6 Ways To Demonstrate Learning Value For The Business

How To Demonstrate Learning Value For The Business

Learning practitioners continue to struggle proving to business leaders that their learning efforts produce performance and business benefits for the organization. Even though many practitioners, in good faith, make an effort to do something they repeatedly fail to impress decision-makers. Often it’s not the effort but more the methodology that fails them.

Learning practitioners have long been misled into believing that a convoluted learning ROI methodology, such as ‘training ROI’, Return on Expectations, and others, would be their savior bringing instant credibility for their efforts. These methodologies are simply false promises in which business leaders place little to no credence in the results.

"Learning practitioners have been misled into believing that learning ROI methodologies, such as ‘training ROI’, Return on Expectations, and others, would bring them instant credibility."

That’s primarily because these methodologies do not address or simply respect the business terminology, ‘return on investment’. Naturally, when you develop a concept applying a superficial understanding for how to actually apply ROI within a business context you’re bound to fail. Convincing leaders the value for any business activity, in this case learning, you must communicate relatable terms. It never works when you attempt to redefine their concepts for your needs.

Return on investment has specific meaning for formally business-educated leaders. While many tell us that it’s only semantics, it actually isn’t. As a Chartered Professional Accountant, and for anyone with a business education, ROI has both a financial and qualitative implication. Learning practitioners fail to recognize that there are many, not just one, ROI type calculation. Unfortunately, training ROI practitioners utilize formulas with very causal relationships to generic financial ROI concepts.

"Training ROI practitioners utilize formulas with very causal relationships to generic financial ROI concepts."

Learning practitioners work in a business unit. Consequently, they should start behaving like a business unit and appropriately and consistently apply business measurement concepts actually used by their leaders. Furthermore, proving that employees learned something is a valueless ROI measure. What leaders expect is how the learning activity integrates with the business decisions to improve some element of job performance.

"Leaders expect to see how the learning activity integrates with the business decisions to improve some element of job performance."

The ROI methodology training ROI presents is loosely based upon a limited business ROI formula your leaders rarely apply in their business evaluations. Below are 6 of the more common ROI approaches to adopt when evaluating the business impact for your learning efforts.

1. Stop Proving Learning And Start Showing Application

Too often, learning practitioners shy away from or get intimidated by the financial requirements leaders expect from internal business activities. If this is the case, the quickest to prove your learning worth is to simply stop explaining what employees learn but rather, demonstrate how they can actually apply to their job.

Your leaders don’t care whether employees learn; they care about is if they are able to improve their performance. Here’s a small reminder: Workplace learning only exists to improve employee performance.

2. Prove A Cost-Benefit Relationship

Many practitioners believe that gaining leadership support requires their learning initiatives demonstrate positive financial outcomes. Doing so will make you lose credibility with your leaders because learning, as with many internal functions, is a cost center. Your leaders expect internal functions to deliver an indirect qualitative benefit, not financial gain.

Essentially, you would apply a cost-benefit analysis to determine the best learning approach to achieve benefits while preserving savings. Ultimately the goal is verify whether its benefits outweigh the costs, and by how much.

3. Demonstrate Break-Even (Or Cost-Volume-Profit) Relationship

Your leaders lean on the break-even concept for many business decisions. But it’s not about whether the learning effort is able to cover its own cost but rather how the additional learning activity costs affect primary business activity’s profitability.

Cost-volume-profit (CVP) is a more involved break-even concept to determine how changes between costs and volume affect the business’ contribution margin (CM), also called the actual business profit. The contribution margin represents the amount of profit the company makes before deducting its fixed costs. Since leaders consider learning, especially elearning, as a fixed cost, they want to determine the amount of sales dollars available to cover (or contribute to) the total fixed costs, which includes your learning efforts.

Your take away? Be lean with your learning costs and attempt to determine what impact the additional costs will have on the business activity’s profitability.

4. Manage Project Investment Implications

Learning is often plays a supportive and integrative role within major business initiatives, or projects, such as a new product introduction. In this case your leaders preoccupy themselves with the current value of the net future cash flows of the ‘project’. Leaders refer to this as a net present value (NPV). The ‘net’ cash flow is the difference between the cash (revenue) the project is earning less the cash outflow (actual expenditures) to generate the revenue over the life of the project.

Learning, among many others supporting activities, is an expenditure. Again, it’s incumbent upon you to ensure that you present only the essential (lean) costs for your learning contributions to justify maximize the project’s positive cash flow and eventual sustainable profitability.

5. Develop Capital Investment Projections For Learning assets

Learning is increasingly becoming a complex and capital-intensive activity. No longer is it only about hiring an instructor but now involves significant investments in technology and other infrastructure activities. Don’t run to your leaders to try and convince them to buy the latest LMS or library of elearning courses before recognizing how they evaluate these types of capital investments.

This is where ROI plays a role. But it’s not the ROI training ROI practitioners shill. It involves many ROI tools like those mentioned previously (NPV, CVP, IRR, EVA). Ensure that you work closely with your finance department to build a proper capital investment case prior to presenting your learning investment needs to key decision-makers.

6. Tie Into Key Performance Metrics

Think back to the last exam you wrote. Now, what if the teacher changed it and gave you the answers ahead of time but said you would need to determine the questions to ask? Well, this is what your leaders are doing with the organization’s performance framework.

The performance framework is a business methodology, not a learning tool. Within the framework are all of the answers to target your learning interventions. You simply need to ask the right people the right questions that correlate to those answers, or rather, achieve those key performance metrics.

Learning is a core component to effect organizational operations. But if it does not add value to improving performance then don’t expect any business love from your leaders.

What's highly disturbing are the many learning practitioners that fear learning about the business implications for their learning efforts. It’s disturbing because first, learning practitioners must practice what they preach and open their minds to learning about what impacts their learning activities.

Second, practitioners must recognize that learning is simply another business activity. Business leaders treat it no better or worse than any other business activity. This is why learning practitioners must develop appropriate skills to evaluate when, how, why, and what impact and involvement their initiatives have on the business activities they contribute to improving. To learn more about this, please read The Trainer's Balanced Scorecard: A Complete Resource for Linking Learning to Organizational Strategy. [1]

This article is highlights only a few of many ways learning practitioners can witness their efforts affecting specific business outcomes. Business leaders are desperate to leverage employee knowledge to obtain a competitive advantage. However, they won't simply integrate learning efforts without supporting business evidence and how the learning activity impacts the business decision and/or activity. So, #startprovingyourworth.

Footnote:

  1. The Trainer's Balanced Scorecard: A Complete Resource for Linking Learning to Organizational Strategy
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