Any organization wants to know that there is a return on investment (ROI) or else the initiative would be a waste of precious corporate resources.
Measuring the ROI in training and development is never easy, and learning leaders continue to seek different ways to evaluate the success of their courses on multiple levels.
Indeed, quantifying the value of learning is not straightforward, and is carried out in different ways across different organizations. LinkedIn Learning’s 2021 Workplace Learning Report noted that there was a rise in the use of employee engagement survey scores as a way to measure the impact of learning.
However, this is just one metric. According to LinkedIn, here are the top 10 ways L&D pros measure the impact of learning:
- Qualitative feedback from employees using online courses
- Satisfaction of employees using online courses
- The number of employees that consistently engage with learning content
- Employee engagement survey scores
- Qualitative feedback about behavioral changes that learning was intended to drive
- The number of online courses completed
- An increase in the number of skills employees are developing
- Team/organization/business metrics (deals closed, customer satisfaction) before and after training
- Time saved/productivity increase
- Ability to retain talent within your organization
Are you properly measuring the impact of L&D? Join us March 2nd at 3pm (ET) for a webinar with CLO Dr. Sydney Savion to learn how you can frame learning as a strategic asset to the C-suite.
Difficulties in calculating training ROI
Looking at the list from the LinkedIn Learning Workplace report, it’s clear that many of these would be of little interest to departments outside of L&D—including the C-Suite.
Qualitative feedback, satisfaction, and employee engagement scores are certainly useful. They’re relatively easy to obtain—usually right after the course has ended or within a reasonable timeframe. They’re also an immediate measure of the hard work of the team of instructional designers and subject matter experts who developed the course together.
Unfortunately, the business unit and senior management would need further proof of the success of the course. This would include changes in behavior, such as skills acquired, or any hard metrics demonstrating direct impact.
Training ROI formula
According to eLearning Industry, business leaders have developed the following simple formula for calculating ROI for corporate training:
ROI (%) = [(Monetary benefits – Training Costs)]/Training Costs * 100
However, as with any basic formula, each organization will need to tailor this based on multiple variables. There must also be a way to isolate the effects of the course or learning experience the employee underwent, for the strongest way to calculate the ROI of training. Each organization is unique, operating in a particular industry and employing individuals with varying levels of experience.
Measuring ROI for different types of training
Sales training is perhaps the easiest ROI to calculate. Managers can simply take the increase in sales production of an employee post-training, subtract the cost of that training, divide by the cost of that training, multiply by 100, and there it is.
As for other job functions that do not produce an immediate, numeric result, calculating the net benefit or effectiveness of a training program can prove a challenge. For example, product managers and developers have longer timelines for which their results can be measured. For some job functions, it is indeed difficult to measure the impact of learning programs.
However, even the calculation for the effectiveness of sales training might not be so simple. The sales organization will need to decide what time frame to use to measure the ROI, as not all salespeople will see an increase in production in the same amount of time.
Calculating training costs
Further, the actual training costs might be unclear and difficult to calculate. For example, the sales department might have had to contribute some budget responsibility to the L&D department for developing the training materials. Additionally, the hours spent in training those salespeople, when those salespeople could have been spending that time prospecting, setting up appointments, doing presentations, and closing, must also be considered, because those “lost” hours are a cost for the training.
To ease the burden, L&D can work with the business units to develop standards in measuring and reporting ROI on learning. For example, training costs across all departments will need to incorporate the time away from performing regular job duties, in addition to any “local” costs that the department spent in training the team, such as paid online courses.
Create your “story of impact” and show robust results to your business partners. Watch this on-demand webinar featuring Dr. Paul Leone, How to Measure and Maximize the Business Value of Training
Evaluating training requires data—and a lot of it
As organizations understand the need to evaluate the impact of their training, they realize that the only way to do this is to collect more data and create strategies to standardize this data collection and calculation (analytics) for insights.
Clearly, there is an opportunity in measurement. Learning industry analyst firm Brandon Hall Group found that the biggest challenge to measuring learning impact is the lack of proper metrics. Nearly all, or 91 percent, of respondents to a survey see the need to measure, but less than half, or 42 percent, indicate that their data collection methods are lacking.
The L&D team will need to acquire additional talent in order to do this. Organizations are starting to see the need for Learning Operations Managers to step in and help L&D teams uncover efficiencies and improve results using advanced analytics tools.
Measuring ROI in training and development is never simple, and organizations will need to work hard on systems that work. However, with access to the right data, leaders, including the C-Suite, can better evaluate training effectiveness and the organization will experience a greater impact to its bottom line.
Show the direct impact of your L&D team’s efforts on business performance with this free training ROI calculator template.