If you’re running a learning and development program at your organization, you need to measure training ROI (also known as learning ROI). This figure not only helps demonstrate the value of training programs, but also identifies areas for improvement.
Unsure how to measure return on investment for training? We’ve got you covered. Let’s look at exactly why and how to measure the ROI of your employee training initiatives.
What is training ROI?
ROI stands for return on investment. It refers to the benefits from any kind of investment on behalf of a company. For example, if you invest $10 in something for your business and get $20 back, your ROI is 2:1 or 200%.
Lots of things can be considered a return. Increased revenue is one, but ROI can also be calculated based on increased productivity, time saved for your team, and overall business success.
When it comes to learning and training ROI, we’re talking about the benefits that come from investing in learning and development (L&D).
Why measure training and learning ROI?
Any company running a training program should be measuring employee learning ROI. That’s because it helps to:
- Measure and show the value of training
- Ensure you’re investing in the most effective training programs
- Get a better idea of what training programs should cost
- Make a case for continued or increased L&D investment
- Foster a culture of continuous improvement
- Prioritize learning that has the biggest impact
- Make data-driven decisions for training program improvements
- Tailor training programs to align with business objectives
Metrics to calculate learning ROI
To work out employee training ROI, you need to track the right metrics. Here are a few that may come in useful:
- Team time saved
- Increased revenue
- Reduced costs
- New employee processing time
- Number of customer complaints
- Number of repeat customers
- Team productivity
- Time to competency
- Number of employee errors
- Employee satisfaction and engagement scores
- Customer satisfaction scores
- Employee training satisfaction scores
You can use a variety of these measures to assess the impact your training initiatives are making.
How to measure employee training ROI
Wondering how to measure return of investment for training? Just follow these six steps.
Step 1: Determine the expected output and overall investment
The first thing you need to do when measuring training ROI is to set key performance indicators (KPIs). These are the results you want to see following your training initiative. To set KPIs, pick several metrics — like those above — that best apply to your business and its current goals.
You also need a clear picture of the costs involved in delivering your training program, including those associated with instructional design, content creation, venue rental, instructor fees, and any technology used. These costs should also account for the number of hours your employees spend away from work to attend or complete a course.
Step 2: Create a control group
You can only judge the return on investment you’ve made if you have a control group to compare your post-training results to.
So, pull KPI data before your employees start their training. You can then compare before and after metrics. Alternatively, if you plan to train your teams in stages, you could train one group first. Then, compare the metrics you get with this group to the group that hasn’t had training yet.
Step 3: Measure learning effectiveness
Measuring learning effectiveness determines how well learnings — acquired in a classroom or online environment — have been applied to the real-life workplace.
To find these stats, enlist the help of managers. Ask them to complete surveys or sit down for 1-2-1s. How do they feel training has impacted the work of their employees? Also, survey your learners and assess their satisfaction with the training. They can tell you how worthwhile they found the training and how it has affected their day-to-day.
Step 4: Measure increased productivity and output
Measuring productivity and output allows you to assess how quickly employees apply their new-found knowledge and skills, and the degree to which their productivity, quality of work, and workplace behaviors improve as a result of your training program.
Step 5: Measure business impact
Measuring how learning and development impacts your business performance helps to assess whether your training has had the desired effect on achieving your goals.
When measuring business impact, you can look at a range of metrics, including employee productivity, retention, client satisfaction, business revenue, and employee engagement.
Step 6: Compare and communicate the results
Once you’ve collected all training ROI data, you can see how your training initiative compares to others. Benchmark your results to industry averages, then analyze this data to find areas for improvement.
Communicating your learning ROI results is another piece of the puzzle. Share your findings with stakeholders, including management, HR, and training teams. By getting everyone on the same page, you can highlight areas for training program improvement and demonstrate the value training brings to your organization.
Measure ROI on training with an LMS
Measuring learning ROI allows you to demonstrate the value of training, make your L&D more effective, and make the case for future training investment. Using the metrics and steps above, you can assess how your training programs really impact your business objectives and overall performance.
While gathering data manually is possible, it’s time-consuming and prone to error. One of the easiest ways to get started with training ROI is with the help of a learning management system (LMS). Moodle Workplace allows you to create stellar training programs for your employees. It also helps you to measure and manage training progress with learning analytics and custom reports.
