Identifying Training ROI in Four Steps

Posted By: Jeannine Kunz, Vice President, Tooling U-SME on March 23, 2017

While world-class manufacturers know an investment in human capital is critical for achieving and sustaining a competitive advantage, less savvy companies relegate training and development to a minor expense line in the annual budget.

Jeannine Kunz, Vice President, Tooling U-SME

Jeannine Kunz, Vice President,
Tooling U-SME

For the benefit of the industry, and our nation, which relies on a strong manufacturing sector for prosperity, this must change. Training and development needs to be treated like other investments presented to top management, with value substantiated.

By ensuring that training programs are an integral part of a strategic plan from the beginning, and are attached to overall fiscal goals, training departments can demonstrate the value and necessity of focusing on people to ensure the overall success of an organization.

Fortunately, proving ROI doesn’t have to be daunting. Simply think of it as a four-step process:

1. Plan. As with anything, the earlier you start thinking through and finalizing business objectives for the program, the better. For instance, a goal could be “Improve productivity by 10 percent.” From there, put plans in place for how you will evaluate and measure outcomes at the end of the project or year.

2. Gather data. Remember to collect data before, during, and after implementation so that you can calculate business impact for key performance indicators such as increased productivity, accelerated onboarding, and reduced downtime. Specific measures may include: cycle time, good parts per hour, machine time up, reduced scrap, etc.

3. Analyze and measure. In this phase, you will calculate ROI based on your original business objectives to see if you reached or exceeded your goals. You will also measure intangibles such as employee satisfaction and lower stress levels.

4. Report. Decision-makers need data to justify investments, whether in equipment or people. Make a business case about training by telling a story that demonstrates its value as an investment. Departments that are able to calculate a return on investment for training dollars are the ones building a strong workplace culture with better financial results.

We get a lot of questions about how to tie learning and development programs to the bottom line. To help, Tooling U-SME created a complimentary white paper, “Proving the ROI of Training: Moving from Expense to Necessity.”

In addition to offering best practices, the white paper provides industry formulas for calculating ROI for metrics such as accelerating onboarding, reducing downtime and increasing productivity. We look forward to hearing your success stories.

Tags: downtime, "human capital", manufacturing, onboarding, productivity, "return on investment", ROI, "Tooling U-SME", training, "workforce development"