Measuring return on investment and risk in training – A business training evaluation model for managers and leaders

Abstract

Orientation: Organisations face productivity and efficiency challenges brought on by global pressure. To cope with the challenges, they seek to develop and enhance their human capital as a source of sustainable competitive advantage. Evidence suggests that less than 10% of what is learned on training courses is applied effectively to enhance performance and business results.Research purpose: This abstract research critically examined existing training evaluation models to propose a new model.Motivation for the study: Smart investment in scarce and critical skills development by means of training is expected to enhance human capital; however, the challenge lies with the uncertainty in whether the return on these investments are measured and whether training risks are managed.Research design, approach and method: Theoretical, abstract research was conducted to understand existing measurement and evaluation models of training with regard to costs, benefits and risks.Main findings: This conceptual paper resulted in a new business model to measure training return on investment and risks. The proposed model adapted and built on the Kirkpatrick-–Phillips training evaluation model, adding a sixth, risk evaluation step and specifying measurement factors for each step.Practical and managerial implications: Training and line managers must note that although the evaluation of trainee’s satisfaction, learning, application, impact and financial return is imperative and must be measured, ignoring the measurement of risk factors such as learning barriers and challenges may jeopardise the ability of leaders and managers to predict how investments in human capital development will impact business results.