Global corporate learning is improving but it is not yet meeting the needs of learners around the world. A description of the current state of global learning and some of its causes can be found in the first article here. This article is part of a series meant to equip the learning leaders of global organizations on the best practices for creating engaging and impactful learning experiences for every team member, no matter the region or culture. CLICK HERE to see a list of the topics covered in this series and access the articles.
Very deliberately, I managed to avoid statistics as much as possible as an undergraduate student. The fear driving my plan came from my sophomore year of high school when I had to drop a math class in which I felt completely lost. The humanities came much more naturally. I was interested in psychology, sociology, history, philosophy, theology, and the like.
Through several degree programs, my avoidance strategy succeeded until a Ph.D. program revealed my lack of understanding of stats. Thankfully, a professor was patient, kind, and willing to get me up to speed to the point where I, not only could do what was required but began to see the beauty and the narrative in the numbers.
In conversations with many other training and development people over the years, I learned that my experience was not unique. Our vocation, historically, has not been focused on numbers nearly as much as it has been on people and their stories.
But there comes a moment when learning leaders need to report on results and, much like my school experience, numbers suddenly take on greater importance. For those working in large organizations, the stories might be compelling, but results expressed in numbers are vitally important.
Why? Because all corporations and organizations, no matter how big they get, face the economic truth of scarcity. That means that no set of leaders in a company can do everything they might want to do. They have to make choices and allocate resources where they believe they will get their biggest return on investment (ROI) for their organization.
ROI among learning leaders has a bit of a holy grail feel to it. In learning conferences, often the best-attended sessions are focused on ROI, what it is, how to calculate it, and how to report it.
Skills in determining ROI have both a defensive and offensive side. In the world of annual budgets, defending what was spent last year means being able to tell the business impact of your learning team. Without being able to clearly demonstrate how dollars allocated to learning added value to your organization, you may find that your budget is the first to be cut when your company has financial challenges.
There is also an offensive side to ROI. When proposing new projects, the decision to shelve or move forward will most often come down to your ability to talk about how the things you want to do will make people or a process more efficient. You should be able to speak to how it will reduce errors or increase people’s leadership skills to improve financial performance. Do you want to start using extended reality in your learning? You have probably already calculated what it is going to cost in software, equipment, and training for your team. What will be your justification for the spend? It can’t be merely that other companies are already using it or the ‘cool factor,’ but the likelihood of approval goes up dramatically if you can speak in numbers.
Return on Investment is a simple calculation. It is:
ROI=(gain-cost)/cost x100
Let’s say what you are reporting created a learning experience that resulted in $20,000 of savings in a process. Developing the learning experience cost $10,000.
ROI=($20,000-$10,000)/$10,000×100=100% ROI
The formula does not care about things like attendance or performance on knowledge checks, or even pre and post-surveys. ROI does not concern itself with whether or not a learner appreciates a learning experience. These are all good learning data points for those on learning teams because they need to know whether or not their learning is landing. But in pure ROI terms, they do not tell the story that matters to those in financial leadership roles of your organization.
There are two components to the equation. The first is cost. Learning leaders who excel at ROI have a solid understanding of all costs associated with developing learning experiences. This list includes things like instructional designers, learning developers, subject matter experts, facilities, technology, and use of outside vendors. It also includes the cost associated with learners’ time to complete the modules.
The second component is gain or benefit. This is harder to determine and includes items like increased efficiency, greater productivity, key performance indicators, and speed to proficiency, especially in onboarding. These are tangible benefits. But it is also possible to include more of the less tangible benefits like measuring increased job satisfaction, longevity, and culture if how these contributed to the economic value of the company can be demonstrated.
The best gains are measured, quantitative, competency-based, and connected to proficiency. Giving the numbers, though, is not yet a complete picture. All the better if they can be tied to overall organizational objectives and team goals.
Telling your learning story through ROI is not easy. It requires a solid understanding of statistics. It takes a great deal of work to isolate the impact of learning. Collecting and analyzing data is a continuous process and requires that you, or someone on your team, can decipher what the data means.
One secret I’ve heard from several learning leaders who do this well is that they focus on relationship-building. They work closely with people like the chief financial officer, chief operating officer, and managers at various levels of their organization. They ask questions about what is most needed and what is more valuable to them. They also seek help from their IT department when needed.
There is no doubt that reporting the ROI of learning is a challenge. But the benefits are worth the effort. You’ll know what is working and what is not. You will be able to communicate clearly and consistently the value of your learning to those who make budgetary decisions. You can justify your learning budget in lean times and boldly ask for additional funding when you have a need and the timing is right.
I recently ran into my high school math teacher whose class I was forced to drop back in my sophomore year. I wanted to tell her that I finally learned what she was trying to teach me, but I didn’t because the moment was not the right one. Perhaps I’ll send her an email so that she knows her efforts were not in vain.
Ingenuit is a unique learning agency that combines expertise in learning, localization, and staff augmentation. We are ISO-certified in three different areas to ensure projects are on time, on budget, and on target. To view our solutions, please visit our learning solutions page CLICK HERE. If you need another set of eyes on your global learning solutions, the learning experts at Ingenuiti are ready to help. We offer a Global Learning Needs Analysis which is a session with our learning experts to review your learning challenges and consider solutions. Please click CLICK HERE to set up a time to talk.
