Table 3: Evaluation Difficulty and Intended Coverage

Levels Purpose Ease Usefulness Target

Coverage Level 1

Reaction & Satisfaction

Relatively easy

Least useful data

100% (say)

Level 2

Learning 80% (say)

Level 3

Application 20% (say)

Level 4

Business Impact 5% (say)

Level 5

ROTI Most difficult Most useful 1% (say)

The sub steps for this particular step are given below:

1) Deciding which training programme is to be evaluated and at what level;

2) Developing training objectives at the desired level; if the evaluation is for higher level,

then training objectives at lower level need not be developed.

3) Developing numeric target and baseline wherever applicable and appropriate to the

level of evaluation and nature of training programme; target for satisfaction level (L1),

learning (L2), ROTI (L5) are easier to specify numerically whereas for Level 3 and Level

4, it is difficult.

4) Establishing data collection method including formats, templates, who would collect,

time limit and how. This is detailed Table 4:

Pre-programme communication of the evaluation plan to programme participants help in

reaffirming the importance of the programme and will encourage participants to help in data

collection at the appropriate time for evaluation process.

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Table 4: Data Collection Plan

Levels Data Collection Method Timing of Data

Collection

Responsibility

of Data Collection

Reaction It requires a one page document having Likert scale for different measures on which feedback is sought. Two different formats are given for illustration in Annexure I.

Immediately at the end of programme, within the classroom

Training Manager / Coordinator

Word of Caution: Data Collection at this level is very easy therefore training managers get tempted to include as many factor as possible. But evaluation at this

level does not provide us any concrete information. Therefore we need to be cautioned while choosing the factors to be measured and only focus on:- Factors which are actionable and which can aid us to take a business decision.

Learning This level requires instruments using which

knowledge/skill gained by participants after training can be assessed. Details of various instruments are shared in Annexure II for more details.

Pre-Post Test: Once

at beginning and other at end of training programme, within the classroom Only Post Test: Immediately at the end of programme, within the classroom

Training

Manager / Coordinator

Application & Implementation

Asking immediate stakeholders of training participants as to how much is the application.

Data Source are*:

i. Reporting Officer ii. Participant

iii. Internal Customers iv. External Customers

v. Subordinates * Based on priority maximum three stakeholders need to be considered.

Data collection Method: Interviews using different mediums like

telephonic, electronic, online, pen & paper formats

Feedback should collected within 3-6 months of

programme conductance; outside

the classroom, at workplace

Training Manager/Coordinator

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Table 4: Data Collection Plan (contd.)

Levels Data Collection Method Timing of Data Collection

Responsibility of Data Collection

Business Impact

Asking seniors about the outcome of the implementation of new knowledge/skills

acquired in training programme.

Data Sources: -Functional Heads

-Sectional Heads -Direct Reporting Officer (in case of senior level employees)

Questions to be asked are- how business objectives as decided earlier have resulted in: -% reduction in mandays / time saved -% increase in customer satisfaction -Reduction in input resources as

compared to previous year -Achieving higher targeted sales and production goals as compared to last year.

-% reduction in customer complaints due to improved quality.

Before end of the year of conductance

of programme

Training Manager /

Coordinator

ROTI 1. Isolating the effects of training programme

2. Gathering business impact data and convert it to monetary value

3. Capturing programme costs

Detailed ROTI process explained in Step 4

and Progrmme Cost Structure in Annexure III

Before end of the year of conductance

of programme

Training Manager /

Coordinator

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Step 3: Data Collection

This stage of ROTI methodology involves data collection in two time frames:

i) In the classroom, immediate after the programme:

Data is collected during the programme with intent to measure participants reaction,

satisfaction as well as learning. Reaction data can also be useful in predicting application

as well as forecasting impact data and ROTI. This time frame is applicable for level 1 and

2 of evaluation only.

ii) Outside the classroom, at the workplace:

After the programme, information is gathered regarding the application of the skills and

knowledge as well as the impact the programme has had on the organizations/business.

Both hard and soft data are collected using a variety of methods. This time frame is

applicable for level 3, 4 and 5 of evaluation.

Step 4: Data Analysis

This pertains mainly to the fifth level of evaluation in ROTI. The benefits of the programme are

converted into monetary value at this stage. But before that, contribution made by the training

programme need to be isolated from the effects of the factors other than training. Following

sub steps are involved in this stage of data analysis:

i) Isolate the effects of the training programme:

Performance factors measured should be directly related to the programme as many

factors influence the performance of employees other than structured training

programme. Some common strategies commonly used to address this issue are stated

as:

Participants/stakeholders estimate the amount of improvement caused, that

could be ascribed to training programme alone. This may be 40% -

100%.Encouragement from seniors, reading from books or online sources,

learning from peers, are some of the other contributing factors.

Identify the other factors making impact on performance and estimate or

calculate the impact by them, leaving the remaining unexplained improvement

attributed to the programme.

ii) Convert business impact data to monetary value:

To calculate ROTI, convert business impact data into monetary values and compare

those values to programme costs. Depending upon the type of data involved in showing

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business impact, following suggested strategies could be used to convert data into

monetary values:

Output data, like additional sales can be converted to profit contribution

Cost of quality measure, such as customer complaint, can be calculated and

reported as standard value.

Employee time saved can be converted to wages saved and benefits, etc.

The programme benefit data is represented in annualized form which means the

analysis could have been for two months period and while reporting, it has to be

converted to 12 months by extrapolation.

iii) Capture Programme Costs: Calculate all the direct and indirect costs involved in

the programme. A detailed list of various parameters are at Annexure III.

iv) Calculate the Return on Investment (ROTI): ROTI can be calculated by

comparing the net programme benefits and costs. The ratio is usually expressed

as a percent:

ROTI (%) = (Net Programme Benefits / Programme Costs) x 100

Where net programme benefits are programme benefits minus programme

costs.

v) Identify intangible measures: Identifying and converting data to monetary value

is more challenging in case soft data or intangible benefits. Intangible benefits

include items such as:

Improved public image

Increased job satisfaction

Increased organizational commitment

Reduced stress

Improved teamwork

Improved customer service

Reduced customer response time

Enhanced technology leadership

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6. The outcome of Study

Reporting the results of a comprehensive measurement and evaluation is the last step in the

ROTI study and should be systematic and well planned. Table 5 provides a framework of

contents of reporting outcome of ROTI study:

Table 5: Suggested Framework for Evaluation Report

Sl Suggested Contents of Evaluation Report

Page no

1 Participating Stakeholder, we are aiming at

2 Stakeholders need and expectations from training programmes

3 Level of evaluation decided/desired and the rationale behind for specific training programme

4 Tangible benefits

5 Intangible benefits

6 Lessons learned

7 Limitations of present study

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Annexure I

A. Sample Feedback Form I (used by NTPC)

PROGRAM TITLE Assessor Building for NTPC Business Excellence Model

PROGRAM DURATION Aug 5-8, 2014

Organizer PMI

VENUE SCOPE Complex, MCM Hall, New Delhi

Program coordinator DMR PANDA

Please provide feedback on following parameters on a scale of 1-10, where 1 Not Satisfied and in the increasing order of satisfaction 10- Highly Satisfied.

1. Please rate the extent to which Overall Program Objectives were achieved

Programme Objective:

Describe the internal assessment model for business excellence

State the coverage of nine criteria of excellence Explain the process of assessment of submitted document from participating

stations Evaluate and score the application document from any NTPC power station

Describe the process of generating feedback report for the particular station based on the review of application document and plant visit

S

No

Not Satisfied Highly

Satisfied

1 2 3 4 5 6 7 8 9 10 1. Overall Program Objectives

2. Please rate the extent to which the following aspects of the program are met as per your expectation

S No Dimensions Not Satisfied Highly Satisfied

1 2 3 4 5 6 7 8 9 10

1. Content & Depth of Coverage

2. Program Duration

3. Relevance to your role

4. Program Coordinated

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3. Please rate the extent to which different faculties met your expectations in terms of subject

knowledge, structure and delivery

S No Session Topic Faculty Name Not Satisfied Highly Satisfied

1 2 3 4 5 6 7 8 9 10

1 Internal BE Model C V Subrahmanyam

4. Please rate the extent to which following Administrative Aspects are met as per your expectation

S No Dimensions Not Satisfied Highly Satisfied

1 2 3 4 5 6 7 8 9 10

1. Hospitality Arrangements

2. Overall Administrative Arrangements

3. In house residential arrangements

5. Kindly mention where and how you shall apply the learning at workplace?

6. Kindly give your comments regarding program and suggestions for improvement of the Program.

Date ------------------------------ Signature________________

Name ___________________

Emp No.________________

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B. Sample Feedback Form II (used by Power HR Forum)

PROGRAM TITLE CSR & SD

PROGRAM DURATION September 29, 2014

VENUE Power HR Forum, PMI NOIDA Please provide feedback on following parameters.

1. Please rate the extent to which Overall Program Objectives were achieved

Moderate (less than (

Annexure-II

Test of Learning

The aim of the Learning Evaluation (Level-2) is to check if the learning of the participants

has reached to some desired level after attending the training programme. There are two

options in this regard:

1) Pre-post test

2) Post test

Further, each of these categories may include following methods:

a) MCQ (multiple choice questions)

b) True/False type

c) Subjective assessment

d) Demonstration through role play / working on models

e) Analysis of case studies

f) Simulation

The job of the training manager at this stage is to follow the learning objectives finalized

during the step 1. Then based on those objectives, determine the mode he/she going to use

for assessing the change in learning achieved during training programme as expla ined

below:

A) Pre-Post Training Test and Post Test:

Pre-Post Test is preferred where participant has some background knowledge of the

training programme contents or participants are already working in the same domain

and the intent of training programme is to acquire advanced skills. Then, training

manager can make out clearly improvement in the skill levels of employees.

Table 1: Comparison of Test Methods

Parameters Pre-Post Test Post Test

Level of skill to be achieved Degree of learning enhancement

Certain level of proficiency has to be

achieved; say 70 % at end of training.

Criticality of learning High Lower

Location of proficiency Within the classroom Within the classroom Extra time and cost More Less

Seriousness/objectivity/engagement of participants

High Lower

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B) Choosing among Objective/Subjective/Case Studies/Role Plays

1. Objective (MCQs/True-False):

These mode of test should be used when the group size is large (say) more than 15,

time available is less, criticality of the skills to be acquired is not that important or

specific and focus is upon acquiring knowledge.

2. Subjective Questions:

This mode is preferred when the population size is restricted a certain level of

knowledge/skill have to be demonstrated. In case,where the criticality of the

knowledge/skill to be acquired is more important than population size does not

matter.

3. Simulations:

This mode of testing is preferred when the skills acquired during the training

programme are of critical importance and have to be demonstrated by every

participant to perform his job at workplace.

4. Case Studies:

This approach has to be used when we want the participants to learn how to

implement the learning from the training programmes to the real life situations.

5. Role Plays:

This approach is preferred in behavioral trainings where we want participants to act

on specific situations and learn, feel and experience it to gain more clarity. This

approach should be preferred when availability of time is not a restriction.

Table 2: Usage of Different Instruments for evaluating Learning

Parameters Objective Subjective Simulations Case Studies

Role Plays

Participant Group

More than 15

Less than 15 Less than 15 Less than 15

Less than 15

Testing Time Least Lesser More More Less

Evaluation Time

Least More More More More

Automation

Level

Highest Not possible Not possible Not

possible

Not

possible Criticality of skills acquired

Moderate Moderate Highest High High

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Usually objective test is most widely used which is a good compromise between

outcome achieved and input required.

(C) How to decide the Number and Difficulty Level of Questions in Pre-Post/Post Training Tests

To get the more accurate picture of the knowledge/skills acquired during the training

programme, inclination is on to ask more number questions, for a clearer assessment.

But this has to be restricted to limit ourselves and be more focused. When we are going

for objective type of questions, one rule of thumb is to ask 16 questions for a day of

training programme or 4 questions per session. Say a training programme is scheduled

for 3 days, then the number of questions come down to 45. In case of subjective type of

questions 6 questions per day should be asked. A combination of objective as well

subjective can also be used.

While deciding the level of questions to be asked in the Pre-Post/Post Training Tests, the

objectives of the training programme as pre-decided need to be considered and

accordingly decided.

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Annexure III

Programme Cost Structure

This stage involves calculating the programme costs incurred and outcomes of the

training programme. Programme cost can be divided into two heads i .e. Direct Cost and

Indirect Cost.

A) Programme Cost:

i) Direct costs are expenses an organization can easily specify for an object or

services acquired. Companies describe these as expenses where one gets what

one pays. An organization can have its own list of direct cost depending on the

resources available with them. A list specifying indirect costs incurred in a

training programme is given below:-

1. Facilitator Fees (if outsourced)

2. Boarding and Lodging Fees for Faculty

3. Faulty travel fees

4. Refreshment expenses for participants

5. Course Material

6. Stationary Items

7. Training Venue

8. Travelling expenses of participants

9. Loss of productivity or costs of backfilling positions during training

which is at least equal to CTC of employee

10. Cost of Evaluation Study (employee cost and time, travel time, etc.)

ii) Indirect cost involves costs which are spread out for usage for different

purposes and cannot be calculated directly for the product/service acquired. A

list specifying indirect costs incurred in a training programme is given below:-

1. Salaries of Training Department personnel involved

2. Infrastructure (training venue, audio-visual aids)

3. Communication elements, air conditioning, building up keep, etc.

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B) Training Benefits: To calculate the programme benefits, business impact created

due to training programme like reduction in manpower, enhanced customer

satisfaction, improved quality needs to be converted into the monetary value for

the same financial year. Depending upon the type of data involved in showing

business impact, following suggested strategies could be used to convert data into

monetary values:

a. Output data, like additional sales can be converted to profit contribution

b. Cost of quality measure, such as customer complaint, can be calculated and

reported as standard value. c. Employee time saved can be converted to wages and benefits, etc.

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training evaluation

Documents

training evaluation

training process

training evaluation

training objectives

training initiatives

training practices

training investment

levels of evaluation