This week we bring you effective tips and a training ROI calculator.

Hello again, Troubleshooters! Welcome back to our blog series on calculating the ROI of training. If you’ve been following along with us, you’ll know that in Part 1 we talked about why it’s important to estimate the return you will get on your investment in troubleshooting training for your staff. We also presented a common formula to calculate it–to go along with our ROI calculator we have for you this week!

ROI = (Gain from Investment – Cost of Investment) / Cost of Investment x 100

And then we tackled how to calculate the first part of that formula, Gain from investment. In Part 2, we went through how to calculate the second part of the formula—your Cost of investment.

So now that you know how to come up with both of those numbers, you can easily come up with your ROI.

We’ve included a handy calculator below to help you.

Training ROI calculator

  1. Before using the calculator, you’ll need to know your average downtime per month (in minutes), and the cost of downtime per minute. (See Part 1 for how to calculate these numbers.) Multiply those two figures and you will get your pre-training average downtime cost, or in other words, what downtime currently costs your company each month. Input this number under “Pre-Training: Average downtime.”
  2. Estimate the percentage by which your company downtime can be reduced through proper troubleshooting training. It’s best to use a range, from lowest expected reduction to highest. Remember that proper troubleshooting training teaches a methodical, systematic approach to diagnose electrical faults that eliminates guesswork and helps find and repair faults using the most direct route and avoiding trial and error.

The range you come up with will be your estimated after-training downtime costs. You can input the lower end of the range, or the higher end, or an average, into the calculator, and the result will be your Gain from Investment.

Note that you can do this operation twice, once using the low end of the range, and once using the high end.

For example, suppose you have determined that downtime is costing your company $144,000 per month (and you entered that under pre-training: average downtime). If you now estimate that troubleshooting training will reduce your company’s downtime anywhere from 10% to 25%, first enter a number that is 10% less than your pre-training average downtime ($144,000 − 10% = $129,600). Later on, you can try this exercise again with a 25% reduction ($144,000 − 25% = $108,000).

  1. To find your Cost of Investment, input all of your expected training costs into the calculator as applicable. (See Part 2 for a breakdown of these expenses and how to estimate them as accurately as possible). Ensure that you break all of these costs down by month (i.e., if they are one-time costs, prorate them over the life of the training program and use the amount these will cost per month).

The final result will be your training ROI, expressed as a percentage of your investment.

And that’s it for today, Troubleshooters. Next week, we’ll discuss how to interpret this ROI number, and what to do if yours is negative.

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