Calculating the PRO-Forma ROI for Investing in a Training Program
** Enter values in grey-shaded cells, enter "0" if no benefit or cost for the year
First: Estimate the Annual Benefits
Benefits in year one (cost reductions or revenue increase due to the training) Benefits in year two (cost reductions or revenue increase due to the training) Benefits in year three (cost reductions or revenue increase due to the training) Benefits in year four (cost reductions or revenue increase due to the training)
Template
Example $300,000 $500,000 $500,000 $0
Second: Estimate the Annual Costs
Costs in year one (costs incurred in deploying the skills learned through the training) Costs in year two (costs incurred in deploying the skills learned through the training) Costs in year three (costs incurred in deploying the skills learned through the training) Costs in year four (costs incurred in deploying the skills learned through the training) $100,000 $150,000 $100,000 $0
Third: Estimate the Investment
Dollars spent to develop/buy and deliver the training program $100,000
Finally: Calculating the Pro-Forma ROI for Investing in the Training
Interest rate you would borrow money at for this investment (Input as whole value i.e. 10% inputted as 10) ROI = (∑[Annual Benefits - Annual Costs] ÷ Investment) X 100 15% #DIV/0! 702%
The Profit Ability Group, Inc. ray@theprofitabilitygroup.com (636)527-7111
Business Training Library info@bizlibrary.com (888)432-3077
Calculating the PRO-Forma ROI for Investing in Training to Reduce Employee Turnover
** Enter values in gray-shaded cells
First: Estimating the Cost of Turnover
a. Number of employees b. Total payroll (including benefits) of employee population c. Average salary (including benefits) of employees = (b ÷ a) d. Number of employees voluntarily leaving the company annually e. % annual turnover = (d ÷ a) f. Estimated cost to replace an employee as % of salary (enter as a whole number) g. Bottom line impact of voluntary turnover = (g X d X c)
Template
Example 1,000 $45,000,000
#DIV/0!
$45,000 200
#DIV/0!
20% 100%
#DIV/0!
$9,000,000
Next: Calculating the Pro-Forma ROI for Investing in Reducing Turnover
i. Retention Goal: targeted % reduction in employee turnover rate (enter as a whole number) j. Turnover rate if Retention Goal achieved = [e X (1 - j)] k. First year's dollar savings in turnover cost if Retention Goal achieved = (j X h)
#DIV/0! #DIV/0! 20% 16% $1,800,000
The Profit Ability Group, Inc. ray@theprofitabilitygroup.com (636)527-7111
Business Training Library info@bizlibrary.com (888)432-3077
l. First year's estimated cost to deploy the skills learned through the retention training m. Second year's dollar savings in turnover cost if Retention Goal achieved = (j X h) n. Second year's estimated cost to deploy the skills learned through the retention training o. Third year's dollar savings in turnover cost if Retention Goal achieved = (j X h)
(Enter "0" if impact of retention training is expected to last no more then two years) #DIV/0! #DIV/0!
$200,000 $1,800,000 $200,000 $1,800,000
p. Third year's estimated cost to deploy the skills learned through the retention training
(Enter "0" if impact of retention training is expected to last no more then two years)
$300,000
q. Dollars spent to develop/buy and deliver the retention training program
Interest rate you would borrow money at for this investment (enter as a whole number) ROI = (∑[Annual Benefits - Annual Costs] ÷ Investment) X 100 = (NPV[(k-l)+(m-n)+(o-p)] ÷ q) X 100 #DIV/0!
$400,000 10% 976%
The Profit Ability Group, Inc. ray@theprofitabilitygroup.com (636)527-7111
Business Training Library info@bizlibrary.com (888)432-3077
The Profit Ability Group, Inc. ray@theprofitabilitygroup.com (636)527-7111
Business Training Library info@bizlibrary.com (888)432-3077
The Profit Ability Group, Inc. ray@theprofitabilitygroup.com (636)527-7111
Business Training Library info@bizlibrary.com (888)432-3077