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Measuring Measuring ROI of ROI of
TrainingTraining
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AgendaAgenda
1. Measuring the Effectiveness of Training
Program
2. Measuring ‘Return on Investment’ of Training
3. Enhancing the Effectiveness and ROI of
Training
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Measuring the Effectiveness of Measuring the Effectiveness of Training ProgramTraining Program
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Training Need Analysis
Training Objectives
Training Delivery
Training Evaluation
Training Process Training Process
What are the training needs for this person and/or job?
Objective should be measurable and observable
Techniques include on-the-job-training, action learning, etc.
Measure reaction, learning, behavior, and results
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The Four Levels of EvaluationThe Four Levels of Evaluation
Level 1 - Reaction
Level 2 - Learning
Level 3 – Behavior Application
Level 4 – Business Impact
Four Levels Four Levels of Training of Training
EffectivenessEffectiveness
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Test the trainees to determine if
they learned the principles,
skills, and facts they were to
learn.
Evaluate trainees’ reactions to
the program. Did they like the
program? Did they think it
worthwhile?
Level 1 - Level 1 -
ReactionReaction
Level 2 - Level 2 -
LearningLearning
The Four Levels of EvaluationThe Four Levels of Evaluation
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What final results were achieved in terms of the
training objectives previously set? Did the number
of customer complaints about employee drop? Did
the reject rate improve? Was turnover reduced,
and so forth.
Ask whether the trainees’ behavior on the job
changed because of the training program. For
example, are employees in the store’s complaint
department more courteous toward disgruntled
customers than previously?
Level 3 – Level 3 –
Behavior Behavior
ApplicationApplication
Level 4 – Level 4 –
Business Business
ImpactImpact
The Four Levels of EvaluationThe Four Levels of Evaluation
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Value of Value of InformationInformation
Frequency of Frequency of UseUse
Difficulty of Difficulty of AssessmentAssessment
Level
I. Reaction
II. Learning
III. Behavior
IV. Results
The Four Levels of EvaluationThe Four Levels of Evaluation
Least valuable
Most valuable
Frequent
Infrequent
Easy
Difficult
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Level 1 - ReactionLevel 1 - Reaction
Evaluate trainees’
reactions to the program:
Did they like the program?
Did they like the
facilitators?
Did they like the training
accommodation and
facilities?
Level 1 - Level 1 - ReactionReaction
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Guidelines for Evaluating ReactionGuidelines for Evaluating Reaction
1. Determine what you want to find out
2. Design a form that will quantify reactions
3. Encourage written comments and suggestions
4. Get 100 percent immediate response
5. Get honest response
6. Develop acceptable standards
7. Measure reactions against standards, and take
appropriate action
8. Communicate reaction as appropriate
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Please give us your frank reactions and comments. They will help us to evaluate
this program and improve future programs.
Program :
Facilitator :
1. How do you rate the subject (interest, benefit, etc)
a. Excellent
b. Very Good
c. Good
d. Fair
e. Poor
2. How do you rate the facilitator? (knowledge, ability to deliver and communicate?)
a. Excellent
b. Very Good
c. Good
d. Fair
e. Poor
3. How do you rate the facilities? (comfort, convinience, etc)
a. Excellent
b. Very Good
c. Good
d. Fair
e. Poor
4. What would have improved the program?
………………………………………………………………………………… ………………………………………………………………………………… …………………………………………………………………………………
Sample of Reaction Form
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Level 2 - LearningLevel 2 - Learning
Measuring learning means
determining one or more of
the following :
• What knowledge was
learned?
• What skills were
developed or improved?
• What attitudes were
changed?
Level 2 - Level 2 - LearningLearning
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Guidelines for Evaluating LearningGuidelines for Evaluating Learning
1. Use a control group if practical
2. Evaluate knowledge, skills and/or attitudes both
before and after the program
3. Use a paper-and-pencil test to measure knowledge
4. Use a performance test to measure skills
5. Get 100 percent immediate response
6. Use the results of evaluation to take appropriate
action
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Guidelines for Evaluating LearningGuidelines for Evaluating Learning
Experimental Group Control Group
Pre Test Score 45 46
Post Test Score 55 48
Gain 10 2
Pretest and Posttest Scores on Change Management Training
Example :
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Level 3 – Behavior ApplicationLevel 3 – Behavior Application
• The frequency of
application of new
skills/knowledge/
attitudes (on the job)
• The effectiveness of the
skills/knowledge/
attitudes (as applied on
the job)
Level 3 – Level 3 – Behavior Behavior ApplicationApplication
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Guidelines for Evaluating LearningGuidelines for Evaluating Learning
1. Use a control group if practical
2. Allow time for behavior change and application to take
place
3. Evaluate both before and after the program if practical
4. Survey and/or interview one or more of the following :
trainees, their immediate supervisor, their subordinates,
and others who often observe their behavior
5. Get 100 percent response or a sampling
6. Repeat the evaluation at appropriate times
7. Consider cost versus benefits
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Example of Survey to Measure Behavior Application
Understanding and Motivating
1. Trying to understand my subordinates 5 4 3 2 1
2. Listening to my subordinates 5 4 3 2 1
3. Praising good work 5 4 3 2 1
4. Talking with subordinates about
their family and personal interests
5. Asking my subordinates for their ideas 5 4 3 2 1
6. Applying "Management by Walking Around" 5 4 3 2 1
Time and energy spent after the prgram compared to time and energy spent before
the program
5 4 3 2 1
Instruction: The objective of this questionnaire is to determine the extent to which those who attended the recent program on Leadership have applied the principles and techniques that they learned there to the job.
Circle the answer that you consider appropriate for each question.5 = Much more 4 = More 3 = Same 2 = Less 1 = Much less
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Level 4 – Business ResultsLevel 4 – Business Results
• Indicate the extent to which you
think this program has
influenced each of these
measures in your work unit,
department, or business unit:• Productivity• Quality• Customer Response Time• Cost Control• Employee Satisfaction• Customer Satisfaction• Other
Level 4 – Level 4 – Business Business ResultsResults
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Guidelines for Evaluating LearningGuidelines for Evaluating Learning
1. Use a control group if practical
2. Allow time for results to be achieved
3. Measure both before and after the program if practical
4. Repeat the evaluation at appropriate times
5. Consider cost versus benefits
6. Be satisfied with evidence if proof is not possible
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Performance IndicatorsPerformance Indicators
HARD DATA INDICATORS
• Downtime duration
• Number of defect products
• Sales volume
• Production unit
• Customer satisfaction index
• Response time to orders
• Number of accidents at work
• Others
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Performance IndicatorsPerformance Indicators
SOFT DATA INDICATORS (intangible impacts)
• Job satisfaction
• Conducive working relationship
• Effective communication
• Stress rate
• Quality in decision-making
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Example : Measuring Training ResultsExample : Measuring Training Results
0.00
50.00
100.00
150.00
200.00Program : TQM TQM
TrainingTraining
Results after 3 3
months of months of
training,training, number
of defects
dropped to 80
units/day
120 units
80 units
Before trainingBefore training After trainingAfter training
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0.00
10.00
20.00
30.00
40.00
50.00
Example : Measuring Training ResultsExample : Measuring Training Results
Program :
Sales TrainingSales Training
Results after 3 3
months trainingmonths training,
number of sales
per salesman
increase to 30
units/month.
20 units
30 units
Before trainingBefore training After trainingAfter training
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Measuring Measuring Return on Investment of Return on Investment of
TrainingTraining
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Level 5 : Return on Investment of TrainingLevel 5 : Return on Investment of Training
Level 1 - Reaction
Level 2 - Learning
Level 3 – Behavior Application
Level 4 – Business Impact
Level 5 – Return on Investment of
Training
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Criteria for Selecting Programs for Levels Criteria for Selecting Programs for Levels
4 and 5 Evaluation 4 and 5 Evaluation
• Importance of the program in meeting the
organization’s goals
• Cost of the program
• Visibility of the program
• Size of the target audience
• Extent of management interest
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Benefits of ROI of TrainingBenefits of ROI of Training
• Measure contribution
• Set priorities
• Focus on results
• Alter management perceptions of training
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ROI of Training Model ROI of Training Model
Collect Collect DataData
Isolate the Isolate the Effects of Effects of TrainingTraining
Convert Data Convert Data to Monetary to Monetary
ValuesValues
Calculate ROI Calculate ROI of Trainingof Training
Tabulate Tabulate Program Program
CostsCosts
Identify Identify Intangible Intangible BenefitsBenefits
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Net Program BenefitsNet Program Benefits
Program CostsProgram CostsX 100X 100
Return on Investment FormulaReturn on Investment Formula
ROI =ROI =
ExampleExample : :
• Costs per program (25 participants)Costs per program (25 participants) $ 88,500$ 88,500
• Benefits per program (1st year)Benefits per program (1st year) $230,625$230,625
$ 230,625 – 88,500$ 230,625 – 88,500
$ 88,500$ 88,500ROI =ROI = X 100X 100
ROI = 161 %ROI = 161 %
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Collecting DataCollecting Data
• Identify appropriate
performance indicators
• Develop a collection plan
Collect Collect DataData
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Example of Performance IndicatorsExample of Performance Indicators
• Units produced• Items sold• Work backlog• New accounts opened• Productivity• Inventory turnover• Etc.
OutputOutput
• Equipment downtime• Overtime• Time to project
completion• Processing time• Repair time• Lost time days• Etc
TimeTime
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Example of Hard IndicatorsExample of Hard Indicators
• Unit costs• Variable costs• Overhead costs• Operating costs• Number of cost
reduction• Etc.
CostCost
• Scrap• Waste• Rejects• Error rates• Rework• Product defects• Product failure
QualityQuality
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Example of Performance ResultsExample of Performance Results
• Some performance results after training Some performance results after training
program:program:
• Scrap was reduced from 11 % to 7.4 %
• Absenteeism was reduce from 7 % to 3.25 %
• The annual turnover rate was reduced from 30
% to 16 %
• Lost time accidents were reduced 95 %
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Isolating the Effects of Training Isolating the Effects of Training
Methods to Methods to Isolate the Isolate the Effects of Effects of TrainingTraining
Using Using Control GroupControl Group
Trend Trend LinesLines
Participants Participants EstimateEstimate
Supervisors of Supervisors of Participants Participants
EstimateEstimate
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Using Using Control Control GroupGroup
• A control group arrangement can be
used to isolate training impact.
• With this strategy, one group
receives training, while another,
similar group does not receive
training.
• The difference in the performance of
the two groups is attributed to the
training program.
Isolating the Effects of Training Isolating the Effects of Training
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Trend Trend LinesLines
• Trend lines are used to project the
values of specific output variables if
training had not been undertaken.
• The projection is compared to the
actual data after training, and the
difference represents the estimate
impact of training.
Isolating the Effects of Training Isolating the Effects of Training
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Trend Lines AnalysisTrend Lines Analysis
Jan Feb Mar Apr Jul Jun May Aug
At the beginning of May, a Sales training Program session was
held
Vo
lum
e o
f S
ales
The
difference
represents
the estimate
impact of
training.
Trend Projection
Actual sales performance
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Participants and Participants and Supervisors of Supervisors of
Participants Participants Estimate of Estimate of
Training’s ImpactTraining’s Impact
• This method rests on the assumption that
participants (and their supervisors) are
capable of estimating how much a
performance improvement is related to the
training program.
• Because their actions have produced the
improvement, participants (and their
supervisors) may have very accurate input
on the issue.
• They should know how much of the
change was caused by applying what they
have learned in the program.
Isolating the Effects of Training Isolating the Effects of Training
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Participants and Participants and Supervisors of Supervisors of
Participants Participants Estimate of Estimate of
Training’s ImpactTraining’s Impact
• Typical Questions to Estimate :Typical Questions to Estimate :
• What percent this improvement
can be attributed to the application
of skills/techniques/knowledge
gained in the training program?
• What confidence do you have in
this estimate, expresses as a
percent?
• What other factors contributed to
this improvement in performance?
Isolating the Effects of Training Isolating the Effects of Training
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1 Training Program 50% 70%
2 Change in Procedures 10% 80%
3 Adjustment in Standards 10% 50%
4 Revision to Incentive Plan 20% 90%
5 Increased Management Attention 10% 50%
6 Other - -
Percent Improvement
Caused by
Confidence Expressed as
a PercentFactors Which Influenced
ImprovementNo.
Isolating the Effects of Training Isolating the Effects of Training
Example of a Participant’s EstimationExample of a Participant’s Estimation
The confidence percentage is multiplied by the estimate (50 % x 70 %) to produce a usable training a usable training factor value of 35 %factor value of 35 %
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1 Training Program 50% 70%
2 Change in Procedures 10% 80%
3 Adjustment in Standards 10% 50%
4 Revision to Incentive Plan 20% 90%
5 Increased Management Attention 10% 50%
6 Other - -
Percent Improvement
Caused by
Confidence Expressed as
a PercentFactors Which Influenced
ImprovementNo.
Isolating the Effects of Training Isolating the Effects of Training
Example of a Participant’s EstimationExample of a Participant’s Estimation
• The confidence percentage is multiplied by the estimate (50 % x 70 %) to
produce a usable training factor value of 35 %• This adjusted percentage is then multiplied by the actual amount of
improvement (post-program minus pre-program value) to isolate the portion
attributed to training• The adjusted improvement is now ready for conversion to monetary values,
and used in the return on investment
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Converting Data to Monetary ValuesConverting Data to Monetary Values
Converting Converting Data to Data to
Monetary Monetary ValuesValues
• Steps to Convert Data to Monetary Steps to Convert Data to Monetary
ValuesValues
1. Focus on a unit of improvement
2. Determine a value of each unit
3. Calculate the change in performance
data
4. Determine an annual amount of change
5. Calculate the annual value of
improvement
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Steps to Convert Data to Monetary ValuesSteps to Convert Data to Monetary Values
An example to illustrate the steps to convert data to monetary values
1. Focus on unit improvement
• One grievance reaching step two in the
four-step grievance resolution process
StepsSteps IllustrationIllustration
2. Determine a value of each
unit
• Using internal experts, the cost of an
average grievance was estimated to be $
6,500 when considering time and direct
costs (V = $ 6,500)
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Steps to Convert Data to Monetary ValuesSteps to Convert Data to Monetary Values
3. Calculate the change in
performance data
• Six months after the program was completed,
total grievances per month reaching step two
declined by ten. • Seven of the then grievance reductions were
related to the program as determined by
supervisors (isolating the effects of training)
StepsSteps IllustrationIllustration
4. Determine an annual amount for the change
• Using the six month value, seven per month
(grievance reductions), yields an annual
improvement of 84 (7 x 12 months)
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Steps to Convert Data to Monetary ValuesSteps to Convert Data to Monetary Values
5. Calculate the annual value of improvement
• Annual value = 84 x $ 6,500 = $ 546,000
StepsSteps IllustrationIllustration
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Tabulating Tabulating cost of the cost of the programprogram
• Tabulating the costs involves
monitoring or developing all of the
related costs of the program
targeted for the ROI calculation.
Tabulating Cost of the ProgramTabulating Cost of the Program
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Tabulating Tabulating cost of the cost of the programprogram
• Cost components that should be
included are :
• The cost to design and develop
the program
• The cost of all program materials
provided to each participant
• The cost for facilitator
• The cost of the facilities of the
training program
Tabulating Cost of the ProgramTabulating Cost of the Program
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Tabulating Tabulating cost of the cost of the programprogram
• Cost components that should be
included are :
• Travel, lodging, and meal costs
for the participants
• Salaries, plus employee benefits
of the participants who attend
the training
• Administrative and overhead
costs of the training function,
allocated in some convenient
way
Tabulating Cost of the ProgramTabulating Cost of the Program
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An Example to Illustrate ROI analysisAn Example to Illustrate ROI analysis
Weeks after training Trained Group Control Group
1 US$ 9,723 9,698
2 9,978 9,720
3 10,424 9,812
13 13,690 11,572
14 11,491 9,683
15 11,044 10,092
Average for weeks 12,075 10,449
13, 14, 15
Post Training Data
Average Weekly Sales
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An Example to Illustrate ROI analysisAn Example to Illustrate ROI analysis
Data US$
Average weekly sales
Trained Group 12,075
Control Group 10,449
Increase 1,626
Profit Contribution from Training 2 % 32.50
(Training Impacts)
Total weekly improvement 1,495
(32.5 x 46 participants)
Total annual benefit 71,760
($ 1,495 x 48 weeks)
Annualized Program Benefits
Note : 46 participants were still in job after 3 months
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An Example to Illustrate ROI analysisAn Example to Illustrate ROI analysis
Cost US$
Facilitation fees 11,250
Program materials : $ 35 x 46 1,610
Meals : 3 days x $ 28 x 46 1,288
Participant salaries plus benefit (35 %) 12,442
Coordination and Evaluation 2,500
Total Cost 29,090
Cost Summary : An Illustration
ROI (%):
$ 71,760 - $ 29,090
$ 29,090
146 %
x 100=
=
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Enhancing Training Enhancing Training EffectivenessEffectiveness
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How Effective is Your Training Program?How Effective is Your Training Program?
Broad and Newstrom (1992) report studies have
shown less than 30% of what is30% of what is actually taught actually taught
transfers to the job in a way that enhances transfers to the job in a way that enhances
performanceperformance.
Source : Broad, M., & Newstrom, J. W. (1992). Transfer of training: Action packedstrategies to ensure high payoff from training investments. Reading, MA: Addison-Wesley.
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Source of Barriers to TrainingSource of Barriers to Training Transfer Transfer
• Lack of reinforcement on the job
• Interference from immediate (work) environment
• Nonsupportive organizational culture
• Trainees’ perception of impractical training programs
• Separation from the inspiration or support of the trainer
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The Transfer PartnershipThe Transfer Partnership
Trainee Trainee recognizes need for new skills
Trainee Trainer Trainer designs and/or delivers learning experiences
Trainee Trainer Manager supports learning and application on the job
Manager
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The Transfer Matrix The Transfer Matrix
Before During After
Manager
Trainer
Trainee
Time PeriodsR
ole
Pla
yers
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ManagerManager
Before TrainingBefore Training
• Build transfer of training into supervisory
performance standards
• Collect baseline performance data
• Involve supervisors and trainees in needs
analysis process
• Involve trainees in program planning
• Brief trainees on the importance of the training
(course objective, content, process, and
application on the job)
• Review instructional content and materials
• Plan to participate in training sessions
• Encourage trainees attendance at all sessions
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TrainerTrainer
Before TrainingBefore Training
• Align the training plan with the organization's
strategic plan
• Systematically design instruction
• Provide proactive opportunities
• Design a peer coaching component for the
program and its follow-up activities
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TraineeTrainee
Before TrainingBefore Training
• Provide input into program planning
• Actively explore training options
• Participate in advance activities
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ManagerManager
During TrainingDuring Training
• Prevent interruptions
• Transfer work assignment to others
• Monitor attendance and attention to training
• Recognize trainee participation
• Participate in transfer action planning
• Review information on employee in training
• Plan assessment of transfer of new skills to the
job
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TrainerTrainer
During TrainingDuring Training
• Develop application-oriented objectives
• Answer the “WIIFM” question
• Manage the unlearning process
• Provide realistic work-related tasks
• Give individualized feedback
• Provide job performance aid
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TraineeTrainee
During TrainingDuring Training
• Maintain an ideas and application notebook
• Participate actively
• Form support groups
• Plan for applications
• Create behavioral contracts
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ManagerManager
After TrainingAfter Training
• Plan trainees’ reentry
• Provide opportunities to practice new skills
• Have trainees participate in transfer-related
decisions
• Reduce job pressures initially
• Give positive reinforcement
• Schedule trainee briefings for co-workers
• Set mutual expectations for improvement
• Arrange proactive (refresher) sessions
• Provide and support the use of job aids
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TrainerTrainer
After TrainingAfter Training
• Provide follow-up support
• Conduct evaluation surveys and provide
feedback
• Develop and administer recognition system
• Provide refresher/problem-solving sessions
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Trainee Trainee
After TrainingAfter Training
• Practice self-management
• Review training content and learned skills
• Develop a mentoring relationship
• Maintain contact with training ‘buddies’
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Recommended Further ReadingsRecommended Further Readings
1. Donald Kirkpatrick, Evaluating Training Programs : The Four Levels,
Berrett-Koehler Publishers
2. Jack J. Phillips and Patricia Phillips, In Action : Measuring Return On
Investment, American Society for Training & Development
3. Mary Broad and John Newstrom, Transfer of training: Action Packed
Strategies to Ensure High Payoff from Training Investments, Addison-
Wesley.
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