How to Calculate ROI for Learning and Development?

magine if every dollar you spent on training translated into measurable business growth. Sounds tempting, doesn't it? According to Statista, the 2022 average spend on workplace training worldwide was $1,200 per employee. It’s no wonder that business leaders are interestxed in the return on investment. A reliable way to measure the effectiveness of corporate training is ROI.

Measuring ROI for learning and development helps your organization invest in the most effective training programs and optimize budget spending.

Let’s take a closer look at how to measure training ROI and what challenges you may face.

What is training ROI?

Training ROI (return on investment) is a classic business metric of profitability. It helps to evaluate how much the costs of creating, promoting, and conducting a course have paid off. 

ROI is calculated as a percentage. If the indicator is less than 100%, then your training program doesn't pay off: it turned out to be too expensive for the business because it cost more than it brought benefits.

Why measure training ROI?

#1. Make the case for training costs

Big training programs usually need management approval, and that means proving they’re worth the investment. Showing the benefits of past programs can help decision-makers feel confident about spending on future training.

#2. Prove you’re choosing the right training

Measuring ROI helps you compare how effective different training programs are. When budgets get tight, training is often one of the first things to go, so it’s crucial to focus on initiatives that deliver the biggest impact.

#3. Set priorities

Knowing the ROI of your training efforts helps you focus on the programs that drive the most value for your organization’s performance.

#4. Show the value of training

If you can prove to management and stakeholders that training delivers real results, it’s easier to secure funding for future programs.

Why measuring ROI on training can be challenging

• Unclear objectives. Without clear goals for your training, it’s tough to measure success. Plus, it’s not always obvious what kind of data you need to gather to prove ROI.
• Lack of data. Speaking of data, calculating ROI means pulling together information from different sources — and that’s not always simple. On top of that, you’ll need to figure out how to convert the results into monetary value.
• Hard to isolate the training impact. Training isn’t the only thing that influences performance — things like company culture or market conditions also play a role. This makes it tricky to pinpoint exactly how much of the improvement comes from the training itself.

Is training ROI something you really can calculate?

In theory, it seems clear, but when it comes to practice, everyone runs into a problem: how to measure ROI in learning and development in such difficult-to-measure things as, for example, leadership or communication skills? 

Of course, using various metrics, you can understand the business impact of a particular seminar, training program, or executive course and translate it into monetary terms. Is it necessary to measure all training programs using ROI? To be honest, it’s really important to do this for only ~15% of training programs.

For example, it makes sense to measure the ROI of a two-year executive training program, but tracking ROI for something like a new code of conduct training? Definitely not necessary.

This brings us to the basic formula for training ROI, and it looks like this:

💡 Main Learning ROI Formula: Training ROI = (Net Benefit - Total Cost of Training) / Total Cost of Training

What data can you collect to tie into training ROI?

• Expenses tied to assessing learning needs, designing, developing, implementing, and evaluating training programs.
• Costs for venues, travel, and accommodations for both learners and trainers/facilitators/coaches.
• The number of learners engaged in training monthly, quarterly, or annually.
• Savings achieved through more efficient processes.
• Time saved by adopting a new system or application.
• Salaries for both staff and learners.
• Performance scores of learners post-training.
• Time required to onboard new employees and get them up to speed.
• Frequency of incident reports or customer complaints.
• Number of sales closed or contracts signed.
• Volume of customer queries handled.
• Participation rates across various training programs.
• Employee retention rates and overall attrition levels.

How to measure ROI in learning and development? 

Let’s calculate training ROI with the most popular Phillips ROI Model. 

Step 1: Reaction

This step assesses participants' initial impressions of the training.

For example:

• 100 participants, primarily team leaders, rated the program on a scale from 1 to 5.
• Average score: 4.8, indicating strong satisfaction and relevance of the content.

Step 2: Learning

Next, we measure the knowledge and skills participants gained during the training.

For example:

• 95% of participants passed post-training assessments, demonstrating a solid understanding of key concepts such as communicating safety principles, building trust within teams, and managing difficult conversations about risk.

Step 3: Behavior

This stage evaluates how participants applied what they learned back in the workplace.

For example:

After two months, behavioral changes were assessed using six indicators on a 5-point scale (from "no change" to "significant change").

• 91% improved in conducting safety conversations effectively.
• 84% reported stronger trust with team members.
• 81% found it easier to handle tough discussions about risk.

Step 4: Business Results

Here, the focus is on the broader organizational impact of the training.

For example:

• Participants were asked to estimate the percentage increase in their productivity or contribution due to the training.
• To isolate training’s impact: Data were considered only for participants with significant behavioral changes. Only tasks influenced directly by the training were evaluated.
• Outcome: The average productivity increase per participant was 2%.

While 2% may seem small, when multiplied across an organization, it represents significant gains.

Step 5: ROI Calculation

This step translates the results into monetary value and compares it to the cost of training.

For example:

• Assumptions: Baseline productivity equals salary (a 1:1 ratio). A 2% productivity increase equates to $376 additional value per participant.
• Costs: Total training cost per participant, including time away from work: $100.
• ROI Formula: 

This means the company earned ~$3.75 for every dollar spent on training.

Pitfalls of corporate training ROI measurement 

• ROI isn’t a hard truth, just an estimate. ROI gives you a ballpark figure, not an exact science. Income and investments don’t always come in neat, obvious numbers, and external factors can skew the results. Maybe a streak of bad weather hits productivity hard. Or it’s summer, potential clients are off on vacation, and sales take a dip.
• Every company has its own benchmark. What’s considered “good ROI” varies. A 50% payback might be fine for a company testing a pilot project, especially if they have funds to spare and can afford some trial and error. But for a company operating under tight financial constraints, that same 50% could be a disaster — every dollar needs to pull its weight.
• Not everything can be measured in dollars. Take communication training, for example. Employees get along better, the office atmosphere becomes more positive and collaborative — huge wins! But how do you put a price on that? To truly assess the value of training, you need more than just ROI numbers.

Final Thought

When setting up corporate training, ROI shouldn't be the ultimate goal. It's just a numerical way to assess the effectiveness of the training system, and each company will have its own benchmark.

To interpret it correctly, it’s important not to just focus on the obvious numbers, but to dig deeper into the data and use isolation methods. Additionally, the HR department shouldn’t overlook the intangible benefits the company gains from training.

Want to dive deeper? Here’s a list of top corporate training platforms that can help you gather all the info you need to measure your L&D ROI.