5 Questions About Return on Investment for Learning
Questions about the return on investment (ROI) in L&D have been around as long as L&D itself. Maybe longer than the term L&D, in fact. It’s been over 60 years since Professor Donald Kirkpatrick outlined his four-level training evaluation model. A groundbreaking study at the time, it’s now been largely superseded, but still L&D leaders – and their bosses – find themselves asking the same questions. What is ROI? Why’s it important? How do we measure it? And what do we get out of it?
We can’t hope to address the full complexity of these questions in a humble blog, but here’s a guide to the issues, and the outline of some answers.
What is return on investment (ROI) in learning?
Managers who learn coaching skills, for example, may help employees to be more engaged in what they do. If so, that’s great. But does it make those employees decide not to leave, and so save money on expensive recruitment? How big a part does it play? And can we put a number on that?
Why does ROI in learning matter?
Knowing how learning benefits an organization and its people per dollar spent is important. Measuring the ROI in L&D helps organizations assess the effectiveness of their training programs, identify areas for improvement, and demonstrate the value of L&D investments to stakeholders. It enables data-driven decision making, so that organizations can allocate resources efficiently.
How can we best measure ROI in L&D?
Measuring ROI in L&D is challenging. We often attribute changes in performance solely to learning, when other factors may be at play. So, it’s important to know what you want to measure and why.
Action Mapping can help. This method starts with a change the organization needs to make, and a goal it can measure. It then works back from there to develop a program of learning which prompts and nurtures change.
It’s also important to be selective. Don’t measure everything. Rolling out new software training to a large sales team needs to be assessed; onboarding a new hire on the internal messaging platform probably doesn’t.
Once you’ve understood what you want to know, use a range of different evaluation methods to better understand the impact of L&D initiatives. For example:
- Pre- and post-test assessments: Run assessments before and after the training to evaluate the improvement of your participants.
- Surveys and feedback: Collect feedback from participants and their managers about how they’ve applied the knowledge or skills they’ve gained.
- Employee performance metrics: Analyze key performance indicators (KPIs) relevant to the learning objectives (productivity, for example). Compare the performance metrics of trained employees with those who didn't receive the training.
Sometimes it's challenging to directly link training outcomes to financial metrics. Return on Expectations (ROE) evaluates whether the learning achieves your goals and meets the organization's expectations. It involves gathering qualitative and quantitative data to assess how expectations and outcomes match.
What are the benefits of measuring ROI for the learner and the organization?Measuring ROI in learning can provide several benefits for both the learner and the organization.
Benefits for learners include:
- More effective learning: By measuring ROI, organizations can identify which learning programs are most effective in achieving desired learning outcomes. This way, learners can focus on programs and activities that have a proven track record of delivering results.
- Clear objectives: ROI measurement allows organizations to set clear objectives and expectations for their learners. So learners understand what is expected from them and how their learning contributes to the organization's overall success. This provides purpose and motivation.
- Continuous improvement: ROI measurement shows the strengths and weaknesses of learning programs. Based on this, organizations can improve the programs, ensuring that learners receive the most relevant and impactful learning.
The main benefits for organizations are:
- Strategic alignment: Good L&D initiatives align with an organization's strategic objectives. ROI analysis tells us how well learning supports the organization’s goals and vision.
- Business impact: Investment in developing skills improves overall performance. ROI helps measure how much L&D initiatives contribute to these business goals.
- Evidence-based decisions: Measuring ROI in learning provides organizations with tangible data and evidence. This helps them make informed decisions about their learning initiatives. ROI calculation allows organizations to allocate resources effectively and prioritize the right learning.
- Increased cost efficiency: By understanding the returns generated from learning programs, companies can optimize their spending by focusing on programs that deliver the highest ROI. They can also eliminate ineffective or redundant learning programs, leading to cost savings.
- Demonstrating value to stakeholders: ROI measurement shows the value of learning to anyone with an interest, from the C-suite to investors. It demonstrates the impact of learning investments on organizational outcomes, builds confidence in the effectiveness of learning initiatives, and justifies allocation of resources.
What ROI can I gain from a Mind Tools toolkit?So how can we help? Organizations want to understand the impact of learning on business outcomes. They also want value for money. Using Mind Tools helps you to address three key areas, and to do it cost effectively.
- Recruitment: Potential new hires value the promise that their knowledge and skills will develop. In a competitive market for talent, an organization that can offer a comprehensive learning environment will have a big advantage. Mind Tools can help to build that environment.
- Retention: Mind Tools content has a direct and positive effect on engagement and retention. We offer a huge variety of content suitable for many areas of business learning and personal growth, which can be accessed when and where learners need it. If your people feel they’re developing, they’ll more likely stay.
- Promotion: Being confident that your people have the skills to move up means you can promote from within, without the significant cost of looking for external candidates.
Mind Tools can also provide toolkit usage reporting and dashboards, including the ability to track user numbers, engagement levels, topics and resources accessed. Combined with client service and communications planning support, including for onboarding and leadership programs, this helps the organizations Mind Tools works with to maximize return on investment for their toolkit.
You may also be interested in…
Chris Coladonato, Founder of Connection Catalyst, discusses the key steps you need to take to protect your people’s mental health and well-being in today’s ‘always on’ work environments.
August 2023Read More
Shannon Tipton, Founder and Chief Learning Officer at Learning Rebels discusses the transformative impact that curiosity can have on learner engagement.
August 2023Read More