Article: Mastering the ROI in Learning and Development

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Mastering the ROI in Learning and Development

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Individual learners respond differently to training and development
Mastering the ROI in Learning and Development

55 percent of high-growth companies had averaged 30-50 learning hours per employee. In contrast, 61 percent of low-growth companies had only 0-30 hours of average learning per employee, according to a research study . According to the same study, 59 percent of high-growth companies spent above average per employee on L&D.  

Measuring the return on investment in learning and development initiatives is tough to do.  Whether it is technical or non-technical, the impact of the learning programs can only be truly measured over a period of time. There are a number of factors to consider and each employee has their own personal approach to learning.  Today, even with the growing crop of digital tools, mobile apps, and MOOCs – the question that’s often in the mind of business leaders is: 

What is the most effective way to measure progress in learning?

And what’s the most effective way to assess the impact?  

From the Kirkpatrick approach

For L&D specialists, the answer to these questions for a long time was the Kirkpatrick model. It is one of the most widely used models to analyze and evaluate the results of training and educational programs designed by Dr. Donald Kirkpatrick in the 1950s.

This model defines four levels to learning evaluation – 1) Reaction – which measure what’s the reaction of the participant to learning, 2) Learning – which is focused on analyzing whether the employee has understood the training and subsequently is there an increase in knowledge, skills or experience, 3) Behavior – which is focused on looking at whether there is a change in behavior, and 4) Results – which is the final step and is geared at understanding the positive impact on the business.

Studies have shown the most companies are stuck at Level 2. According to ATD’s State of the Industry survey, only 3 percent of all the companies even tried to evaluate training beyond Kirkpatrick’s Level-2. Why are so many companies unable to go beyond that?

Firstly, to confidently show that the impact of learning is felt, companies need to take a number of variables into account. Secondly, when it comes to issues of people development, leaders are often aware of the fact that individuals respond differently to training and development.  And often, just isolating ROI belies the expectations of the L&D’s function to the business.

Meeting changing needs and expectations

Modern day learners need access not just to learning course material, they need to practice these skills in a real-time working environment, feedback on their performance and they also need support to continuously improve themselves. Here’s everything that companies need to consider when measuring impact on learning:

1. A stronger business partnership: As the world of work goes through continuous transformation, L&D departments need to foster a strong partnership with the business to ensure that they are in tune with business needs and the latest trends. Active involvement of business leaders and line managers in the designing the learning path will be critical to the success of learning programs in the future.

2. Focus on growth opportunities: Studies have shown that increasing the L&D budget has led to higher engagement. But just learning alone will not improve tenure and retention. Companies will need to invest in adequate growth opportunities to ensure that they are able adequately engage employees at work. This means aligning promotions, cross functional or overseas job opportunities to ensure that there is a meaningful progression from an employee’s point of view.

3. Go beyond just online courses: While there is evidence that online learning programs can enable an anytime, anywhere environment. In order to practice skills and ensure that there is behavioral shift, companies need to invest in peer learning environments. This means investing in classroom courses and traditional learning methods including instructor led learning where employees can discuss real workplace situations in greater depth.

Measuring ROI

From an individual’s learning perspective: There are multiple ways to measure ROI. At the individual level, companies are employing a combination of assessments, peer reviews and practical assessments to know how effective the learning transfer has been.

From a cost perspective: The formula for computing ROI in training is ROI as a percentage.  (Monetary benefits – Training Costs)/ Training Costs x 100. While assessing the monetary benefits is difficult to do, this approach gives an cost estimate of the benefits of training and development.

Feedback from participants: Another way to measure the impact of the learning program is to capture the feedback from participants. Companies also employ a variety of feedback structures, including 360 degree feedback from peers to ensure that the learning is actually aligned with job-based outcomes.

Designing learning for employees

In order to align learning to the needs of the function, business and industry, companies are also increasingly looking at designing custom programs which can help address the needs of the business directly. In order to do this, companies are partnering with universities to ensure that the custom programs are aligned to the business. FLAME’s center of executive education is one such program which enables employees to not only have access to lectures from leading experts around the world, but it offers complimentary workshops and enables HR professionals to align the right opportunities mapped to their learning journeys.

Custom programs both online and offline are going to become increasingly important for companies to navigate an uncertain future. In this age of the fourth industrial revolution where jobs are at risk of being automated, learning is no longer an option. As an industry analyst Josh Bersin asks, “What do you think would happen if nobody in your company ever learned anything?”

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Topics: Learning & Development, Talent Management, #FutureReadyHR

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