Return on investment isn't something we often associate with workplace learning because the metrics don't usually link up. However, when investing in learning, businesses must be able to track the effectiveness of their implemented learning programs or the ROI of their learning investments.
You may now be asking, how would you go about doing so if the metrics are difficult to track? Simply correlating a range of different metrics that, when in conjunction with one another, gives you an overview of the effectiveness of the given learning program. Integrating a range of metrics allows you to see how and where your program is excelling and alter the parts that aren't to see actual workplace performance.
Each metric gives you a different evaluation based on what your goal is. However, all will provide you with some data you can use to optimise your workplace. Here are the most valuable data points to pull when engaging in workplace learning.
Training cost per employee
Dividing the total cost of training (the investment itself) by the number of employees taking on the learning program. You can break this down per program or as the sum of the totality of the training. The simple equation is
Investment per employee = total cost of training (or program) / number of employees
You can compare this to the average cost of training per employee, which according to the Association for Talent Development, is $1,252 annually to scope whether you are spending above the industry average.
This metric is excellent for planning; for instance, if you are below the industry average and notice your business isn't performing to your standards, investing in learning programs would allow for an indirect way of boosting employee performance.
Learning return on investment
This ensures the profitability of the money you put into the learning program. ROI is a valuable tool for measuring whether a particular training course or program is good value for money. It indicates the dollar amount returned as a benefit for every dollar spent on a program. To calculate it
Training ROI = (return of Benefit – Investment Cost) / Investment Cost x 100
This equation will give you a percentage where ideally it should be > 100%, indicating that you have earned all your money back plus revenues.
For instance, if you spend $35,000 on training to increase the effectiveness of your marketing team's campaign management. As a result of the training, your marketing team increased leads, which led to a $110,000 increase in net profits, therefore:
($110,000 - $35,000) / $35,000 x 100 = 214% ROI
That is, you have doubled your investment plus some. The investment was, in turn, an extremely successful training investment.
Operation efficiency should increase by investing in training that closes specific skill gaps in the workplace. It is the reduction of wasted time, effort and materials in the workplace while being able to produce quality services or products.
Before implementing the training, you want to measure the current efficiency of each metric; 'time to recover', 'time to failure', 'cost-per-click' and other metrics you deem necessary. Once you have implemented the training and the required employees have completed the programs, you can re-measure the same metrics and compare them to your first measurements. This difference will give you an idea of whether or not the training program successfully minimises the wasted resources of your workplace.
Assessment pass rate and assessment scores
This is how many of your learners passed or failed the course. For example, if 500 employees took the course and only 360 passed, you would have a 72% success rate. This rate would indicate that the course was quite tricky. Depending on your goal, you would alter the program accordingly. For example, if you wanted to filter out underperformers, you would maintain the current difficulty level.
More so, this metric can indicate whether or not your course was successful in actually changing workplace behaviours. If the score is exceptionally low, it could suggest that the course was too detailed and learners were inundated with information that led to a lack of memory. Or, if time spent on the course was longer than expected, perhaps the course questions were confusing and over-detailed.
Employee performance post-training looks at how the employee has excelled over the period of the training program. The impacts of the training may be immediately noticed or only in the passing months; this all depends on the course's complexity and the skills being trained.
The performance of an employee can be tracked through performance metrics. Where like operational efficiency, you should measure metrics pre and post-training. These metrics can include the number of sales or leads the individual employee can pull or the revenue brought in at an organisational level. Each metric gives you a different insight and should measure the goal you are trying to achieve.
Data can be used for many reasons, but to optimise your training program each metric plays a different role. Spending your resources on gathering metrics sparingly here is essential as you don't want to overspend on unnecessary metrics. For instance, if you are attempting to find the exact ROI of your training, it would be useless to measure the cost-per-click rate for your employee. Being proactive and continuously measuring your training programs at several levels will allow you to optimise your training to answer your questions, evaluate outcomes, and reach goals.