Return On Training Investment And How To Measure It
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Discover The Value Of Training By Measuring The Return On Training Investment

Training requires time, money, and other resources. But you already know this. In fact, you’re well aware of the direct and hidden costs of training development. You also understand the cost benefits of eLearning over more traditional on-site approaches.

But now you’re wondering whether your training program is going to be worth all those costs. You’re wondering how you’ll know whether the training is benefiting learners and the business. Perhaps it’s time to find more about measuring the return on training investment.

What Is ROI In Training And Development?

Depending who you ask, training ROI could be described as a measureable increase in skills, greater annual revenue, or simply the number of trained employees. Because when it comes to training, return on investment means different things to different people in different circumstances. That’s a lot of differences.

Why the lack of clarity? Well, because the returns yielded by training can be applied to the learners, to the business, or to a host of other multi-faceted criteria. So, the first and most challenging question when it comes to ROI, is what to measure and how to measure it.

How To Measure Training ROI

Depending on what’s most important according to the training objectives, you can use a few or all of the following 5 measures to determine your training ROI.

1. Are They Engaged?

Measures of engagement evaluate the extent to which learners have actively participated in training activities and interacted with the course content. Some of the simplest measures include completion rates, such as course or activity completion, and the number of participants at live online workshops and events.

But we’ve all completed an activity, or been present at a live workshop, without being truly engaged. So, measuring the amount of time that learners spend on an activity, what peer reviews reveal about a group member’s participation, and how frequently learners curate content in the form of wikis or discussions, can be a more accurate reflection of engagement.

As a numerical measure, this can be evaluated in terms of the ratio of learner posts to a number of learners, or as a ratio of a number of posts for each learner.

2. Did They Enjoy Their Engagement?

A study by McKinsey unveiled the shocking reality that only half of organizations keep track of their employee feedback from training programs[i]. And yet, the best way to find out what people think is simply to ask them.

Feedback surveys are a useful way to measure learner perceptions about the effectiveness and benefits of training. Like whether they enjoyed the experience if they felt that they acquired useful knowledge and skills, and how confident they are that they could use that knowledge and those skills in the real world. Furthermore, did they find the training experience to be motivating, and would they want to do it again?

Apart from the open-ended questions, using a survey with Likert scale response options means that feedback can be translated into numerical scores.

3. What Did They Learn Through Their Engagement?

No matter how deeply someone engages in an eLearning course, it’s really nothing to brag about until they’ve actually learned something. This is why acquired knowledge, skills and abilities (KSA’s) is a critical training ROI measurement.

The good news is that there are tons of approaches to measuring learning. Competency assessments and knowledge recall tests can all provide scores associated with new KSA’s. And when the feedback is automated, the costs can be kept down, too!

What’s important is that the learning measure is fair, and relevant to the desirable KSA’s in the training objectives. So, start with a pre-test where learners rate themselves on each of the learning outcomes before they start training. Then, ask them to rate themselves again once the training is complete. Do they feel that they’ve improved?

4. Can They Apply The Knowledge In The Workplace?

As they say, action speaks louder than words. Acquiring new KSA’s means little if learners don’t have the confidence or ability to know when and how to use them. So, the next layer of measurement when it comes to return on training investment is the application.

Placing learners in real contexts will give them the opportunity to practice their new knowledge and skills. This can be in the form of on-the-job tasks and challenges, role plays, branching scenarios, or online games and simulations. Then, use supervisor ratings or automatic scoring to calculate the return on training investment for the application of skills.

5. How Does This Application Benefit Business?

Now comes the crunch. That question the CFO seems to keep repeating every time you need clearance for a new training program. How will it benefit the business?

Well, if training objectives are linked to strategic objectives, then a successful training program will almost always contribute the achievement of business goals. Not only does eLearning create a fresh perspective and modern-day skills, not only does it lead to innovation, productivity, and efficiency, but it also has tangible results for specific targets.

If the goal is to increase sales, then improved skills in persuasion and increased product knowledge will enable sales teams to do just that. If the objective is more accurate market forecasts, then developing employees’ understanding of the economy and market trends, and skills in market research is likely to improve accuracy.

So, the correct answer to "How does training benefit business?", is actually "How do you want it to benefit business?".

5. What Is The Resulting ROI?

By engaging, learners not only become motivated by their training experience, but they learn new skills, knowledge, and abilities. By applying these new learnings in the workplace, the business benefits from innovation, productivity, efficiency, and the achievement of strategic business goals.

Each of these holds value in and of itself. But in order to calculate the total eLearning ROI, weightings and scores must be applied to each. The weighting represents the importance of each measurement, and the score represents the success of each measurement. These must then be multiplied, and the product summed together for a total out of 100. For example,

Weighting (W)  Score (S)  W x S
Engagement 10% 50 5
Feedback 5% 90 4.5
Assssment 25% 82 20.5
Application 25% 76 19
Business imact 35% 73 25.55
Total 100 % 74.55

Training, A Worthwhile Investment

An investment in training, when successful, can yield returns for the learners and the business alike. Employees are more loyal, more motivated, and more satisfied when employers invest in their development. They’re also more likely to be productive and efficient in achieving the strategic goals of the business. This, of course, benefits the business.

So, are the returns of training worth the costs? Yes. And if your ROI isn’t looking as attractive as it should be, that’s okay too. Because as you collect feedback, measure and evaluate your training program, and make continuous improvements, your return on training investment is bound to rise with future iterations and new training programs.

 

References:

[i] Building organizational capabilities: McKinsey Global Survey Results. 2010.

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