Learn the definition of commonly used terms such as summative and formative evaluations, analysis vs. data presentation, and financial terms like ROI. Avoid common pitfalls like misrepresenting financial terms (Example: calling ROI "return on inspiration" versus the actual meaning).
- In this video, I'd like to introduce you to a few key measurement and evaluation terms. The first two terms are formative and summative evaluations. Formative evaluations are used to evaluate a program's development. This includes the materials, exercises, and overall instructional design. Summative evaluations are used to measure a training program's success. This includes measuring whether the training helped improve business results. Let's say you want to develop a training program to help project estimators create more accurate price quotes for their customers.
You might conduct a formative evaluation by running a pilot class so you can fine-tune the course before rolling it out. For example, you might learn that the instructions for a specific activity confused learners and need to be revised. A summative evaluation could provide some key statistics about the training once you rolled it out, such as whether or not the estimators were able to improve the accuracy of their price quotes. Here are two more terms that you should know, data presentation and data analysis. These terms often get confused with each other.
Data presentation involves sharing data. For instance, here's a sample data presentation from our class on creating accurate price estimates. This graph shows a 25 percentage point increase in price quote accuracy after estimators attended the training. That sounds like the training program was a success, but the data presentation doesn't tell us why accuracy increased. That's where a data analysis comes in. We can dig a little deeper to interpret the data and draw actionable conclusions.
Here we see that the price quote accuracy generally improved after attending the training, but the biggest gains occurred when participants used the new pricing tool. This analysis tells us that we could improve the training even more if we could find a way to get everyone to use the new pricing tool. Okay, the last term I'd like to share with you is return on investment or ROI. This is a financial term used to show how much value is gained when money is spent on a training program.
You calculate ROI by taking the financial gain achieved as a result of the training program and subtracting the cost of the project. Next, you divide that number by the cost of the project to get your return on investment which is expressed as a percentage. For example, imagine the price estimate training program resulted in a $50,000 savings over one year. The cost to develop and implement the training program was $10,000. So we calculate our ROI by subtracting the $10,000 cost from the $50,000 gain.
That leaves us with $40,000. Next we divide the $40,000 by the $10,000 cost of the program to get four. ROI is expressed as a percentage, so this project has a 400% ROI. Okay, these are just a few common measurement and evaluation terms. I highlighted them because they seem to confuse trainers most often. You might encounter other unfamiliar terms as you learn about evaluating training programs. I know it often happens to me.
So if you see a term you're unsure of, don't be afraid to look it up.
Check the exercise files for sample evaluation plans, reports, checklists, and worksheets that you can use to evaluate your own employee development program.
- Common learning assessment models: Kirkpatrick, Phillips, Brinkerhoff, and alternatives
- Identifying expectations
- Collecting data
- Analyzing data
- Making recommendations