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How can your organisation prove the value of its learning and development efforts?

schedule 28th November 2017 by Sophie Thornton in Virtual College Last updated on 24th April 2018

Enthusiastic employee talking in meeting

Most modern businesses are well aware of the need to invest considerable sums in learning and development, but it remains an unfortunate fact that many bosses are still reluctant to put their money where their mouth is when it comes to staff training.

As a result, employee training and development budgets can often be first on the chopping block when it comes to cutting costs, despite the considerable body of evidence showing that a well-supported approach to training can deliver a significant return on investment (ROI).

HR, compliance and training managers, therefore, need to be well-versed in how to make a strong business case for why spending on training solutions needs to be considered an essential expense, rather than an expendable luxury. This can be a challenge, given that learning isn't traditionally seen as a quantifiable metric, but there are in fact a number of ways in which the impact of a properly funded learning strategy can be made clear to senior teams.

What kind of ROI can staff training deliver?

One of the easiest ways to demonstrate the potential gains can be to point to the numerous industry-wide studies offering clear evidence that investment in training can deliver the kind of ROI that would turn the head of even the most money-minded CEO.

For example, a US study by Accenture suggested that for every dollar invested in training, companies received $4.53 in return - an ROI of 353 per cent - while another study by True Focus Media suggested that businesses can receive $30 worth of productivity for every dollar spent on e-learning tools.

Despite this, LinkedIn's 2017 Workplace Learning Report suggest that only 60 per cent of companies provide learn and development leaders with a seat at the C-suite table, while only 27 per cent of training departments expected a budget increase this year. This shows that many firms are still not realising the full benefits of proper investment in this area - as well as hinting at the potential competitive gains available to those that do.

How can the ROI of learning and development be calculated?

The reason why ROI for training investments can be hard to calculate is that many of the gains associated with learning and development are so-called "soft" benefits such as increased staff satisfaction or engagement, which are difficult to specifically quantify.

However, there are also many measurable metrics that can provide clear insights into the success of your training efforts. For example, many firms might measure the impact that customer service-specific training has on feedback ratings and complaints data before and after the sessions; other organisations, meanwhile, may look at the number of leaders they are able to promote internally as a result of development efforts, and calculate the amount of money saved on external recruitment.

In all cases, it's important to collate detailed data on your staff's training performance and their professional attainment levels, before isolating any changes that can be attributed to the training, and calculating how this translates into profit contributions or cost savings. By deducting the overall programme costs from the resulting total, you'll be able to produce an ROI figure that gives you at least a ballpark estimate of the kind of gains you're making.

Making the case for training

With LinkedIn's Workplace Learning Report suggesting that only eight per cent of company leaders see the impact of learning and development and only four per cent see the ROI, it is clear that more needs to be done to make a more persuasive case for training investment.

After all, every business accepts that onboarding, refresher and compliance courses are going to be vital at various points, so by doing the legwork and collating the data to provide hard evidence of the benefits they offer, it will become much easier to convince bosses to invest the necessary resources.

Moreover, the benefits of this kind of data collection are ongoing, as it will allow the organisation in question to get a detailed insight into which of their interventions are delivering the expected value, and to refine their methodology accordingly. This way, they can maximise the already significant gains that learning and development can provide, putting them a few more crucial steps ahead of their more reluctant rivals.

Summary: Investing in learning and development is essential for any company - which is why it's important that those responsible for training are able to make a business case for how these kinds of investment offer value for money.

Related resources

Sophie Thornton - Virtual College

Author: Sophie Thornton

Sophie is a Learning Technology Manager who is passionate about helping her clients achieve better results through digital learning. With her team, Sophie creates effective and innovative solutions using new and emerging learning technologies. She has a degree in English and uses her broad skillset to also write bids.

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