Case Study

PROGRAMME Bachelor of Commerce in Human Resource Management

MODULE Training and Development

YEAR Two (2)

INTAKE January 2023 Semester 1

Marks 30
Why It’s So Hard to Measure ROI in Training and Development
Source: https://cognota.com/blog/why-its-so-hard-to-measure-roi-in-training-and-development/

Any organization wants to know that there is a return on investment (ROI) or else the initiative would be a waste of precious
corporate resources.

Measuring the ROI in training and development is never easy, and learning leaders continue to seek different ways to
evaluate the success of their courses on multiple levels.

Indeed, quantifying the value of learning is not straightforward, and is carried out in different ways across different
organizations. LinkedIn Learning’s 2021 Workplace Learning Report noted that there was a rise in the use of employee
engagement survey scores as a way to measure the impact of learning.

However, this is just one metric. According to LinkedIn, here are the top 10 ways L&D pros measure the impact of learning:

1. Qualitative feedback from employees using online courses

2. Satisfaction of employees using online courses

3. The number of employees that consistently engage with learning content

4. Employee engagement survey scores

5. Qualitative feedback about behavioral changes that learning was intended to drive

6. The number of online courses completed

7. An increase in the number of skills employees are developing

8. Team/organization/business metrics (deals closed, customer satisfaction) before and after training 9. Time
saved/productivity increase
10. Ability to retain talent within your organization

Difficulties in calculating training ROI

Looking at the list from the LinkedIn Learning Workplace report, it’s clear that many of these would be of little interest to
departments outside of L&D—including the C-Suite.

Qualitative feedback, satisfaction, and employee engagement scores are certainly useful. They’re relatively easy to obtain
—usually right after the course has ended or within a reasonable timeframe. They’re also an immediate measure of the
hard work of the team of instructional designers and subject matter experts who developed the course together.

Unfortunately, the business unit and senior management would need further proof of the success of the course. This would
include changes in behavior, such as skills acquired, or any hard metrics demonstrating direct impact.

Training ROI formula

According to eLearning Industry, business leaders have developed the following simple formula for calculating ROI for
corporate training:
ROI (%) = [(Monetary benefits – Training Costs)]/Training Costs * 100
However, as with any basic formula, each organization will need to tailor this based on multiple variables. There must also
be a way to isolate the effects of the course or learning experience the employee underwent, for the strongest way to
calculate the ROI of training. Each organization is unique, operating in a particular industry and employing individuals with
varying levels of experience.

Measuring ROI for different types of training

Sales training is perhaps the easiest ROI to calculate. Managers can simply take the increase in sales production of an
employee post-training, subtract the cost of that training, divide by the cost of that training, multiply by 100, and there it is.

As for other job functions that do not produce an immediate, numeric result, calculating the net benefit or effectiveness of
a training program can prove a challenge. For example, product managers and developers have longer timelines for which
their results can be measured. For some job functions, it is indeed difficult to measure the impact of learning programs.

However, even the calculation for the effectiveness of sales training might not be so simple. The sales organization will
need to decide what time frame to use to measure the ROI, as not all salespeople will see an increase in production in the
same amount of time. Calculating training costs

Further, the actual training costs might be unclear and difficult to calculate. For example, the sales department might
have had to contribute some budget responsibility to the L&D department for developing the training materials.
Additionally, the hours spent in training those salespeople, when those salespeople could have been spending that time
prospecting, setting up appointments, doing presentations, and closing, must also be considered, because those “lost”
hours are a cost for the training.

To ease the burden, L&D can work with the business units to develop standards in measuring and reporting ROI on learning.
For example, training costs across all departments will need to incorporate the time away from performing regular job
duties, in addition to any “local” costs that the department spent in training the team, such as paid online courses.

Evaluating training requires data—and a lot of it

As organizations understand the need to evaluate the impact of their training, they realize that the only way to do this is to
collect more data and create strategies to standardize this data collection and calculation (analytics) for insights.

Clearly, there is an opportunity in measurement. Learning industry analyst firm Brandon Hall Group found that the biggest
challenge to measuring learning impact is the lack of proper metrics. Nearly all, or 91 percent, of respondents to a survey
see the need to measure, but less than half, or 42 percent, indicate that their data collection methods are lacking.

The L&D team will need to acquire additional talent in order to do this. Organizations are starting to see the need for
Learning Operations Managers to step in and help L&D teams uncover efficiencies and improve results using advanced
analytics tools.
Measuring ROI in training and development is never simple, and organizations will need to work hard on systems that work.
However, with access to the right data, leaders, including the C-Suite, can better evaluate training effectiveness and the
organization will experience a greater impact to its bottom line.

QUESTION 1 (30 Marks)

You are a Training and Development Specialist. You have been contracted by Choc Co. to advise the company on how to
go about conducting programme evaluation.

Prepare an email to the Head of Training and Development in which you explain the purpose of programme evaluation
as well as Return on Investment. Motivate for the type of evaluation you would recommend.