Hello friend,
Training can be evaluated on monetary terms. I am familiar with two methods,
1. HRV( Human Resources Value) method and
2. DIF ( Difficulty, Importance, Frequency) analysis.
The first one is simple and could be explained as follows;
Step 1. Create the Performance Grid for each employee:
The Performance Grid is a matrix combination of two factors, competency and committment. The Grid is expressed graphically, with competency on the horizontal axis and committment on the vertical one. The values are spread from zero to 100 as percentage.
Assume that we want to create the performance grid of employee A.
His supervisor will have to indicate on the grid where he is positioned with regard to competency and committment. Let us assume these values are 60 and 70.
The average grid value is therefore, 60+70 divided by 2 = 65%.
Step 2: Calculate Human Resource Value(HRV)
HRV= Average employee cost x grid value.
Employee cost is the total cost of maintaining the services of the employee at current rates.
Assume that for A the employee cost works out to Rs.1.2 lakh per annum.
Average employee cost = 1.2 lakhs divided by 12 months = Rs.10000.
Hence HRV for A = 10000x 65% = Rs.6500.
It means that even though we are paying Rs.10000 to maintain A, we are getting only Rs.6500 value from him.
Step 3. Send A for training to improve gaps in competency.
Step 4. Make fresh performance grid after training and calculate HRV.
Assume that after training, his supervisor assesses him at 70 on competency and 80 on committment; the average grid value becomes 75%.
New HRV after training = 10000x 75%= Rs.750
Step 5. Calculate incremental increase in HRV after training.
In this case, 7500-6500= Rs.1000.
This incremental increase represents the ROI on training for A.
Taken for a whole group, gives the ROI for that particular training programme.
Step 6. Calculate, in the above manner the ROI for all the training programmes in a calender year to give the total value.
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The above scheme is ideally suited for a small organisation where these calculations could be effectively done.
The success depends on how well the supervisors evaluate the performance of their subordinates.
The scheme has a subjective content in the evaluation process so the values obtained need not be considered as accurate, but a trend value useful for our contextual purpose.
The whole scheme even with the subjectivity errors discounted, gives a tangible indicator regarding effectiveness of training.
I hope this is of use to you.
best wishes
Rajeev.V