Finance
Return on investment (ROI)
Helps managers answer: How well are we generating sustainable profits?
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Return on investment (ROI) vs Training return on investment
These models cover closely related ground. Compare their purpose, scope, practical guidance, and supporting resources to choose the better fit.
Related modelsFinanceFinanceKPI / metric
Organisational behaviour
Training return on investment
Helps managers answer: How effective is our training in driving business results?
Read articleChoice logic
Use this when.
Answer the key performance question: “How well are we generating sustainable profits?”
Answer the performance question: “How effective is our training in driving business results?”
Extracted signals
Strengths, limits, and pitfalls.
Return on investment (ROI)
- Make every ROI auditable: publish the counterfactual, costs, benefits, timing and attribution owner. Distinguish an annual period such as 1 January to 31 December from annualisation. Under a simple convention, 1% for a month becomes 12%, while 10% over two years becomes 5%; a compound annual rate is more appropriate when returns accumulate.
Watch for
- Do not compare marketer, project and investor ROI labels without reconciling definitions. One may use gross profit over campaign cost and another net income over all capital employed. Also avoid confusing annual with annualised return or ignoring risk, cash flow timing and benefits displaced from elsewhere.
Training return on investment
- Select a small number of consequential programmes for full ROI analysis and design the evaluation before training begins. A pre agreed outcome, baseline, attribution method and cost boundary make the eventual calculation far more credible.
Watch for
- Do not convert every reported improvement into a training benefit. Separate the programme’s effect from management attention, incentives, process changes and market conditions, and show uncertainty. A precise looking ratio built on unsupported attribution is misleading.
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