Executive Summary A Study on Return on Investment of ... - Vikalpa

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<strong>Executive</strong> 

<strong>Summary</strong> 

KEY WORDS 

ROI Evaluation 

Training Programme 

Government Enterprise 

Indian Oil Corporation 

India 

A <strong>Study</strong> on Return on Investment 

of Training Programme in a 

Government Enterprise in India 

K S Subramanian, Vinita Sinha and Priya D Gupta 

Return on investment (ROI) has become one of the most challenging and intriguing 

issues facing the human resources development (HRD) and performance improvement 

fields. With ROI, decision makers evaluate investments by comparing the magnitude 

and timing of expected gains to the magnitude and timing of investment costs. 

A good ROI means that investment returns compare favourably to investment costs. 

This study is aimed at testing the feasibility of a Return on Investment (ROI) model in 

the context of a training programme in the Indian Oil Corporation (IOC), a government 

organization, to see whether the success of a training programme can be measured 

more accurately in monetary terms. It is meant to enable the management to 

understand the direct impact on the business bottom-line as a causal effect of the 

training imparted and to decide whether to continue or discontinue the programmes. 

IOC conducted in-house training programmes in 2004 which included a blend of behavioural 

and functional training. The programmes conducted at this organization 

were evaluated using the most comprehensive evaluation models and discussed in 

terms of return on investment. The two programmes chosen for the study were: The 

Threshold Programme and the Excellence in Project Management, each having 30 

participants. 

The ROI analysis plan document captures information on several key issues necessary 

to develop the actual ROI calculation: 

• Significant data items 

• The method for isolating the effects of the training and education programme 

• The method for converting data into monetary values 

• The cost categories, noting how certain costs should be prorated 

• The anticipated intangible benefits 

• The communication targets to receive the information 

• Other issues or events that might influence programme implementation. 

With a proper planning around a proven framework, realistic evaluation targets, and 

shared responsibilities for major steps, the ROI process can be implemented in a costeffective, 

systemic manner and can assist the resource-constrained training function 

to reap financial benefits that leaders understand and have come to expect. It is now 

strategically imperative that training be conducted with the clear understanding that 

if people are truly the organization’s greatest asset, then training is beyond doubt, the 

greatest investment and must hence be utilized wisely. 

VIKALPA • VOLUME 37 • NO 1 • JANUARY - MARCH 2012 31

Return on investment (ROI) has become one of 

the most challenging and intriguing issues 

facing the human resources development (HRD) 

and performance improvement field. The interest in ROI 

during the 1990s was phenomenal, more so in the new 

millennium. This topic appears on almost every HRD 

conference and convention agenda. Articles on ROI appear 

regularly in HRD practitioner and research journals. 

Several books have been developed on the topic 

and consulting firms have sprung up almost overnight 

to tackle this critical and important issue. 

ROI is one of the several approaches to evaluating and 

comparing investments. With ROI, decision makers 

evaluate investments by comparing the magnitude and 

timing of expected gains to the magnitude and timing 

of investment costs. A good ROI means that investment 

returns compare favourably to investment costs. In the 

last few decades, this approach has been applied to asset 

purchase decisions (computer systems, factory 

machines, or service vehicles, for example), “go-no-go” 

decisions for projects and programmes of all kinds (including 

marketing, recruiting, and training programmes), 

and to more traditional investment decisions 

(such as the management of stock portfolios or the use 

of venture capital). 

WHY MEASURE ROI OF A 

TRAINING PROGRAMME? 

Several issues are driving the increased interest in, and 

application of, the ROI process, the most common being: 

• the pressure from clients and senior managers which 

show that the return on their training investment is 

probably the most influential drive 

• the competitive economic pressures that are causing 

intense scrutiny of all expenditures 

• the general trend towards accountability with all staff 

support groups that is causing some HRD departments 

to measure their contribution 

• to justify the existence of the training department by 

showing how it contributes to the organization’s objectives 

and goals 

• to decide whether to continue or discontinue the 

training programmes. 

BENEFITS OF ROI 

Measures Contribution – ROI makes it possible for the 

HRD staff to know the specific contribution from a se- 

32 

lect number of programmes. It can determine if the benefits 

of the programme, expressed in monetary terms, 

have outweighed the costs and thus whether it has made 

a contribution and is actually a good investment or not. 

Sets Priorities – By calculating ROIs in different areas, 

one can determine which programmes contribute the 

most to the organization, allowing priorities to be established 

for high-impact training. 

Focuses on Results – Measurement of ROI is a resultbased 

process which brings a focus on results with all 

programmes. The process requires instructional designers, 

facilitators, participants, and support groups to concentrate 

on measurable objectives – what the programme 

is attempting to accomplish. Thus, the process has the 

added benefit of improving the effectiveness of all the 

training programmes. 

Alters Management Perceptions of Training – The ROI 

process, when applied consistently and comprehensively, 

can convince the management group that training 

is an investment and not an expense. Managers will 

see training as making a viable contribution to their objectives, 

thus increasing the respect for the function. This 

is an important step in building partnership with management. 

BASIC ROI ISSUES AND TRENDS 

Many professionals argue that most models of the ROI 

process ignore or provide very little insight into two key 

elements essential to developing the ROI: 

• Isolating the effects of training 

• Converting data into monetary values 

While most executives can logically conclude that training 

can pay off in important bottom-line measures such 

as productivity improvements, quality enhancements, 

cost reduction, and time savings, frustration comes from 

the lack of evidence to show that the process is really 

working. Organizations have moved from training for 

activity to training with a focus on bottom-line results 

and this shift is evident from the beginning to the end of 

the process. 

The ROI Analysis Plan 

The ROI analysis plan is a continuation of the data collection 

plan. This plan document captures information 

on several key issues necessary to develop the actual 

A STUDY ON RETURN ON INVESTMENT OF TRAINING PROGRAMME IN A GOVERNMENT ENTERPRISE IN INDIA

ROI calculation. The key issues include: 

• Significant data items, usually Level 4 (Business Impact), 

but in some cases could include Level 3 (Application 

and Implementation) data. However Five 

levels of measurement are said to be currently in practice, 

(Phillips, 1997a) (Annexure 1) 

• The method for isolating the effects of the training 

and education programme 

• The method for converting data into monetary values 

• The cost categories, noting how certain costs should 

be prorated 

• The anticipated intangible benefits 

• The communication targets to receive the information 

• Other issues or events that might influence programme 

implementation. 

These two planning documents are necessary to successfully 

implement and manage the ROI process. 

Criteria for an Effective ROI Process 

The following criteria were developed for an effective 

ROI process with inputs from hundreds of education 

and training managers and specialists (Phillips, 1997a). 

• It must be simple, void of any complex formula. 

• It must be economical with the capability to become 

a routine part of training and development without 

requiring any additional resources. 

• The assumptions, methodology, and techniques used 

must be credible. 

• Ideally, the process must strike a balance between 

maintaining a practical and sensible approach and a 

sound theoretical base for the process. 

• The ROI process must account for other factors that 

influence the output variable. 

• The ROI process must be applicable to both hard and 

soft data. 

Post-1990, when the economy was liberalized, the country 

was given firm indications that it would no longer 

be functioning in a closed, regulated, and secure environment 

and that it would eventually have to face the 

open market forces. If a company had to survive in such 

an environment, it would require a drastic change right 

from the roots. A lax, laid-back organization would have 

to re-invent itself into a more competitive player in the 

industry and a force to reckon with in order to re-invent 

itself. IOC used training as a major tool to change the 

attitude sets and skill levels of its employees. Conducting 

programmes all over the country right through the 

year, it has succeeded in not only holding its own in 

today’s dynamic business environment, but has also 

ventured into businesses outside the country successfully. 

Training Vision 

• Be a learning organization, and inculcate skills and 

competencies required for becoming a transnational, 

integrated energy company and for value creation 

for the stakeholders. 

Training Mission 

• Develop employees by enhancing their knowledge, 

skills, and competencies in functional areas – general, 

strategic management, and advanced functional 

management, in line with the business of the company. 

• Provide post-experience management education for 

renewal of executives to global standards. 

• Achieve and sustain customer respect through worldclass 

products and services. 

• Sustain learning environment through creativity, 

competence, and recognition of contribution. 

SURVEY OF RELATED LITERATURE 

Many organizations around the globe are using costsaving 

approaches so that they can begin conducting 

ROI evaluation within their current budget while others 

are using such approaches in order to increase the 

number of ROI studies they conduct. General cost saving 

approaching for measuring programmes at the ROI 

level introduced by Phillips (1997a) have been proven 

to significantly decrease resource requirements while 

still providing sound, credible data. Despite these factors, 

establishing an evaluation culture is no easy task. 

In many ways, implementing a system-wide ROI effort 

is similar to implementing a large-scale change initiative. 

The concept of ROI has been used for centuries. The 75th 

anniversary issue of Harvard Business Review (HBR) 

traced the tools used to measure the results in organizations. 

In the early issues of HBR, during the 1920s, ROI 

was the emerging tool to place a value on the payoff of 

investments. In recent years, the application of the con- 


cept has been expanded to all types of investments including 

training and education, change initiatives, and 

technology (Phillips, 2000a). With increased adoption 

and use, it appears that ROI is here to stay. Today, hundreds 

of organizations, representing manufacturing, 

service, non-profit, and government, are routinely using 

ROI calculations for education and training programmes. 

A professional society, The ROI Network, 

with over 500 members, allows practitioners an opportunity 

to share information and tools around ROI. The 

networks have been formed within the organizations to 

focus on the ROI and accountability issue. Almost 1,000 

individuals have been certified to implement the process 

in their organizations. Three casebooks have been 

developed to show specific applications of ROI (Phillips, 

1994; 1997; 2000c). A fourth casebook describes successful 

implementation of the ROI process (Phillips, 1998). 

This level of interest and activity is evidence that the 

ROI process is here to stay. 

There are good reasons why return on investment is so 

significant. Although the viewpoints and explanations 

may vary, some things are very clear. First, in most organizations, 

education and training budgets have continued 

to grow year after year. As expenditures grow, 

accountability becomes a more critical issue. A growing 

budget creates a larger target for internal critics, often 

prompting the development of an ROI process. 

Second, Total Quality Management and Continuous Process 

Improvement have drawn increased attention to 

measurement issues. Today, organizations measure processes 

and outputs that were not previously measured, 

monitored, and reported. This measurement focus has 

placed increased pressure on the education and training 

function to develop measures of programme success. 

A paper (Buckberry, 2004) has been developed to provide 

to members of Computer Education and Management 

Association (CEdMA) some basic introductory 

information and ideas to assist in the preparation of their 

own customized ROI processes. CEdMA’s clients are 

typically purchasers of IT software and hardware, and 

CEdMA members are responsible for the provision of 

training to these clients. The question this paper addresses 

is, “How do we help customers understand and 

justify for themselves the need to invest properly and 

comprehensively in training, and how do we present 

the comparative benefits of different approaches to training?” 

Implementing some form of measurement proc- 

34 

ess is as important for managing training programmes 

and investment, as it is for any other project requiring 

significant financial investment by a business. Training 

programmes consume resources (i.e., they take people’s 

time and money), but they are also critical to maximizing 

the return on investment in other programmes or 

products (e.g., the effective introduction of software systems 

requires users to be able to use the systems effectively 

if the potential benefit of the software systems is 

to be realized in practice), as well as generally improving 

the productivity of the workforce. If ROI is to be 

successfully managed and measured, it is important that 

the process be included early in the planning cycle for 

the training programmes. (Buckberry, 2004). 

A study was conducted by Reed (1986) to determine the 

net impact of Job Training Partnership Act (JTPA) training. 

(A measure of net impact expresses only those gains 

due to training and not those due to other reasons.) Job 

service applicants were chosen as a comparison group 

whose recent labour market experiences would parallel 

those of JTPA participants. All results were positive. For 

men who participated in JTPA in 1983-84, the estimated 

effect of training was an additional $1,400 earned during 

1985. It appeared likely that the benefit persisted in 

1986. For white women, the estimated effect of training 

was an additional $1,000 earned in 1985. A separate estimate 

of the impact on earnings was made for recipients 

of Aid to Families with Dependent Children 

(AFDC). For them, the effect was an additional $1,200 in 

1985 earnings. Because their initial earnings were so low, 

this amounted to approximately 100 per cent of the 1979 

income. The reduction in AFDC grant amounts attributable 

to training was another measure of impact used. 

Twelve months after enrollment, AFDC recipients who 

participated in training were 86 per cent more likely not 

to be receiving assistance than were their counterparts 

who did not participate. 

Collins, Collins and Jensen (2009) concluded from their 

study that wisely allocating financial resources is essential 

to the success of every health care organization. 

Therefore, health care managers must be able to determine 

if dedicating the necessary funds for employee 

training results in an adequate return on investment. 

This case study examines how training programmes can 

be evaluated in terms of business results and describes 

one method, simple regression analysis that health care 

managers may use, to help determine if the training was 

financially beneficial to the organization. 


Philips and Philips (2009) describe the ROI methodology, 

a measurement process that was developed almost 

30 years ago and refined over the years to the point that 

it is now becoming a staple for many HR functions. 

During difficult times in the economy, nothing is more 

important to top executives than knowing the true value 

of a particular project or programme. “Show me the 

money” has become a battle cry for many executives 

demanding that any new HR project or programme 

shows its value even before it is implemented and, certainly, 

the impact and return on investment (ROI) after 

it has been implemented. Around the globe, HR executives 

are taking a look at the ROI process as a way to 

show credible values, including financial ROI. This article 

describes why and how ROI is used to show the contribution 

of HR programmes and improve them further 

so that they can add more value, build support for HR, 

enhance commitments, and concretize important business 

relationships. This method can be used to show the 

value of major programmes and projects and establish 

HR as a business partner. With the ROI process, the HR 

staff and the client would know the specific contribution 

of an HR programme. 

METHODOLOGY 

Objectives 

This study is aimed at testing the feasibility of a Return 

on Investment (ROI) model within the organization so 

that the success of a training programme or a set of training 

programmes can be measured more accurately in 

monetary terms, thus enabling the management to understand 

the direct impact on the business bottom-line 

as a causal effect of the training imparted. 

Variables 

Independent Variable: The effects of behavioural and 

functional training imparted to the employees have been 

coined as independent variable. IOC used training as a 

major tool to change the attitude sets and skill levels of 

its employees. It conducted 2,434 in-house training programmes 

which included a blend of behavioural and 

functional training. The training was intended to develop 

employees by enhancing their knowledge, skills, and 

competencies in functional areas/general/strategic 

management and advanced functional management, in 

line with the business of the company. 

Dependent Variable: Change in the attitude sets and skill 

levels of the employees and direct impact on the business 

bottom-line have been considered as dependent 

variable in the present study. It includes change in 

knowledge, skills, and competencies enhancement in 

functional areas as well as change in attitude and the 

behavioural aspects of the employees. 

Programmes/Sample 

The two programmes chosen for the study were: 

1) Threshold Programme (30 Participants) 

2) Excellence in Project Management Programme (30 

Participants) 

Threshold Programme 

This particular programme was chosen for the purpose 

of ROI calculation since this is one of Indian Oil’s most 

elite programmes. The programme has been designed 

to enhance the general management skills of senior managers 

of the company and to help them acquire a comprehensive 

strategic perspective so that they are 

prepared to lead the organization with confidence to 

meet the emerging challenges. This is the programme 

where the best of the best are trained to enable them to 

cross over from middle management into the rungs of 

top management. 

Excellence in Project Management Programme 

Due to the increased investment envisaged by the corporation 

to meet the current challenges in technological, 

environmental, and customer expectations in terms 

of quality in delivery, the Excellence in Project Management 

Programme becomes one of the most vital ingredients 

in the recipe for success. 

Collecting Post-Programme Data 

The questionnaires for “Threshold Programme Evaluation” 

and “Excellence in Project Management Programme” 

(Refer to Annexure 3) have been implemented 

to ascertain the degree of success in meeting the objectives 

of the training programme at IOC. 

Converting Data into Monetary Benefits 

Several methods such as calculating the cost of quality, 

using historical costs, and internal and external experts’ 

inputs and converting employee time could have been 

used but due to lack of time and data, the method chosen 

for this study was to use the estimates from participants. 


In some situations, programme participants are capable 

of estimating the value of a soft data improvement. This 

method seems appropriate when participants are capable 

of providing estimates of the cost (or value) of the 

unit of measure improved by applying the skills learned 

in the programme. The advantage of this approach is 

that the individuals closest to the improvements are also 

often the ones most capable of providing the most reliable 

estimates of its values. 

Estimating Programme Costs 

Most of the data relating to programme costs was available 

from the Project Completion Reports of the programmes. 

The only additional cost which has been 

included is the cost of participants’ time which had not 

been previously taken into account. This element has 

been considered while trying to estimate programme 

costs because this represents the time that the participants 

have spent attending the programme which they 

would have otherwise spent at the workplace. The CTC 

(cost to company) of the participants represent an expense 

that should be included. For situations where the 

programme has been conducted, these costs can be estimated 

using average or midpoint values for salaries in 

typical job classifications (Tables 1 and 2). 

Table 1: Costs Considered in the Threshold Programme at IOC 

36 

Notes on Cost Evaluation 

1) The cost of conducting needs assessment has been 

excluded from the costs. This might include time of 

staff members conducting the needs assessment, direct 

fees and expenses for external consultants who 

conduct the needs assessment and internal services 

and supplies used in the analysis. 

2) A final charge is the cost of overhead, the additional 

costs in the training function not directly related to 

any particular programme. Typical items might include 

the cost of clerical support, the departmental 

No. Cost Element Amount Consolidated Amount 

(Rupee Value) (Rupee Value) 

1 Faculty Honorarium: 

Vedanta 7,500 

Thomas Intl. 29,160 

APTECH 12,900 

Comp. Update 20,000 

IIM-A 11,98,800 12,68,360 

2 Stay @ Rs. 1,500/- per day/participant for 22 SMs/CMs and @ 

Rs. 2,400/- for 8 DGMs for 28 days 

8,01,600 

3 Catering @ Rs. 125/- per day/participant for 30 persons for 28 days 1,05,000 

4 Photocopying 43,000 

5 Stationary incl. Ties and Bags 18,220 

6 Air Travel and Local Travel (If borne by IIPM) 5,000 

7 Others: (Foreign Module) 

a. Air Fare @ Rs. 35,726 for 31 people 11,07,506 

b. Visa + Ins. @ Rs. 2,700 for 31 people 8,37,000 

c. Foreign Allowance (27 people + 1 coordinator) 24,14,250 43,58,756 

8 Cost of participants’ time @ Rs. 90,000 per participant 

(assumed average CTC) 

27,00,000 

Total 92,999,36 

Source: HR (Dept.), IOC. 

Table 2: Costs Considered in the Excellence in Project 

Management Programme at IOC 

No. Cost Element Consolidated 

Amount 

(Rupee Value) 

1 Faculty honorarium 19,200 

2 Stay @ Rs. 1,500 per day/participant 1,68,000 

3 Catering @ Rs. 125 per day/participant 14,875 

4 Photocopying, stationary and brochure 27,500 

5 Air and local travel 34,755 

6 Photography and books 3,850 

7 Cost of participants’ time @ Rs. 8,000 

per participant (assumed average CTC) 

2,40,000 

Total 5,08,180 

Source: HR (Dept.), IOC. 


office expenses, salaries of training managers, and 

other fixed costs. Organizations might obtain an estimate 

for allocation by dividing the total overhead 

by the number of programme participant days for 

the year. For the sake of simplicity, such allocation 

of overheads has been excluded from programme 

cost tabulation. 

Calculating the Return 

The return has been calculated in three different ways: 

The Threshold Programme 

1) Benefits/Costs Ratio 

This is calculated as follows: 

Programme Benefits 

BCR = 

Programme Costs 

32,50,000 

= 

15,49,989 

= 2.097 

2) ROI Formula 


(Programme Benefits — 

Programme Costs) 

ROI(%) = 


(32,50,000 – 15,49,989) 

x 100 

= 

15,49,989 

x 100 

= 109.68% 

3) Payback Period 

Payback Period = 

Total Investment 

Annual Savings 

15,49,989 

= 

17,00,011 

= 0.91 years or 

11 months (approx) 

Net Benefits - Costs Breakup 

Net 

Benefits 

Costs 

Benefits/Costs Ratio 

Calculation of Return* 

One of the earliest methods for evaluating training investments 

is the benefits/costs ratio (BCR). This method 

compares the benefits of the programme to the costs in 

a ratio. 

BCR = 

Excellence in Project Management Programme 

1) Benefits/Costs Ratio 



BCR = 


9,87,750 

= 

1,86,333 

= 5.3 

2) ROI Formula 


(Programme Benefits — 

Programme Costs) 

ROI (%) = 


(9,87,750 – 1,86,333) 

x 100 

= 

1,86,333 

x 100 

= 430% (approx) 

3) Payback Period 




1,86,333 

= 

8,01,417 

= 0.23 years or 

3 months (approx) 

Net Benefits - Costs Breakup 



In simple terms, BCR compares the annual economic 

benefits of the programme to the costs of the programme. 

Net Benefits 

* The costs of both programmes have been adjusted on the basis of usable responses received. For example, there were thirty participants in the 

Threshold Programme but only five usable responses were received. Therefore, the cost taken into consideration for the programme was onesixth 

of the total cost incurred. 

VIKALPA • VOLUME 37 • NO 1 • JANUARY - MARCH 2012 37 

Costs

A BCR of one means that the benefits equal the costs. A 

BCR of two, usually written as 2:1, indicates that for each 

rupee spent on the programme, two rupees were returned 

as benefits. 

ROI Formula 

Perhaps the most appropriate formula for evaluating 

training investments is net programme benefits divided 

by cost. The ratio is usually expressed as percentage 

when the fractional values are multiplied by 100. ROI 

can thus be expressed as: 

38 

Net Programme Benefits 

ROI (%) = x 100 


The ROI value is related to the BCR by a factor of one. 

This means, for example, that a BCR of 2.56 is the same 

as an ROI value of 156 per cent. An ROI on a training 

investment of 60 per cent means that an additional 60 

per cent of the costs are reported as ‘earnings’. An ROI 

on training investment of 150 per cent indicates that the 

costs have been recovered and an additional 1.5 multiplied 

by the costs is captured as ‘earnings’. 

Payback Period 

The payback period is a common method for evaluating 

capital expenditures. With this approach, the annual 

cash proceeds (savings) produced by the investment are 

equated to the original cash outlay required by the investment 

to arrive at some multiple of cash proceeds 

equal to the original investment. Measurement is usually 

in term of years or months. 




DATA ANALYSIS AND RESULTS 

The calculations are based on a series on impact questions. 

Five adjustments are made to ensure that the data 

is credible and accurate: 

1) The participants who do not complete the questionnaire 

or provide usable data on the impact questions 

are assumed to have made no improvement. 

2) Extreme and unrealistic data have been omitted. 

3) Only annualized values are used as requested in the 

responses. 

4) The values are adjusted to reflect the confidence level 

of participants. 

5) The values are adjusted for the amount of the improvement 

related directly to the programme. 

These five adjustments create a very credible value that 

is usually considered to be an understatement of the 

benefits accrued due to the training imparted. Tables 3 

and 4 give the estimates of training impact from participants 

in the different programmes. 

LIMITATIONS OF THE STUDY 

The method chosen to isolate the impact of training is 

meant to obtain information directly from the programme 

participants. The effectiveness of this approach 

rests on the assumption that participants are capable of 

determining or estimating how much of a performance 

improvement is related to the training programme. This 

is one of the major methodological limitations of such 

studies. Erroneous, incomplete, and extreme information 

could have distorted the analysis. While calculating 

ROI through this method, the participants should 

know how much of the change was caused by applying 

their learning from the programme. 

Apart from this, the following limitations have been figured 

out in the present study: 

1) The exact figure for cost of participants’ time was not 

available. Hence there is a possibility that the estimations 

made are not accurate. 

2) Suitable responses from all the participants were not 

available. This means that the effectiveness of both 

training programmes taken into consideration has 

been an extrapolation of the responses, which were 

made available. The assumption here is that similar 

benefits would have accrued from the participants 

who did not make their response available. 

3) There was no possibility of even experimenting with 

the control groups since the project commenced posttraining. 

4) The participants of both the programmes were posted 

all over the country, making distance a barrier for 

conducting in-depth interviews. 

The presence of participants across the nation also made 

it difficult to obtain post-training data from more than 

one source, i.e., the participants themselves. This was a 

unique problem that was uncovered particularly with 

the Threshold Programme participants. Since they primarily 

occupy high leadership positions, they do not 


Table 3: Estimates of Training Impact from Participants in the Threshold Programme 

Participant Improvement Basis Confidence Isolated Effect Conservative 

(Rupee Value) Level(%) Percentage Integration 

Estimate(%) (Rupee Value) 

1 30,00,000 Better decision making 30 50 4,50,000 

2 25,00,000 Efficient management 60 40 6,00,000 

3 20,00,000 Quick and accurate decisions 40 80 6,40,000 

4 40,00,000 Efficient handling of situations and 30 70 8,40,000 

increased teamwork within department 

5 30,00,000 Good decisions 60 40 7,20,000 

Total Benefits 32,50,000 

Table 4: Estimates of Training Impact from Participants in Excellence in Project Management Programme 

Participant Improvement Basis Confidence Isolated Effect Conservative 

(Rupee Value) Level (%) Percentage Integration 

Estimate(%) (Rupee Value) 

1 1,60,000 Additional Sales 90 50 72,000 

2 3,00,000 Decreased time overruns 60 50 90,000 

3 3,00,000 Reduced cost of rework 70 60 1,26,000 

4 2,00,000 Minimizing startup hiccups 50 50 50,000 

5 2,75,000 Reduced maintenance problems 60 40 66,000 

6 3,00,000 Increased site effectiveness 70 50 1,05,000 

7 4,00,000 Reduced maintenance problems 80 40 1,28,000 

8 2,00,000 Reduced project time 70 50 70,000 

9 3,50,000 Reduced on-site problems 85 50 1,48,750 

10 1,40,000 Efficient time and labour management 50 60 42,000 

11 1,50,000 Under budget 100 60 90,000 

Total Improvement 9,87,750 

have any activity within their purview which directly 

impacts the bottom line of the organization. It is generally 

their ability to handle the employees, who directly 

boost the bottom line well, which is their real contribution. 

This indirect effect makes quantifying the benefits 

derived due to training rather difficult. 

RECOMMENDATIONS AND IMPLICATIONS 

FOR FUTURE RESEARCH 

• For organizations implementing the ROI concept for 

the first time, it is recommended that only one or two 

courses be selected for an initial calculation, as a learning 

process (Phillips, 1997). 

• If appropriate and feasible, participants should receive 

prior communication about the requirement for 

a follow-up questionnaire. This minimizes some of 

the resistance to the process, provides an opportunity 

to explain in some more detail the circumstances 

surrounding the evaluation, and positions the followup 

evaluation as an integral part of the programme – 

not as an add-on activity that someone initiated three 

months after the programme. 

• Management involvement at the local level might 

prove critical to the response rate success. Managers 

can distribute the questionnaires themselves, make 

reference to the questionnaire at staff meetings, follow 

up to see if the questionnaire has been completed 

and generally show the support for completing the 

questionnaire. This direct supervisor support might 

cause some participants to respond with usable data. 

• Even if it is an abbreviated form, participants should 

see the results of their study. More importantly, participants 

must understand that they will receive a 

copy of the study when they are asked to provide 

the data. This promise might increase the response 

rate, as some individuals want to see the results of 

the entire group along with their particular input. 

• It is difficult to evaluate an entire HRD function such 

as management development, career development, 

executive education or technical training within the 

ROI umbrella. ROI is more effective when applied to 

one programme that can be linked to a direct payoff. 


For this reason, ROI evaluation must be a micro-level 

activity that will usually focus on a single programme 

or a few tightly integrated programmes. This decision 

to evaluate several programmes or just one programme 

should include consideration of the objectives 

and timing of the programme. Attempting to 

evaluate a group of programmes conducted over a 

long period becomes quite difficult. The cause and 

effect relationship becomes more confusing and complex. 

• Incentives might be used to obtain a greater response 

results from the participants. For example, one might 

pin a ten rupee note to the questionnaire and add a 

heading on the questionnaire which states “Please 

fill out this form over a cup of coffee”. Another incentive 

might be to send a pen along with the questionnaire 

along with a note which states “Kindly use 

this pen to fill out the form”. These methods have 

been known to boost response rates. 

CONCLUSION 

Any organization wanting to improve systems, procedures, 

or even attitudes must plan accordingly. This 

planning must be integrated and aligned with the business. 

The effort to use training as a tool to help balance 

an organization in a dynamic environment must be continuous. 

There must be constant matching of individual and organizational 

needs in a system which is biased towards 

neither. Once this matching is completed and training 

programmes carried out, it is then not only important 

to evaluate the training but to realize how much it has 

boosted the bottom line. Here is where the ROI comes 

to the fore possibly on helping management realize that 

training is truly an investment and not an expense. 

Annexure 1: Five Levels of ROI Evaluation 

40 

Training can no more be a mundane task which exists 

because it always has. It is now strategically imperative 

that training be conducted with the clear understanding 

that if people are truly the organization’s greatest 

asset, then training is beyond doubt, the greatest investment 

and must hence be utilized wisely. 

By evaluating training programmes with the ROI in 

mind, training functions can be perceived in a more credible 

light. Programmes aligned with organization strategy 

are offered, while others that add little value are 

redesigned and sometimes eliminated. With proper 

planning around a proven framework, realistic evaluation 

targets, and shared responsibilities for major steps, 

the ROI process can be implemented in a cost-effective, 

systemic manner and can assist the resource-constrained 

training function to present their work in terms of financial 

benefits that leaders understand and have come 

to expect. Specifically, part one of this ROI series emphasized 

the following cost-savings approaches: 

1. Plan for evaluation early in the process 

2. Build evaluation into the training process 

3. Share the responsibilities for evaluation 

4. Require participants to conduct major steps 

5. Use short-cut methods for major steps. 

Part two will continue to describe practical application 

of five additional cost-saving approaches to ROI implementation: 

6. Use sampling to select the most appropriate programmes 

for ROI analysis 

7. Use estimates in the collection and analysis of data 

8. Develop internal capability 

9. Streamline reporting 

10. Utilize technology. 

The evaluation levels categorize data, reporting a chain of impact as reaction leads to learning, to application, to 

impact, and to return on investment. 

ROI Evaluation Level Measurement Focus 

1. Reaction & Planned Action Measures participant satisfaction with the programme and captures planned actions 

2. Learning Measures changes in knowledge, skills, and attitudes 

3. Application and Implementation Measures changes in on-the-job behaviour and progress with application 

4. Business Impact Captures changes in business impact measures 

5. Return on Investment Compares programme monetary benefits to the programme costs. 

Source: Phillips, 1997. 


Annexure 2: Training at IOC 

IOC conducts on an average approximately 2,000 training 

programmes per year which are conducted in-house, 

leveraging expert faculty from renowned institutes/organizations 

and well-trained business leaders from 

within the company. The training plan contains a variety 

of programmes which meet intrinsic needs of different 

functions. Some of the programmes are made 

mandatory at the corporate level such as ‘Vigilance 

Awareness Programme,’ ‘Communication & Presentation 

Skills,’ ‘Gender Sensitivity Programme,’ and ‘Security 

Sensitization’. However, majority of the Divisions 

carry out additional programmes based on ‘Here and 

Now Needs’ of the customer divisions such as ‘Safety 

and Hazardous Operations,’ ‘Safety Integrated Learning’, 

‘Hydrotreatment Processes for Middle Distillates,’ 

and ‘Treasury Management.’ 

Training Strategy 

• Align and integrate learning with the company’s 

business. 

• Identify skill and competency gaps at all levels and 

create groups for delivering in-house trainings. 

• Identify courses outside IOC/India and depute key 

employees handling new technology, practices or 

new business to attend these courses. 

• Set up a world-class institute for creating critical mass 

of highly trained middle and senior level executives 

for occupying top level positions to the organization 

and the industry/nation. 

• Set up a learning centre for training of marketing 

executives on customer-orientation, marketing of 

products and other marketing specific programmes. 

• Organize cutting-edge training on quality, cost, attitude, 

customer service and communication network. 

• Conduct brain-storming sessions with the key executives, 

senior and middle management groups, unions 

and working levels, for deciding strategies for 

the changed scenario and involvement of employees. 

• Organize regular interaction with top management 

for deliberations on specific issues in an organized 

way. 

• Impart training to senior top managers in advance 

technologies and latest managerial tools and techniques 

for maintaining cutting edge of the organization 

and developing leaders with all-round qualities. 

• Have multi-pronged communication about the imminent 

competition across the organization on a 

regular basis and Enterprise Resource Planning Solutions 

and related training. 

• Focus on quality, ISO Certification/accreditation, 

adoption of Business Excellence Model by strategic 

business units and benchmarking with national/international 

training providers. 

• Train critical position holders extensively in India and 

abroad to handle business ambiguities and complexities 

and gear up for the new business outside India. 

• Develop in-house Petroleum based international 

MBA programme with in-built foreign module to create 

a global mindset and entrepreneurial qualities 

among executives. 

• Depute sizable number of executives for MBA courses 

in other Institutes of India for creating a mix of 

executives with general MBA and petroleum-based 

MBA. 

• Conduct Management Development Training Programmes 

in niche business schools in India and 

abroad for understanding global business trends. 

• Make a paradigm shift from ‘Supply and Distribution’ 

to ‘Marketing Strategies and CRM’ 

• Train <strong>Executive</strong>s for business integration, diversification, 

and entering into joint ventures and handling 

newly acquired companies. 

Focus Areas of Training 

Corporate Focal Area 

• Strategic and General Management 

• Operations & Technology Management 

• Finance Management 

• Human Resource Management & Organizational 

Behaviour related courses 

• Information Technology & Enterprise Resource Planning 

related trainings (SAP) 

• Marketing Management 

• Internal Audit, Security and Vigilance 

• Gender Sensitization 

• Women Development 

Refineries Division 

• Projects Management 

• Operations Management 

• Programmes on Quality Initiatives 

• Maintenance and Inspection 

• Fire and Safety 


• Product Customization 

• Petrochemicals 

• Materials Management 

• Human Resource Management 

• Finance and Accounting Management 

• Tendering Procedure and Contracts Management 

• Information Systems Management 

• Corporate Communications and Media Management 

• General Management courses such as: <strong>Executive</strong> 

Stress Management, YOGA for Good Health and Rejuvenation 

Marketing 

• Engineering Services 

• Customer Orientation 

• Brand Management and CRM 

• Productivity Courses 

• Marketing Strategy and Market Research: Tools and 

Techniques 

• Quality Programmes 



• Supply and Distribution courses 

• Simulation Games 

• Fire and Safety Management 

• Information Systems Management 

Annexure 3: Questionnaires for Programme Evaluation 

42 

Pipelines 

• Transportation Management 

• Operations of Pipelines 

• Fire and Safety Management 

• Materials Management 

• Maintenance and Upkeep of Pipelines/Pumps 



• Contracting and Tendering 

• Total Quality Management 

R&D 

‘Threshold’ Programme Evaluation 

• R&D Management 

• Purchase and Work Procedures 

• Best Practices and Benchmarking 

• Creativity and Innovation 

• Product Knowledge 

• Analytical Techniques in Petroleum Analysis 

• Basics of Tribology 

• Oily Sludge Management 

• New Environmental Regulations 

• Fundamentals of Lubrications 

• Petroleum Refining Technology 

• Hydroprocessing Workshop 

1) Listed below are the objectives of the ‘Threshold’ programme. After reflecting on the programme, please indicate 

the degree of success in meeting the objectives: 

As a result of this programme, participants will be able to: 

a. Develop a general management orientation through 

highlighting the inter-linkages across decisions in 

functional area 

b. Strengthen the understanding of key issues and 

challenges in strategy formulation and implementation 

c. Enhance the awareness about the threats, constraints 

and opportunities that have arisen from operating 

in increasingly deregulated product, services and 

resource markets 

d. Sensitize the participants to the need to create value 

through appropriate corporate actions for long-term 

survival and growth of the organization 

Failed Limited Generally Completely 

Success Successful Successful 


2) Please rate on a scale of 1-5, the relevance of each of the programme elements to your job by indicating (1) not 

relevant and (5) very relevant 

Interactive Activities 

Group Discussions 

Networking Opportunities 

Reading Materials / Video 

Programme Content 

1 2 3 4 5 

3) Please indicate the degree to which your use of the following actions was enhanced as a result of your participation 

in the training programme: 

Taking decisions with a sound analysis 

of the same 

Making the unit/department more 

market-oriented 

Focusing on customer analysis and 

customer value 

Effectively using the information 

technology within the organization 

Understanding and managing co-workers 

and superiors 

Effectively measuring and managing risk 

Engaging in vertical integration, diversification 

and/or mergers and acquisitions 

Ability to envision for your organization 

Enhancing your leadership traits 

Better handling the competition faced by 

your company 

No Little Some Significant Momentous No 

Change Change Change Change Change Opportunity 

to Use Skill 

4) Please identify any specific accomplishments that you can link to this training programme (on time schedules, 

project completion, response times, etc) 


5) What specific value in Indian Rupees can be attributed to the above accomplishments/ improvements (use first 

year values only)? While this is a difficult question, try to think of specific ways in which the above improvements 

can be converted into monetary units. Please indicate the basis for your calculation. 

44 

INR 

Basis: 

6) What level of confidence do you place on the above estimations? % 

(0% = No Confidence, 100% = Certainty) 

7) Other factors generally tend to affect performance as well. Please indicate the % 

per cent of the above improvements that is related directly to this programme. 

8) Indicate the extent to which you think this programme has influenced each of these measures in your work unit, 

department or business unit: 

Productivity 

Customer Response time 

Cost Control 

Employee Satisfaction 

Customer Satisfaction 

Quality 

Other 

No Some Moderate Significant Momentous 

Influence Influence Influence Influence Influence 

9) What barriers, if any, have you encountered that have prevented you from using skills or knowledge gained in 

this programme? 

10) What specific suggestions do you have for improving the programme? 


‘Excellence in Project Management’ Programme Evaluation 

1) Listed below are the objectives of the ‘Excellence in Project Management’ programme. After reflecting on the 

programme, please indicate the degree of success in meeting the objectives: 

As a result of this programme, participants will be able to: 

Grasp the concepts of Project Management in the 

current scenario 

Grasp the latest trends in Project Management for 

optimum utilization of resources available for the projects 

Reduce the execution time by using modern construction 

equipment 

Identify key factors for improvement in time, cost and 

quality of projects 

Failed Limited Generally Completely 

Success Successful Successful 

2) Please rate on a scale of 1-5, the relevance of each of the programme elements to your job by indicating (1) not 

relevant and (5) very relevant 

Interactive Activities 

Group Discussions 

Networking Opportunities 

Reading Materials / Video 

Program Content 

1 2 3 4 5 

3) Please indicate the degree to which your use of the following actions was enhanced as a result of your participation 

in the training programme: 

Minimizing the non-contributing actions 

per project 

Arranging the site for maximum 

effectiveness 

Assigning appropriate work for involved 

employees 

Dealing with problems on site 

Keeping the project members focused 

Accomplishing project objectives 

Evaluating the project 

Implementing action plans 

Planning a follow-up activity 



to Use Skill 


46 

Organizing projects efficiently 

Understanding of the project life cycle 

Linking realistic objectives to stakeholder 

needs 

Establishing dependable monitoring 

techniques 

Estimating project costs 

Preparing realistic time schedules 

Using modern construction equipment 

efficiently in mega projects 

Controlling costs efficiently 

Increasing the level of safety at construction 

sites 

Monitoring of the project 

Minimizing start-up hiccups post-project 

completion 

Envisaging maintenance problems at project 

completion stage and minimizing the same 



to Use Skill 

4) Please identify any specific accomplishments that you can link to this training programme (on-time schedules, 

project completion, response times, etc.) 

5) What specific value in Indian Rupee can be attributed to the above accomplishments/improvements (use first 

year values only)? While this is a difficult question, try to think of specific ways in which the above improvements 

can be converted into monetary units. Please indicate the basis for your calculation. 

INR 

Basis: 

6) What level of confidence do you place on the above estimations? % 

(0% = No Confidence, 100% = Certainty) 


7) Other factors generally tend to affect performance as well. Please indicate the % 

per cent of the above improvements that is related directly to this programme. 

8) Indicate the extent to which you think this programme has influenced each of these measures in your work 

unit, department or business unit: 

Productivity 

Customer Response time 

Cost Control 

Employee Satisfaction 

Customer Satisfaction 

Quality 

Other 

No Some Moderate Significant Momentous 

Influence Influence Influence Influence Influence 

9) What barriers, if any, have you encountered that have prevented you from using skills or knowledge gained in 

this programme? 

10) What specific suggestions do you have for improving the programme? 

REFERENCES 

Buck Berry, Norman (2004). “<strong>Summary</strong> Process for Measuring 

ROI of Training,” Version Draft 5, May 2, Prepared for 

CEdMA Europe. 

Collins, Sandra K; Collins, Kevin S and Jensen, Steven C (2009). 

“Determining Return on Investment for Training Using 

Simple Regression: A Hypothetical Case <strong>Study</strong> for the 

Health Care Industry,” The Health Care Manager, 28(1), 

30-37. 

Hasset, J (1992). “Simplifying ROI,” Training, September, 54. 

Kirkpatrick, D L (1975). Techniques for Evaluating Training Programs,” 

Evaluating Training Programs, Alexandria, VA: 

American Society for Training and Development. 

Phillips, J J (1994). In Action: Measuring Return On Investment, 

Vol. 1. Alexandria, VA: American Society for Training 

and Development. 

Phillips, J J (1996). “How Much is the Training Worth?” Training 

and Development, 50(4), pp. 20-24. 

Phillips J J (1996). Accountability in Human Resource Management, 

Gulf Publishing Co. 

Phillips, J J (1997). Handbook of Training Evaluation and Measurement 

Methods, 3rd Edition, Houston, TX: Gulf Publishing. 

Phillips, J J (1997). Return on Investment in Training and Performance 

Improvement Programs, Butterworth Heineman. 

Phillips, J J (1997a). Return On Investment in Training and Performance 

Improvement Programs. Houston, TX: Gulf Publishing. 


Phillips, J J (1998). Implementing Evaluation Systems and Processes, 

Alexandria, VA: American Society for Training and 

Development. 

Phillips, J J (2000a). The Consultant’s Scorecard, NY: McGraw- 

Hill. 

Phillips, Jack and Phillips, Patti (2009). “Measuring Return on 

Investment in HR,” Strategic HR Review, 8(6), 12-19. 

Acknowledgement. We acknowledge the contribution of B 

Vasanth Gopalan, an ex-student of SCMHRD, who collected 

the data from IOC and conducted the study. We are also thank- 

K S Subramanian is the Director of Symbiosis Centre of Management 

& Human Resource Development, Pune. A Postgraduate 

in Commerce from Wadia College, he had won a 

Gold medal in his Masters with Marketing and Human resources 

from the Symbiosis Institute of Business Management. 

He served as a commissioned officer in the Indian Army in 

Infantry, Anand Business Group, Aditya Birla Group, Grasim 

and Indo Gulf Division, as Vice President of the Site for Dabhol 

Power plant, and BPL technology group for their cellular venture 

in Maharashtra and Goa. 

e-mail: director@scmhrd.edu 

Vinita Sinha is a faculty (OB&HR) at the Symbiosis Centre of 

Management & Human Resource Development, Pune. She has 

completed her doctorate in Psychology, has a Masters in Psychology 

with specialization in OB, and a Post Graduate Diploma 

in Human Resource Management from IMT Ghaziabad, 

Post Graduate Diploma in Health Psychology and Behaviour 

Modification from Amity University. She was the 1st rank 

holder in the college in both the years of her Masters. Her past 

work experience lies with the Great Lakes Institute of Management, 

Chennai; BIMTECH, Greater Noida and EMPI Business 

School, New Delhi. She has published numerous research 

papers, articles, and book reviews in the refereed international 

48 

Pine, J and Tingly, JC (1993). “ROI of Soft Skills Training,” 

Training, February, 55-66. 

Reed, David (1986). “The Return on Investment from Indiana’s 

Training Programs Funded through the Job Training Partnership 

Act,” Report, Indiana State Office of Occupational 

Development, Indianapolis, October. 

ful to IOC for granting us permission to publish the results of 

our analysis. 

and national journals and has authored two books entitled, 

Implications of Hardiness and Social Support: Psychological Wellbeing-A 

Recent Perspective and The Burnout Process with Lambert 

Academic Publications, Germany. 

e-mail: vinita_sinha@scmhrd.edu 

Priya D Gupta is an Associate Professor in the Symbiosis Centre 

for Management and Human Resource Development 

(SCMHRD), Pune. She is pursuing her doctoral degree in the 

area of Training and Development from the Tata Institute of 

Social Sciences, Mumbai. She has done her Masters in Human 

Resource Management and also holds a Diploma in Training 

and Development from the Indian Society of Training and 

Development, New Delhi. She has about 12 years of experience 

in the area of Human Resource Management, her core 

areas of expertise being Training and Development, Performance 

Management, and Employee Relations. She has conducted 

workshops in the areas of self-development, 

motivation, leadership, communication; team building, human 

resource management, etc., for different organizations. She was 

the editor of SCMRD’s first peer reviewed Journal, OPUS 

(Organization People and Us), for three years. 

e-mail: priya_gupta@scmhrd.edu

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