Question

Provide a brief overview about why calculating ROI is strategically important and list common types of items and services that would be included in an ROI analysis. Next discuss what items and services may differ in ROI calculations between different types of training. For instance, consider the differences between a soft skills training like leadership development and employees taking an Excel training program.

Answer 1

ROI calculation is of strategic importance, as it contributes to determining the profitability of an investment or expenditure. The ROI is a significant Key Performance Indicator (KPI) for assessing whether or not the company is doing well. It helps identify areas for improvement to achieve the goals. In other words, ROI contributes to measuring the profit or loss of investment, be it training or business or any other investment. This is of strategic importance because the numbers are clearly indicated in the measurement of business performance.

The items and services in the ROI analysis are:

-- Net revenue

-- Total property

-- Sales

--Turnover

-- Margin of profit

-- Results (impact on business), etc.

The different items and services between different training types in ROI calculations are:

-ROI (percentage) = ((Monetary benefits – Training Costs)/Training Costs) x 100

The results or the cost of the training vary depending on the various training types. The results for various training types are different. For example, training in skills like leadership requires results to acquire leadership skills. For employees who undertake an Excel training programme, different results, such as Excel data handling knowledge, are required.