1) An organization lost 125 employees last year, at a cost of $5,000.00 each. (Value is derived from cost to rehire and fill opening, as well as lost investment in the employee.) You suggest that a one-time investment in a training program (costing $250,000 up front) will reduce turnover by 50%. Calculate the following numbers using historical figures as your assumptions.
a) Total savings that the program stands to create
b) Net savings the first year in place
c) Return on investment after one year
d) Return on investment after two years
e) Return on investment after six months (assume half of the employees/but all of the cost)
2) We have estimated that a training program on sexual harassment will cost $14,000 and result in a savings of $70,000 (the cost of the two settlements we paid last year).
a) What is the cost-benefit ratio of this training?
b) What is the return on investment after one year?
c) Do you agree that we can use the amount of our settlements from the prior year as our savings figure? Why or why not?
3) A program has an annual cost of $70,000 and is expected to generate in return a savings of $80,000. When would the break-even point occur, given steady savings and costs?
4) Why is it important for trainers to be able to estimate the ROI, cost-benefit analysis, and break-even analysis? Give three reasons why calculating this information will assist the training endeavors.
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