Continuous staff development through different training initiatives is part of an organisation’s annual HR budget cost. Religiously catered for by best practice organisations, the allocated funds are treated as an ordinary, required and normal cost to enable staff to meet their personal and career development needs. Yet the actual return that is generated from such training and development activities is rarely calculated.

Costs paid are merely gauged in relation to the budget but little or no regard of other intangible or indirect costs and benefits. To calculate training and development’s return on investment (ROI), one should quantify all costs and benefits resulting from each activity and subsequently determine if that activity met the learning objectives.

Training and development can be compared to other capital investments and projects, whereby the expected rate of return is higher than the cost of capital. Similarly, when investing in human capital, the organisation should expect a similar return from its investment in training that is higher than the costs of that. 

The crucial first step is the identification of employees’ needs and priorities

However, the crucial first step before determining the ROI from training and development is the identification of employees’ needs and priorities. An appropriate training needs analysis will provide the rationale required to focus on development priorities according to organisational requirements. Such an exercise provides additional benefits in terms of career planning, employee retention and the identification the requirements of new recruits.

Following such an analysis and the implementation of the selected initiatives, the ROI exercise can be set in motion through calculating the ROI from each training activity which provides valuable feedback to management not only to assess if the training has met the respective objectives, but also for planning how to address both present and future needs.

For more information join EY Malta’s CPE Accredited training event on ‘Determining the Return on Investment from Training and Development’ on June 4, from 2.45pm to 6.15pm at EY’s Connect Centre, Msida. One may send an e-mail to events@mt.ey.com to confirm attendance. Admission fee for this session is €59 (incl. VAT)

Robert Delia is a seasoned HR professional, with over 20 years’ work experience in people and business management in various industries. He is currently responsible for the organisation of a range of accredited training events as a part of EY’s Connect Centre, as well as for the provision of HR Advisory services to clients. 

Charmaine Tanti is an HR supervising associate and the learning champion in EY Malta’s Talent team. She is a qualified accountant and holds a first in class Diploma in Taxation.