Computing the ROI training

STEPS IN COMPUTING ROI TRAINING

1. Determine the course objective and goals in term of gains and benefits derived from the course.
• Identify the best practices to be adopted and the standard output they have achieved.
• Measure the current performance in term of efficiency or output or outcome measures.
• Compare before and after training performance of the trainees
• Accumulate the value until say for three years i.e whatever duration where values are drawn from training.
2. The KPI of the job holder would be a good measure of expected performance gains and opportunity cost.
3. Compute the course/ workshop/ seminar costs which include the opportunity costs of trainees
4. Divide gains or profits or benefits from training divide by the cost of training to arrive at the return on training. 
5. IF the benefits or gains to be derived from training is more than 1 year, the IRR and NPV is a better criterion in justifying training.
6. In general, the ROI on training has always been proven to be higher than 100% per year.

SYNOPSIS of ROI Training 

The purpose of this workshop is to impart knowledge and skills in measuring the effectiveness of training.  ROI is said to be the ultimate measure on the impact of training.

Since the benefits, accruing to training extends more than a year, the IRR would be a better indicator in measuring the impact.

The first day of this two day course shall focus on the ROI and the accumulation of costs and the benefits accruing from training.

The second day shall see the projection of benefits in terms of cash flows into the second and the years ahead.

Ready Templates and models (excel based) has have been designed for this course.

Performance improvement in Sales and Production departments as an impact of training are ter easy to calculate as compared to other department.

Profit center accounting must be prepared for each section and departments showing its income statements.

We believe that every job has more than one KPI measures.  The output or outcome could be calculated with each respective KPI measure.

References:http://traininginmalaysia.blogspot.com

Seven steps in training need Analysis

SEVEN STEPS IN TRAINING NEED ANALYSIS

1. Identify the performance gaps in the business by comparing against a standard in the industry.
• Use the ROE chart
• Use the business profit model  
• Use KPI efficiency and performance ratios
2. To determine the causes of poor performance – performance gaps analysis
• root cause analysis
• component ratio analysis
• Trend analysis
3.    To provide a basis of measurement –
• key performance indicators
• Input output analysis
• before and after training
4.    To determine the desired training outcomes – 
• desired competencies in the best practices
5.    To determine the contents and scope of training - 
• task and subtask analysis
• best practices
• innovation
6.   To determine the whether training is needed -  competency gap analysis through input-output analysis
• competency profile of the job holders as compared to ....
• identify unique competency gaps against industry standard joh holders.
• confirm competency with alternative approach such as BSC perspective, expert opinion, task analysis
7.   To gain management support -  ROI training where the gains and benefits are divided by the costs of training.

©  Arriffin Mansor 012-2786282

ROI Training - metric approach

Calculating ROI / IRR on training and development
	9.00-10.30		11.00-12.00	12.00-1.00		2.00-3.20		4.00-5.00
First day	Training evaluation – Kirkpatrick 4 level		Guidelines for evaluation of performance	Accumulate training  costs and benefits		ROI templates and calculations		Group work – computing the ROI case
Second day	Training Inputs and output analysis		Pitfalls in ROI  – measuring real efficiency	Projecting the net cash flows of training benefits		Group work - Computing IRR and NPV		Close Summary and action plans
	© ABM Consult

     11 steps to training need analysis

1. Identify the Critical performance gaps through benchmarking.
• Use the financial statements
• Use the ROE/ROA chart
• Profitable business model
2. Root cause depth analysis on the gaps
• component ratio analysis
3. Identify the true performance problems, issues and opportunities.
4. Identify the non-performers as individuals or groups.
5. Identify performance solutions and change required
• Non-training solutions
• Training solutions
6. Through best practices, conduct competency profiling of each non-performer.
7. Identify competency gaps within the non-performers.
8. Consider the costs of alternative training and coaching solutions.
9. Record before and after training performance outcome.
10. Estimate the gains and benefits as the outcome of training.
11. Compute the ROI of training to justify the training.

Competency concepts

What is competency?

A set of  best practices to be adopted and applied to produce an expected performance output.
A set of knowledge attitude and skills to produce a set of behaviours which could be observed, measured and evaluated to produce job or work outcome.

How to draw a set competency for a job.

• What are the objective and goals of the job?
• What are the duties and tasks needed to accomplish these?  Key Result Areas/Best Practices
• What are the actions do the job holder take?  Performance improvement matrix
• What results have been achieved: measurable performance.  KPIWhat is the different between competency based learning approach in contrast to the traditional academic based approach?

Competencies are identified through analyzing responsibilities, duties and tasks of a workman who has produced standard performance output. ry

The competency of any job would depend on the best practices in the industry.

The competency gaps is the different between the job holder competency against the best job holder in the industry.

Competency gaps are identified for the purpose of finding what training needs are needed for key job holders.
For example, an accountant are functioning primarily as follows:-

1. Producing efficiently financial statement as required by the laws
2. Producing periodical analysis and meaningful reports for the purpose of planning and decision making for all stakeholders.
3. Ensuring healthy cash flows and liquidity management.
4. Sourcing for cheap source of funds for the company and managing them efficiently and effectively.

Because of the above, the accountants must learn

1. Debit and credits up to Balance Sheet
2. Ratio analysis
3. Cash flows
4. Calculating cost of funds.

Through competency approach, a trainee learns to solve problems through applying the appropriate tools learned.

STAR: (Situation, Tasks, Actions, Results.)

We organise the following competency based seminars in Kuala Lumpur
(How to do it -  the tools that has been practised successfully)

1. Performance Audit - 2 day
• Evaluating past performance and the underlying factors
2. Performance Improvement - 7 steps approach - 1 day
3. Strategic Management - 2 day
• Metric Structure and Strategic Mapping
4. Strategic Finance in spreadsheet - 2 day
• 7 steps in business finance
5. HR Measures and Accountability - 1 day
• Measuring HR performance
6. Cash flows and Project Evaluation - 2 day
• Excel spreadsheet based
• Understanding discounted cashflow techniques
7. Business Planning in 7 steps - 2 day
• systematic approach to business
8. Performance Planning and Appraisal - HR purposes - 2 day
• The key HR function
9. Training Need Analysis - 2 day
• Performance gaps
• Competency gaps
• Justifying training
10. Compensation for performance - 1 day
11. Performance Management System - 3 day
12. Performance leadership and team building
• Team synergy and management

for more information call us now 012-2786282
arriffin@gmail.com

COSTS, VOLUME, PROFIT ANALYSIS

Return on Equity Chart  -   use as total diagnostic tool.

STRATEGIC MAPPING

Competency based steps in business
Job or work based methodology

1. Evaluate past performance using financial statements
2. Identify SWOT through gap analysis/ benchmarkings
3. Determine Market positioning
4. Know the market segment and competition.
5. Adjust business strategies
6. Refine market strategies
7. Ensure adequate working capital with a practical trading strategies
8. Minimise investment on fixed capital but ensure adequate capacity.
9. Financed the business by balancing equity with loan funds
10. Ensure continued liquidity through cash flow projections
11. Check goals achieved through Du Pont ROE chart.
12. Construct future financial statements
13. Test for reliability and reality with ratio analysis

Our Specialised expertise

We conduct training and provide consultancy services in the following areas:-

1.          Training Need Analysis
2.          Turnaround Management
3.          Performance Improvement
4.          Performance Planning &  Performance Appraisal
5.          Performance Planning and Budgeting
6.          Impact Study
7.          Installing a KPI management system
8.       Spreadsheet Finance
9.       Cash flows and project evaluation
10.       Business planning in 7 steps
11.       Marketing plans and budgeting
12.      HR accountability
13.       Performance leadership and team building
14.       Performance Audit

.    

For further information please visit our blogs on performance, training and business planning.

FINANCE FOR NON-FINANCE Course Title

Target groups		Executives, managers, entrepreneurs & directors
Learning Objective		To acquire key financial knowledge and skills for the purpose of managerial decision making and planning.
Delivery Strategies		Zero based lectures, group dynamics and case analysis
		Excel based templates and models demonstrations
Course Contents		1.       To determine the right size - Cost volume profit analysis
		2.       Trading and Working capital strategies
		3.       Fixed Asset Strategies and depreciation
		4.       Equity and financial leverage
		5.       Return on Equity Financial Structure (Du Pont format)
		6.       Cash Flow Projections (liquidity management)
		7.       Proforma Financial Statements
		8.       Financial Key Performance Indicators
Duration		2 working days
Course Benefits		Improve planning and operating decisions through financial criteria
Our unique Training Approach		Excel based financial models and templates
Training Aids		Please  bring calculators or laptops for the whole session
Cases to be discussed		Break even analysis
		Key Financial Ratio Analysis
		Annual Percentage Rate for loan repayment
		Cash flow Projections
© Arriffin Mansor 2011

Tel 012-2786282

‘arriffin@gmail.com

http://abmconsult.blogspot.com

Managing by Performance

	MANAGEMENT BY PERFORMANCE
	9.00-10.30		11.00-12.00	12.00-1.00		2.00-3.30		4.00-5.00
First Day	What is performance Framework- Value Chain		Key Result Areas – identifying them	Management by Objectives- Cascading the objectives		Performance Planning Meetings		Role Plays
Second Day	Benchmarking and Key Performance Indicators		Performance Measurement	Linking performance into a strategic map		Action Plans		Calculating performance workshop
CASES- First day	Value chain		ROE chart	Goal setting and cascading		The leader and his team		Climate in performance planning
Second day	How to benchmark?		Types of KPIs	BSC perspectives		Sample of action plans		evaluate performance -using  Input output techniques

Copyright:   Arriffin Mansor 012-2786282

1. What is performance and how to measure it.
2. Performance measures should be clear and ultimately falls to Return on Equity.
3. Compare performance against industry standards to get the critical performance gaps
4. Analyse results for performance issues and problems.
5. Use component analysis to get to the root cause factor
6. Solve performance gaps with solutions and changed strategies.
7. Study the critical non-performers profile against the standards.
8. by comparing against best practices competency gaps are identified.
9. Confirm competency gaps through alternative means
10. Estimate costs of training
11. Estimate the benefits and gains derived training
12. Compute ROI training