Chances are you’ve landed here because you run or work for an organization that needs to do eLearning better (whether they know it or not). Like any business decision, getting online training in place is not something you can just switch on overnight—so how do you make your case when recommending a new solution? Whether your company has 10 or 10,000 employees, being able to display Return on Investment (ROI) will go a long way.
What is ROI?
ROI equates to how much return an organization will make after any investment – how much did you gain after your outlay? The easiest way to determine this is to weigh up how much investment was made against what value or gain it contributed.
We imagine you’re only still reading because you want to know how your eLearning initiative can provide more gain that investment, so let’s get into that.
What factors influence the ROI of eLearning?
When it comes to ensuring your staff training solution is able to prove itself to your business, here are some of the things we need to consider.
- Cost – Yep, no getting round it. We’re talking both the price of the LMS or eLearning solution itself, as well as the business costs associated with rolling it out. If your training platform isn’t cost effective, or if rolling it out is going to cost you the earth because of unforeseen internal costs to facilitate it, not much else matters.
- Effectiveness – Does your eLearning platform make it easy for your staff to get the info they need and get back to work, as more informed, more empowered team members? Is it clean and simple in its content delivery, allowing them flexible, cross device learning options? Knowing staff are able to engage with your training platform is more likely to enhance their perception of you as an employer, making your employer value proposition better, hopefully leading to less turnover and recruitment.
- Scalability/Trackability – Putting an eLearning solution in place ‘just for now’ which isn’t fit to grow with your business may mean that in time, you may be up for additional costs to upgrade. Also, the ability to easily track training completion can reduce labour-hours, saving your business time and money.
How can I calculate the ROI of eLearning?
OK, so when it comes to demonstrating the ROI of an eLearning solution to your business, you’re going to have to do run some forward projections, using the current business training situation as a baseline.
Using Kirkpatrick’s model, we can walk through how the proper eLearning solution in place, you’ll be able to effectively prove its value:
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Level 1 – Reaction
This is as simple as it sounds – what are your staff thinking about your eLearning? Is it getting you less dirty looks within the business? More thumbs ups? This is usually a good sign
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Level 2 – Learning
Easy to measure, and with the right training platform, you should be seeing assessment completions and scores increase.
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Level 3 – Behavioural changes
While these are difficult to assess depending on the size and nature of your business, you’re looking to see things being done differently or better within the business. Think raised efficiency, pro-active improvements to processes—stuff like this.
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Level 4 – Results/business impact
Less difficult to measure. Are you seeing gains in productivity and employee satisfaction and a decline in employee turnover? You’re on the right track.
By defining the measurable business impact in level 4 (your return), you’ll be able to compare this to the cost of implementing your training solution (your investment) and determine your ROI.
Example calculation
Marty runs a Creative Agency with a central workforce located in a city office, while also employing multiple contracted creatives who work remotely. He wants to ensure his staff are constantly at the bleeding edge in terms of their technical and industry knowledge, while making sure they’re also all up to date with internal agency procedures, to improve efficiency.
Marty’s concerns
- eLearning is not affordable for his business.
- Previous training platforms have proven disengaging for staff and hard to manage.
- His workforce is likely to become more fragmented by location and skill-set as his business grows.
Calculating Marty’s ROI
As it stands, Marty’s business currently spend roughly $7,000 every year on staff training. The majority of these costs are comprised of transport for staff to attend annual in house training ($5,500 p.a.) and labour-hours required for his internal design team to create training material assets ($1,500 p.a.). And to be clear, these costs don’t include
- Annual recruitment, due to the fact that his staff are constantly being poached by bigger agencies with more attractive employer value propositions ($1,500 p.a)
- Business costs due to inefficiency, which means that client work is regularly going over time and budget. ($3,500 p.a.)
By finding an eLearning solution that is affordable for Marty’s agency (under $5,000 p.a.) he is able to effectively remove travel costs from his training budget, saving himself $5,500 p.a.
He has been able to drastically reduce the time it takes his staff to facilitate staff training via the new solution, bringing his costs under $1,000 p.a. in labour-hours.
And in time, he will be able to measure how an eLearning solution has been able to reduce his costs for recruitment and what impact this solution has had on the agency’s productivity.
So, if you’re looking to demonstrate the Return on Investment of a new or updated eLearning system to your business, just remember to take into account factors such as cost, effectiveness and scalability/trackability, and be prepared to use your business’ current training costs to project what the future could look like. By doing the leg work now, and getting as granular as you can, you should have no trouble convincing those whose opinions matter most.
