How to Measure Training ROI (Without Overthinking It)
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Training ROI is hard to calculate, and frankly, sometimes unnecessary. A training video that you pilot to 10 people doesn’t justify an ROI calculation. And neither does a one-time Zoom workshop designed and delivered by an internal L&D manager to line managers.
Calculating training ROI should be reserved for high-profile training. The ones with real costs, like manager development or a strategic leadership series, where stakeholders are asking you to make the business case for these investments.
Why training ROI matters
L&D needs to show it is driving outcomes the business cares about, the same way any function competing for budget does. You need to make the case for why the business should continue to invest in training.
The problem I'm seeing is that L&D teams are struggling to evaluate the ROI of their training. That's because with AI, teams can design and develop training faster than ever before. But all this new content is creating a readiness debt — teams are churning out content at such a high volume that it's impossible to measure what's having an impact, and what's not. This gap is only growing.
How to measure training ROI
Training ROI is estimated using a deceptively simple formula:
ROI (%) = (net program benefits / program costs) x 100
Where net program benefits = total monetary benefits minus total costs.
This is known as the Phillips ROI model, which is based on the Kirkpatrick Model.
Phillips ROI model adds a Level 5: ROI, using this formula and three inputs:
- Costs: training design and delivery, tools, materials, facilitation, facilities, travel, and administrative overhead
- Business impact: 1-3 business metrics (with a monetary value assigned to each), measured against a pre-training baseline
- Attribution: a percentage of performance improvement that can be attributed to the training, using a control group, trendline, or manager estimate, with a confidence rating
The estimation also requires you to document assumptions about the data you’re collecting. (It’s hard to put a dollar-amount on business metrics.) You’ll also need to separate out intangible benefits, like increased team morale or job satisfaction. They’re valuable, just not in a way this formula can address.
See an example of how the formula would work for a manager development program below.
How to present ROI to leadership
Odds are, you need to share the results of your training ROI with someone in leadership. You don't need a fancy slide deck, and you don't need to reinvent the format every time. Create a template you can repurpose for every program.
A strong executive summary should be reviewable in a few minutes, cover what changed, what you invested, and any assumptions, and always end with a decision and a next step. Consistency makes it easier for leadership to review quickly and know where to focus their questions or feedback.
I also recommend keeping an assumptions log to document the decisions you made along the way, and any judgment calls about data. This should be something you can append to a summary (if asked) so that someone else could follow your reasoning.
If you read that and went, wait I’m supposed to get what? You’re not alone. Fortunately, not all training necessitates this level of measurement. In most cases, what I call “good enough” measurement suffices for reporting out to stakeholders.
What is “good enough” measurement?
Good enough measurement gives you confidence to make a decision about your training, like whether to keep it (and perhaps scale it), revise it, or stop it altogether.
Both approaches below use the Kirkpatrick Model of evaluation, just at different levels.
- Snapshot measurement
A quick determination of whether your training is landing as intended. Snapshot measurement uses Level 1 (Reaction) and Level 2 (Learning) data, like post-training sentiment surveys and assessment scores. - Impact measurement
A focused evaluation of whether your training is leading to performance outcomes. Impact measurement uses Level 3 (Behavior) and Level 4 (Results) data, like manager observations of on-the-job behavior and shifts in a related KPI.
How to choose the right measurement approach
If your training is a low-profile pilot, one only a handful of people beyond the L&D team even know about, you're probably not expected to report out on it to leadership. That means Snapshot or Impact measurement is likely enough.
If a program evolves from a pilot into a scaled offering, you may need to update your approach to measurement. You'll know you've reached the level of complexity that calls for the Phillips model when you can document the assumptions behind your ROI and offer a range, from conservative to optimistic, based on those varying inputs.
Here's a guide for deciding which evaluation approach is appropriate for your training.
Avetta, a global leader in supply chain risk management, evaluated their onboarding and just-in-time support for customer interactions for 150 support agents using impact measurement and business metrics: ramp-to-proficiency, call handling time, and interaction quality.
This measurement approach is appropriate given the nature of the trainings. They impact the business, but the costs are low on a per-training-video basis. A Phillips ROI calculation would only make sense for this organization if they were evaluating the overall investment in Synthesia across use cases.
Amy Vidor, PhD, is the Learning and Development Evangelist at Synthesia, where she researches learning trends and helps organizations apply AI at scale. With 15 years of experience, she has advised companies, governments, and universities on skills.
Frequently asked questions
How do you measure ROI on training?
Calculate training ROI using the Phillips model, which is the net program benefits divided by the program costs. Use this approach for evaluating high-visibility programs, where there's substantive investment in the design and delivery of training.
What is a good ROI for a training program?
There's no universal benchmark for what constitutes "good" training ROI. A positive percentage means the program's benefits outweighed its costs, but whether that number is good enough depends on the program's stakes, the assumptions behind it, and your leadership.
What's the difference between training ROI and training effectiveness?
Training ROI weighs the costs of the program versus the benefits. Training effectiveness determines whether the training achieved its learning objectives.
A training can be effective at changing behavior, but have a negative ROI because it is prohibitively expensive.
