It’s a huge undertaking to create a training program for employees. It's not just an exhausting, time-consuming process — it can cost a great deal of money, too.

Recent estimates put corporate annual training budgets at around $308,000 and about $1,200 spent per employee. And that's not including hidden costs that can creep up at any point in the process — like learning curve times, technology upgrades and the use of outside learning resources. 

How can companies realize a positive return on this investment by measuring the effectiveness of their training programs? How can they know that their efforts to create valuable training are actually paying off with better employee performance? 

Training must be aligned with company goals and learner outcomes

Dr. Jack J. Phillips, chairman of ROI Institute, told HR Dive that there is a general fear about the outcomes of training, because measurement poses a potential threat to learning and design teams. If those workers get it wrong, their value of the training to the organization is lost.

Asked to give the number one reason why employee training programs fail to deliver a solid return on investment, Phillips answered that “a persistent problem that has been around for a while is the failure to design training around the value that an organization needs.” 

To overcome this fear, Phillips advises, L&D managers must “redefine the success of learning, which can only be the positive impact it has on the learner.” 

A better way of thinking about training effectiveness

Jason Forrest, CEO and chief culture officer at FPG (Forrest Performance Group), and the author of “WTF: Why Training Fails”, is a leading expert at creating high-performance, high-profit and "Best Place to Work" cultures. By his figures, companies are spending around $164.2 billion on employee training each year, but around 70% of training fails to produce a positive ROI. 

"The number one reason employee training programs fail to deliver a solid return on investment is due to a lack of accountability," Forrest said, explaining that the best way to measure success (or failure) of learning programs involves a change in the way that employees approach their work.

“Personal development programs should transform people from a victim mindset to victor mindset," Forrest added. "Are your employees asking for things to be easier? Or are they looking for the opportunity to be a better version of themselves? That mindset shift should be the measuring stick.” 

John Eades, CEO of LearnLoft and host of the 'Follow My Lead' Podcast, told HR Dive that many companies have “misaligned expectations because they are always thinking about immediate ROI on employee development programs.”

When Eades asked leaders about the best investment they’ve ever made, nine out of 10 said that the investment in their own professional development has been the most important factor. “The point is the investment organizations make in their people will always pay off because you are improving the lives of the people that produce the results," he said. “Quit trying to measure the ROI of training and think about the impact you are having on the lives of people.” 

Steps to designing better training programs with built-in measurement

Everything in the business world has to be justified and measured. This helps companies evaluate where and how much money should be invested. And employers have it within their power to design training programs that include methods of measuring success and progress; it’s not just about measuring employee performance or retention. 

“Organizations first need to start with clear, measurable outcomes, followed by establishing the baseline of current skill sets,” Forrest said. He shared an example: “In sales training, you would want to know what your sales teams’ conversion rate currently is. From there, you want to discover what is causing this current baseline. In sales, you’d want to identify where the sale is stopping, and then what is holding them back from moving the sale forward. Do they not know what to do? Or do they know what to do, and are just not doing it?” 

Using assessments to measure ROI

Often, an outsider's perspective can shed some light on things that hold back training programs, according to Forrest. “Outside assessment are effective because they are objective and take any of your personal biases out of the equation. Once you have your results, you can then build your training program around the needs of your employees," he said. "You always want to make sure you reassess periodically to make sure that your training program is working.” 

Data can tell the story of what learning is doing in the organization, and these insights can be used to optimize the value of learning assessments to make programs better through additional evaluation. If used properly, this can vastly improve the ROI of training.

Phillips added that “new training programs should come from ‘Why’, and use the right solutions to make the content stick, then make it accountable and measurable."