How to measure the ROI of employee training
The cost of employee training and upskilling is a significant line item in almost every company’s budget. Businesses in the U.S. spent more than $70 billion in 2016 on employee training initiatives alone, not to mention the costs associated with taking employees away from their usual duties.
With budgets of up to $13 million for large companies, it's important for employers to know they’re getting a good return on their investment. And as costs rise and the pressure to upskill increases, measuring the effectiveness of training will be more important than ever.
Who are employers teaching?
In its 2016 Training Industry Report, TrainingMag.com noted that employers' expense per learner ranges from as low as $379 in large companies to $1,052.00 in small firms. On average, employees received 43.8 hours of training in 2016, with non-exempt workers receiving 40% of the training. Thirty percent went to exempt non-managers, followed by managers and then executives.
As with all initiatives, results matter. But for employee training, measuring impact and outcomes can be difficult. For some learning programs, results are clear and visible; an employee becomes able to use the necessary equipment, for example. For others, like customer care, results may be more subtle.
“An organization's ability to measure the impact and subsequent value of learning activities has been a historical challenge for many reasons,” says JD Dillon, principal learning strategist for Axonify. “Traditional measurements can be subjective and may be limited to a specific moment — like the end of the training session. Surveys often don’t paint a complete picture or measure change over time.”
But no one single measurement can do it. Employers need to be ready to consistently gather data from multiple points to "paint the full picture of learning impact," Dillon told HR Dive. He suggests that data include content consumption, current knowledge, behavior observation, employee feedback and performance results.
“By analyzing this data,” Dillon says, ”an organization can validate the sustained impact learning is having on the business and its employees. Rather than guess at the impact a training program had six months ago, you can verify the impact of training right now.”
There are, of course, some widely used evaluation models. According to John R. Mattox II, managing consultant at Gartner, these include Kirkpatrick’s Four Levels of Evaluation, Phillips ROI Methodology and Bersin’s Impact Measurement Framework.
Mattox, along with Mark Van Buren and Jean Martin, delves into each of these methods in a book, Learning Analytics: Measurement Innovations to Support Employee Development.
The ability to measure outcomes starts with determining what outcomes you seek, experts say. It could be the basics like improved use of tools or equipment, or more outcomes that are more difficult to measure, like improved engagement. Whatever you hope to achieve, you must start with a baseline that identifies where you are now, and then project where you hope to be. From there, you can determine what tools can best be used to measure success of the training, as well as the employee.
Mattox says one of the best ways to measure effectiveness is to compare “after training” results against benchmarks. But while companies may have their own internal benchmarks, external data may be more valuable. If you only have a few staffers who perform a task, for example, you might want to know what standards the industry overall relies upon. To help, Gartner created a Metrics That Matter system. “It’s a scalable, cloud-based system that automates the collection of training evaluation information using web-based surveys,” Mattox says.
Learning management systems often provide some metrics, and some can generate reports that reveal clues into the effectiveness of training, like time spent on each course or activity; time to complete each item; and completion and dropout rates.
This information can provide some insight; high dropout rates, for example, could suggest material that is difficult to understand, among other things.
Pre- and post-training surveys can offer some instant insight, while other data — like whether the training has produced desired behavior changes — must be collected over time.
Evaluating the experience
Recent research reveals that a majority of employees (65%) expect to receive training and career guidance. For millennials, 65% believe it’s management’s responsibility to offer accelerated development programming on the job. But another study found 43% of learners say the training they're getting is ineffective. Providing impactful training not only meets employees' expectations, but can help retain employees in a difficult talent market.
To meet demand in an era of shrinking talent pools, employers are increasingly upskilling current employees, so the impact of training on employee engagement and retention may well be a significant metric to consider when measuring your investment.
Is ROI that important?
Of course, business is concerned about return on investment, but Dillon cautions that it can't be learning professionals' sole focus. “ROI is important, but it's not the goal," he said. "Impact — a sustained change in employee behavior and business results — is the goal.” No company wants to waste resources, but hinging all actions on ROI discounts the value of learning, he said.
It’s also important to remember training is not a one-and-done proposition. Ongoing learning, reinforcement of prior materials and two-way feedback and communication provide employees with the skills and tools they need for continuous learning and growth on the job. The true return on investment might just be engaged, retained employees.