ROI of L&D

Learning ROI – It’s Time to Shift the Narrative

Learning and development (L&D) is driving big investments for businesses, with estimates of $96.3 billion spent in 2017 alone. With steep costs associated with L&D, it stands to reason that business leaders would want to see their ROI, but this poses a problem: It’s impossible to calculate ROI of learning the way we do other areas of investment because ROI is traditionally a financial calculation, while learning is a deeply human process. To think of it any differently will result in an imperfect assessment of the value of L&D.

ROI is traditionally focused on causation — if you invest this much, you’ll get this much back — and this model works fine for many types of spending, such as marketing (e.g. SEO optimization spend yields X increase in clickthru rates). But the elements of causality are hard to find in uncontrolled environments like companies and classrooms. Once we accept that causation is not a viable measurement for learning, the next step is identifying the mechanism that will help determine learning ROI — correlation.

From in-person conferences and live online courses to self-directed access to problem solving, companies are providing a diverse range of learning resources. Correlations between the use of these resources and business outcomes can be found in a number of places. For instance, most organizations have the ability to track their employees’ “touchpoints” — engagements with their learning programs, online or in person — and to determine how frequently they participate. Many organizations may also have a system for tracking performance and potential, often rating or ranking on both dimensions. By using the information provided by these systems, L&D leaders can map learning engagement to an organization’s most important goals and employee measurements.

In looking at this data, you might find that your organization’s highest performers are also the most engaged learners, and that correlation can point to direct business value. Further, if you see that high-performers are performance-adjacent learners — meaning they jump in and out of a company’s learning tools to get answers — then it can be further surmised that this approach has a direct impact and value to the business while simultaneously justifying investment in learning tools.

Conversely, the lowest performers in an organization, as determined before learning measurement begins, offer a chance to chart improvement with learning resources. Their improvement helps L&D leaders make the case that these resources are directly helping employees gain skills. If those same employees are measured by engagement, there can be further measurements to determine whether and how employees who interact with learning programs reach proficiency faster than those who engage less frequently.

To best measure the impact of L&D, follow this five-point checklist:

Examine critical business and HR metrics and then correlate learner engagement and learner behavior with those metrics.
Work to align learning engagement metrics with the things the business inherently values. Insights such as how often your best performing employees use your online environment and for how long can suggest ways that other employees can better succeed.

Don’t get trapped into overselling smile sheets or other Kirkpatrick Model Level One or Level Two assessments.
Such assessments can certainly be useful, but they are limited because they can’t accurately measure future skill retention or application. For example, while a pre- and post-test for tangible, fact-based information that you want to be disseminated might be somewhat helpful, it’s important to be cautious in interpretation. Such tests most likely tell you that the learner can recall what was just taught, but the tests suggest nothing about behavior changes or business impact.

Play the long game and set expectations.
Make sure the business leaders in your organization understand that the outcome of learning interventions must be observed over time and might sometimes feel intangible. Talk with management about their own experiences in learning a new skill or functional area — how did they or anyone else measure their success? Additionally, outline the data you plan to gather and report back to leadership throughout the entire program. This commitment should allow you to discuss how, over time, the investment will pay off.

Create a targeted strategy around Kirkpatrick Model Level Three and Level Four assessments.
Some companies offer dozens or even hundreds of possible learning experiences every year. For these organizations, it’s too burdensome to send out observation teams or to collect observational survey data for every experience. Rather, identify a few learning experiences that have the greatest possible impact and seem feasible to observe. Spend energy around Level Three and Level Four assessments in these areas only.

Argue table stakes, not sweepstakes.
While measurement is important, it’s time to make the case with senior leaders and key funding decision makers that new factors have changed the game. According to a recent Dale Carnegie survey, 87 percent of millennials say that professional development and career growth are significant to them. The same survey found that companies with engaged employees outperform those without by up to 202 percent. These are numbers that should not be ignored or taken lightly. What’s more, the war for talent is not slowing, and it’s costly to attract and replace talent. A recent study by Udemy found that 46 percent of employees say that limited opportunities to learn new skills is the top reason why they are bored in their current roles and, as a result, 61 percent of those employees are likely to change jobs to pursue opportunities that are more rewarding.

Development opportunities are now crucial to maintaining a competitive workforce, and L&D must be recognized as affecting not only performance but also talent retention, employee engagement and other business metrics. Correlation helps us draw lines between L&D engagement metrics and mission-critical organizational goals, which makes it easier for business leaders to recognize the value of L&D. When we shift our view to this vantage point, L&D professionals will be empowered to tell meaningful, data-driven stories that align with the goals of their organizations.