ROI of Training

ROI has been a buzzword since the 90s. People talk about it all the time… and measuring ROI is cited as a goal for many initiatives across an organization. We’ve been designing learning solutions since 1995, and while we think ROI is really important, we can count the projects on one hand where people actually calculate ROI. Why isn’t it happening?

The answer depends on the organization. Here are a few possibilities to consider. Do any of these sound familiar in your organization?

The C-Level cares about ROI… but frontline employees are not as concerned

Company leadership often takes complete ownership of the strategic plan. They set the revenue goals and allocate budgets for each department. The bottom line is, for them, the most important thing. When frontline employees get too disconnected from the company’s strategic goals, ROI will be the last thing on their minds. For example, an L&D department that is allocated a certain budget may only be concerned with spending the entire budget (so they will get the same amount the following year) and showing that everyone completed training. If they have not bought in to the strategic goals of the organization, they will only be focused on convincing leadership that their job is valuable.

ROI is long-term, but we must respond to short term needs in the moment

Some of us are too busy putting out fires to look up at the horizon. We are meeting the needs of today without anticipating the needs of tomorrow and evaluating our past actions. At least, that’s what happens when we don’t think about our organizational investments. It’s not just training, either. In fact, overly worrying about ROI can also be detrimental if it keeps us from taking even the smallest actions. Analysis paralysis is a risk, just as failing to consider ROI is a risk. Since we often need to take an action and move forward quickly in the midst of daily tasks, ROI can get pushed aside entirely.

We lack the necessary tools to accurately calculate ROI

Learning and Development does not get too deep in the analytics department. Most LMS’s are just used as glorified “completion tracking engines.” We want to know whether or not someone took a course or not so we can tell our boss that everyone completed the training. What we don’t also see is how each learner performed on the learning objectives, or how job-related performance indicators changed after completion of the training. Some LMS’s are more full-featured than others, of course. In many cases, it’s just a matter of the L&D department making full use of the tracking capabilities available to them.

Formal training fills a fraction of our time at work.

Formal training makes up a small part of the learning picture, so it’s hard to track its impact

Sharon Boller’s 2013 Learning Trends, Technologies and Opportunities white paper points out that the average learner spends only 31 hours in formal training during a typical year. Meanwhile, their working life has at least 2049 more hours of activity… and most of the real learning happens on the job. Since formal training is a relatively minor part of our working lives, it sometimes plays a small part in our overall success on the job. It might help us get started, but its impact decreases over time. We need a way to track more of the learning experiences that happen in the flow of work and think of this informal learning as an important part of professional development. Tin Can API (also called Experience API) makes this infinitely easier to do.

We haven’t had to calculate it before… so we don’t now

Many companies have delivered the same type of training for years. It’s already a line item on the annual budget and no one questions it because they don’t remember not doing the training. Instead of re-evaluating the results of the training on a regular basis, it becomes embedded in the company culture and allowed to continue indefinitely. This is why bringing in a third party can be helpful.

 

TiER1 Performance

New Palestine, IN 46163
P.O.Box 155
Directions

phone: (317) 861-7281
fax: (317) 861-1839

hello@tier1performance.com

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