No Train, No Gain? You've invested a lot in training your employees, so see if you're getting what you paid for.

Like many entrepreneurs, Chris Stone has a training budget. Heoffers $1,500 plus five days of paid training per year to hisemployees, who have participated in training sessions ranging fromtechnical writing to sales.

But how does he know he's getting something back on hisinvestment? "The measurement is problematic," says Stone,54, founder and CEO of Stone Environmental, a Montpelier, Vermont, companythat analyzes water quality. "In some cases, it's hard toget a direct payback."

So how can companies tell whether the training has been worthit? U.S. companies want to see an ROI when they hire a consultantor send employees to a conference, especially when they'respending more than $60 billion annually on training, according tothe American Society of Training and Development.

Training has many benefits. But evaluating ROI takes time, moneyand data crunching. Most entrepreneurs go with their gut. "Wesee companies that have a belief in [certain trainingprograms]," says James W. Dean Jr., associate dean ofexecutive education at University of North Carolina'sKenan-Flagler Business School in Chapel Hill. "You don'tsee people scurrying around trying to prove ROI is 21percent."

Estimating ROI

Companies that measure training impact rely on methods like theKirkpatrick levels framework, which evaluates training on fourlevels. Level 1 measures participant satisfaction. Level 2 gaugeswhether employees learned anything. Level 3 studies whetheremployees are doing anything different as a result of the training.Level 4 assesses how training has changed the organization. Mostcompanies don't venture beyond the first level. "The ROIquestion is framed in terms of level 4," Dean says."[Most companies] are thinking about level 4, but [the numberthat] go to the lengths you'd have to go to calculate ROIimpact is relatively small."

Entrepreneurs can, however, estimate the cost of a companyproblem with an upfront analysis, says William Rothwell, co-authorof What CEOs Expect From Corporate Training.Say, for example, poor customer service is holding a company back.The entrepreneur can calculate how many customers the company islosing every week, the number of complaints, the average purchasesize, even lost sales. These numbers give the entrepreneur a benchmark for evaluating the ROI of a training program down theline.

Generally, it's easier to see a quick return on"hard" skills-sales and software training, forexample-than "softer" skills, such as leadershiptraining, where any noticeable change can take months or years tosee. Laura Yamanaka is co-founder and president of TeamCFO, a Los Angelesprovider of outsourced CFO services with annual sales nearing $1million. The company's employees have attended technical andleadership training seminars, and Yamanaka finds that the softerthe training, the more she needs to coach employees to generatereturns. "You can't send an employee to leadership andmanagement training and expect them to create a change within thecompany," says Yamanaka, 47. "It has to come from thetop."

Quarterly job reviews, focus groups and 360-degree feedback canhelp measure the impact of soft training over many months."Make training and development as closely integrated with thereal work as possible," says Thomas E. Moore, vice presidentof executive education and corporate programs at Babson College inBabson Park, Massachusetts.

Stone Environmental's employees and managers talk about whatkinds of training will improve performance the most. "We makesure this is something the employee wants to do," Stone says.After a training session, employees have a meeting to share whatthey took away from it. For Stone, making sure training meets aneed is key to generating ROI. "It's carefully selectingcourses that make sense for the employee and your business,"he says. The strategy must be working: Yearly company sales are nowmore than $4 million.

Rewarding Employees

Do departmental managers and company policies enhance the newskills employees bring back to the office? "The biggestproblem with training is that new skills aren't reinforced.That's why training often doesn't stick," says

, president of Los Angeles consulting firm PeacockProductions and co-author of the new book, Who Are "They" Anyway? A Tale ofAchieving Success at Work Through Personal Accountability."Make sure what you're training [for] is also whatyou're going to be rewarding." This means aligning salaryincreases, bonuses and other incentives to reward employees whomake progress meeting training goals.

In the end, some training is always better than no training atall. "Training is an acknowledgement that you're investingin the individual," Stone says. "That benefits thecompany."