All businesses want a positive return on their investments, and training is no exception.
Measuring ROI (Return on Investment) on training, however, suffers from the fact that training provides intangible benefits that are difficult to measure.
Training's impact on intangibles will have to be converted into quantifiable scores to be added to the measurable metrics for a better picture of the ROI.
A blended index that provides for both the intangible and tangible returns for a composite ROI is more suited when it comes to determining the ROI of LMS (Learning Management System).
The standard quantifiable metrics include business KPIs like Sales, Revenue, Profits, Operational Efficiency, etc. The non-quantifiable parameters include individual KPIs like Satisfaction, Efficiency, Engagement, Workplace Behavior, etc.
To know the impact of training, it is essential to know the baseline position. The pre-training and post-training ROI comparison will throw up the degree of change and whether it is up to the targeted levels. Applying analytics to and learnings from the results will allow businesses to adapt and adopt design and process changes for bringing about the desired and discernible improvement in expected outcomes.
To bring about a notable improvement in training ROI, it is essential to look at the cost structure of training. The traditional methods of imparting training cost heavy. A brick and mortar classroom with the requisite infrastructure, trainee travel, and associated costs, upkeep and maintenance costs, trainer wages and remuneration, material hard copies, etc. all add up to considerable per trainee expenditure. Newer methods of e-learning and mobile training are cost-efficient, leaner ways of imparting knowledge and upskilling employees.
Scalability and speed without sacrificing content and ability are the hallmarks of such technologies. Adopting these tech-based methods as the core of LMS will help generate better training ROI. More importantly, it can enable a focused approach in a short time to train specific target groups with specialized know-how. For instance, a project that is potentially a revenue spinner can be successfully invested into with the support of project-specific training to the set of people who will run the project. This will automatically translate to higher levels of revenue with lower overheads and a higher ROI for the business. Decisions regarding resource allocation and project selection will become easier when it is known that the backup training system can efficiently repurpose and bring the team concerned up to speed. Quickly creating such ninja teams of highly trained professionals for specific projects will yield good returns and uptick the training ROI.
Some best practices that will aid in better ROI from L&D (Learning and Development) vertical focus on cost management and productivity enhancement measures. For instance:
The link between productivity and employee engagement is well established. An engaged employee is a satisfied employee who will render better and improved customer service. This, in turn, will lead to higher levels of turnover and improve the bottom line in balance sheets and consequently improve ROI.
Learning and development professionals are well aware of this linkage. They truly appreciate the concept of ROI of training and maximizing the dollar benefits of training. Even though measuring the intangible benefits is hard, such technical deficiencies can be overcome through scores and weights allotted to various parameters, which can give a fair value of the contribution. For instance, use of supervisor assessment of employees post-training over their pre-training performance. Comparing the impact on the assessee set across measurable metrics like customer service, teamwork, time-space efficiency, task completion, goals achievement, etc. Based on the supervisory judgment of the percentage of improvement in the chosen metrics, ROI can be derived. It will also help in refining and fine-tuning training inputs for better results in the future as it serves well as a feedback mechanism.
Measuring the effectiveness of training is important for weighing the impact of training on employee engagement, productivity and retention, and resultantly business returns. Training ROI provides organizations with the measure of value that training brings to the table. It can help in choosing between available options that best suit the organization's needs and maximize value. It is apparent that cost-effective training methods, which find ready acceptance by the users, notably cloud-based e-learning, are currently a better value proposition than traditional brick and mortar institutional training. They are scalable, amenable to quick changes with built-in agility, and can cover a large segment of employees anytime, anywhere, and anyone.
To get the best value from training, sometimes it is better to outsource solutions. A third-party perspective often provides insights that may go unnoticed by in-house teams. Professional companies like Gyrus, offer ready-made and customized learning tools that are best in class. Their platforms not only provide solutions to problems associated with training but also help improve employee productivity. Changes become visible, and real business value follows. Gyrus solutions not only augment competencies but also make a lasting impact on team performances. They employ a variety of mechanisms with active engagement tools that build employee loyalty. Their 39 years of global experience across 500+ enterprises confirms that their solutions provide benefits that far outweigh the costs.
Whatever be the choice, an effective and tested LMS provides value to an enterprise, which should be optimized to be genuinely beneficial.