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Proving Learning Value Is Hard But Not Impossible

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Proving Learning Value Is Hard But Not Impossible

Written on May 3, 2017 1:23:09 PM, by Stefan Sarbu

In some companies, championing a learning culture can be a tiring process. CEOs, leaders, and stakeholders want to know the ROI of something that is not easy to define or measure sometimes. Trying to reduce learning to a monetary amount can seem like an impossible task.

Also read: Use These KPIs To Measure Training Effectiveness

If you have been put in this situation at work, this cartoon may be familiar to you. Meeting after meeting with people just like these two debating about learning programs, an LMS, training sessions, and other expenses related to learning.

Corporate Dilemma Training Value.png

You may have the simple solution. You have probably been doing a lot of research and just want to scream, “Just give me the money!” But, you can’t do that. You just have to go to the meetings and hope that someone realizes the power of learning.

ROL

I think you have more power than you think. Hear me out. ROL (Return on Learning) is a new component of ROI that is gaining ground due to the increased access to data and analytics.

According to a 2016 Towards Maturity report, researchers found that 97% of Learning and Development teams rate evaluation and analytics as important for the future of the program. The part that leaders in Learning and Development need to improve is the implementation.

This is vital to be able to prove the ROL of the program you want to implement or expand. The truth is that only 17% of Learning and Development leaders actually measure KPIs and, as shown in a recent CIPD Learning and Development report, the more difficult a KPI is to measure, the less it gets done.

While having data linked to KPIs is the most effective way to prove learning value, there are other ways. 

Learners have expectations. How their expectations are met can be seen in how they choose learning resources. Do you they read articles or watch videos more often? What resources do they share with others? How often do they use provided resources? That information can help you see what the learning trends in the company are, which can help you develop a better program.

Also read: How to Create an In-House Training Plan for Your Team

But still, for many people, money talks.

Calculating Value

If you look at the formula for proving learning, it seems very simple:

Monetary Benefits - Total Cost of Learning * 100
Total Cost of Learning

Finding the numbers to put into that equation is the hard part.

Costs

There are many costs associated with learning. All of these have to be taken into consideration when calculating the ROL:

  • Course design or build
  • LMS
  • Trainer cost
  • Registration fees
  • Materials
  • Transportation for participants or trainers
  • Lodging
  • Meals
  • Lost productivity
  • Benefits

If the costs weren’t hard enough to measure, benefits can be even more difficult. It’s no wonder that only 17% of Learning and Development leaders go through this process.

In order to measure the benefits of learning, everything has to be linked to a KPI. The training has to have some purpose. After the training, the KPI can be measured and tracked over a certain period of time. This is the best way to try to measure the benefits. It is not a perfect science, but it’s the best we’ve got.

For example, if you wanted to how the training program was impacted recruiting, you could look at measurable things like recruitment costs, number of applications, or the percentage of accepted offers. If you wanted to look at training sessions for the sales team, you could look at customer spending, the number of sales, number of leads, and the value of sales.

These are just a few examples but there are lot of indicators that could be linked to goals: sick rates, engagement levels, retention rate after onboarding, and so on. Whatever you choose, just make sure it is measurable and is linked back to a KPI related to your learning sessions.

Also read: Why Learning And Engagement Are Inseparable

As we mentioned before, you can also take into consideration ROE (Return on Expectations). This focuses on individual feedback and stated wishes. It can help you answer the question, “Am I giving people what they want and expect?” This can be measured by elements like employee attitudes, values, practices, and habits. If employees are not passionate about learning, if they don’t value your resources, or have a pessimistic view of the job and their development, these can clue you into what needs to change.

These factors are not as numbers-based as the other ways to measure benefits, but they can be just as important. For the most effective look at benefits, it can be good to get data from both KPIs and expectations.

ROI Done Right

When looking at ROI, Accenture has done a lot of research into how to calculate it correctly. They found that for every dollar companies invest in training, they get about $4.53 in return. That is an amazing 353% ROI. Similarly, True Focus Media has found that e-learning tools increase productivity by about 50%. For every dollar companies spend, they can get $30 worth of productivity.

Sounds good right? Almost too good to be true? Not entirely. To get the same numbers (well, as close as one human get possibly get) Accenture and True Focus Media did, there are some steps you can take to maximize your results.

Collect Data

Get as much data as you can, just don’t go overboard. For ROL calculations, the best kind of data is quantifiable. Questionnaires, feedback surveys, metrics, and supervisor feedback are all great ways to get good data.

Use Controls

Just like any good research study, you need control groups to isolate the effects of training. When you are collecting data, make sure to track pre- and post-training scores. You can also look at data from trained and untrained groups to see if there is a difference.

Convert to Monetary Values

The data can then be converted to monetary values based on historical costs, profit, payroll, and other expenses. When trying to convert this data into monetary values, look to the numbers in place to help you. Look at the past costs of training sessions, trainers, and learning materials. Check profits and payroll when trying to figure out how time off plays a role in productivity.

Calculate costs

Using the list we provided above, you can see how much learning costs for each employee. It’s important to try to account for as many costs as possible. You might even want to create a range if you are not sure some of the exact costs. You know that learning works and it can be easy to fall into the trap of underestimating the costs so that you get a good ROI number. But this can be tricky because there might be other people who will surprise you with questions about additional costs. It’s better to play it safe when it comes to calculating costs.

Find your ROI

So, now you are ready to find your fantastic ROI. Fingers crossed it’s in the hundreds. After you have taken into consideration all the costs and benefits and converted them into monetary values, you can use the learning formula from above to figure out your ROI or ROL and present it to anyone who will listen.  

Go out there and prove to every finance manager, CEO, and stakeholder that learning is valuable. Not only will your learning program meet or exceed expectations, but it will increase profit. Being able to prove this may seem like an uphill battle, but with the right tool and planning, you can make it look easy.

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Stefan Sarbu
Stefan is the Chief Operating Officer for Teamfluent. He is passionate about creating learning habits and staying on top of the latest tech trends.
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