The evolution of work has highlighted the strategic value of learning and development (L&D). As organizations continue to expect high employee engagement and productivity across hybrid and remote teams, corporate training plays an essential role in the success of a distributed workforce.
Yet L&D departments battle limited resources. A notable 47% of L&D professionals report that a lack of financial support is significantly hurting their organization’s learning effectiveness. Traditionally seen as a cost center, L&D teams often struggle to demonstrate their efficacy and value with straightforward metrics – leaving funding at risk.
In order to keep stakeholders invested and advocate for budget, L&D leaders must demonstrate their role in strategic innovation and illustrate how they support business objectives in a competitive market.
How to measure the ROI of training
L&D success is often measured by course completion or employee feedback. If enough employees reported a training initiative was beneficial – or simply completed a training – their responses are accepted at face value. According to McKinsey, only 30% of organizations take the time to look at training metrics beyond employee feedback.
With the increasingly strategic role of L&D and opportunities to capture more quantifiable engagement metrics, feedback alone is insufficient for making the business case for training. Here are five quantitative and qualitative ways to measure and communicate the ROI of L&D to your stakeholders.
1. Align your training to organizational goals and metrics
Corporate training exists to develop skills and competencies that support business growth. Yet less than half of L&D leaders report that their company’s learning strategy aligns with business goals – unsurprisingly, only 6% found poorly aligned L&D efforts to be effective.
To prove the ROI of L&D it’s essential to match learning initiatives to measurable business goals and outcomes. L&D leaders must establish clear channels of communication with business units to identify their target OKRs or KPIs and align training programs to support these goals.
For example, could a more streamlined onboarding process for new sales representatives lead to faster productivity that helps the team exceed their monthly goals? Could customer success training help reduce support tickets by 10% saving 200 working hours per month?
Work with business unit leaders to establish a baseline metric for success prior to any training program so that you can measure attributable growth once employees put their learning into action. By collaborating with department managers, you’ll recognize key training needs, how to correlate that training with concrete business data, and support increased participation as the effort becomes a shared goal.
Take action: Meet with your department heads to define what goals need more training support. Where is their team lacking the skills to succeed? What training do they believe would best support them? Then, establish a collaborative metric that allows you to measure and communicate the return on learning investment.
2. Tie training to employee evaluations to demonstrate individual growth
Beyond departmental goals, individual employee KPIs and other performance measures included in employee evaluations are a powerful way to target and improve isolated skill gaps that add value to your business.
Talk with people managers to discover what metrics they use to determine employee performance. In some positions, like sales, metrics are readily available to calculate a quick ROI for improving specific outcomes. Other roles might measure more qualitative skills like leadership or collaboration. Not all skills can be tied to training, so work with managers and your People Experience team to identify whether it’s appropriate to align employee outcomes with L&D initiatives.
Remember that training and learning have a symbiotic relationship – identifying where training did and didn’t help employees provides insight into how to improve your own L&D approach as well.
Take action: Find out how people managers evaluate individual employee performance. Do the evaluations include measurable standards? Do those standards align with current or planned training? Are evaluations conducted frequently enough to use as a metric of L&D success?
3. Track how L&D supports employee satisfaction and retention
Employee satisfaction is a qualitative metric, but no less critical to measuring the ROI of L&D – particularly when it comes to retention. Poor employee retention costs U.S. businesses $1 trillion each year and over half of employees who voluntarily left their job reported that their company could have done something to make them stay.
People are seeking purpose in their work more than ever, and 59% of workers identify professional development opportunities with superior company culture. L&D is in the unique position to influence employee satisfaction and help organizations retain top talent – both compelling metrics to prove its ROI.
Work with your People Experience team to incorporate L&D feedback in employee satisfaction surveys. Ask people managers what career development resources are most requested. By enhancing career development training, you’ll not only retain more employees but attract higher-quality candidates – a priority in today’s competitive market. Talented prospective employees want to work for companies that support employees beyond a salary alone.
Take action: Connect with your People Experience team to better understand what motivates employees. What training can support individual goals and improve employee experience? How might you develop training to address those trends?
4. Conduct a training impact study informed by engagement and learning data
When you want to measure and communicate the ROI of a new training, turn to an impact study. An impact study is ideal for matching training to outcomes from the beginning. A commonly used and respected framework for measuring impact is the Kirkpatrick Model, which measures reaction, learning, behavior, and results. It can be challenging to concretely measure these categories, however.
One useful way to connect an impact study to real data is through video training. Many L&D leaders have adopted on-demand video training to capture and share courses in a central video learning library for their organization. A robust video management system provides analytics that you can pair with the four levels of the Kirkpatrick Model to communicate quantifiable ROI.
Level 1: Reaction: The initial level in the model garners the immediate reaction of participants. Did they find the training useful? Do they think it will improve their job performance? These are the types of questions the reaction phase seeks to answer – typically through surveys. A video training library provides unique engagement insights such as how many employees completed the training and if employees viewed the video more than once.
Level 2: Learning: The next level determines what participants learned during the training. For example, using before and after questionnaires to gauge how well the training enhanced subject-matter knowledge. You can add quizzes directly into video training using a video content management system to streamline the process and automatically generate reports on results.
Level 3: Behavior: For training to make an impact, learning isn’t enough. Participants have to put what they’ve gained into action. Level three estimates learner behavior change – the ultimate goal of training. Seek feedback from managers on how employees are putting skills into practice.
Level 4: Results: The results phase goes beyond the individual and looks at larger business impact. Discover whether training delivered on its intended goal by looking at the metrics you aligned on with your business unit leaders.
Take action: Look at your upcoming training schedule and identify a course that you can map to the Kirkpatrick Model of measurement. Consider using video training to simplify logistics and acquire advanced insights. Start small in order to test this qualitative approach and determine whether it can effectively scale for your organization.
5. Continuously improve the cost-effectiveness of training
While it’s important to shift the narrative of L&D as a cost center by proving the additive benefits of your training, there is always value in continuously innovating to reduce spend while maintaining quality. One of the most effective ways to cut L&D costs is adopting on-demand training.
How much do travel and accommodations take from your training budget? If you’re like most companies, the number is higher than you’d prefer. In-person training depletes as much as 85% of each training dollar, and growing hybrid and remote work environments make the traditional method of live, in-person training impossible to scale affordably. The costs of airfare and mileage to gather your team in one place are staggering – not to mention the productivity cost of pulling people away from their work.
By both preparing video training to roll out across your organization and recording live training for later access, you can eliminate much of the need for in-person courses. Beyond the cost and productivity savings, on-demand video training transforms your L&D initiatives into evergreen assets that anyone in your company can revisit – helping you scale programs and significantly boost the ROI of training production.
Take action: Revisit your training budget for the year. Where can you reduce costs without affecting quality or delivery? Use an ROI Calculator to determine how much on-demand video training could reduce your budget.
Transforming training from a cost center
to a revenue center
To effectively measure and communicate the ROI of L&D, help your organization recognize its role in both reducing costs and generating revenue. With these five qualitative and quantitative strategies, you can demonstrate the value-add of your training and develop a comprehensive picture of impact to accurately and effectively communicate ROI in a way stakeholders can validate.
Download The Essential Hybrid Training Playbook
Whether you’re new to hybrid learning or ready to scale your existing hybrid training programs, we developed The Essential Hybrid Training Playbook as your actionable guide to creating a future-proof hybrid L&D strategy.
Download The Essential Hybrid Training Playbook to discover:
- 6 steps to building a future-proof hybrid training strategy
- Best practices for building a corporate video learning library
- An actionable checklist to strengthen training initiatives
- Case examples and lessons learned from L&D leaders