Previous approaches to measuring learning's return on investment have focused on attributes such as "Did they like it?" "Did they learn from it?" and "Did it change behavior?"
by Site Staff
October 25, 2009
Previous approaches to measuring learning’s return on investment have focused on attributes such as “Did they like it?” “Did they learn from it?” and “Did it change behavior?”
However, the only truly accurate measurement is the one taken at the end of the training session. Beyond that, little impact has ever been successfully measured, meaning the ROI of training remains fuzzy at best.
It’s also true to say that ROI could have been “achieved” through financial measurement, while at the same time customer service, internal systems and operations might have been adversely affected. In a training or learning context, ROI fails as a measurement tool, as the impact on the business is dispersed throughout the organization and in many cases brings intangible operational benefits.
Considering return on strategy (ROS) presents a broader range of business areas in which learning can have an impact.
ROS is divided into three categories:
- Internal, which includes policies, practices, products and staff retention.
- Direct external, which includes customer satisfaction and retention.
- Indirect external, which includes new customers and expanded markets.
Strategic benefits can be derived across a wide range of business activities, from improved knowledge of products to streamlined company procedures and enhanced governmental compliance reporting. Improved performance can impact staff retention, customer retention and other business strategic drivers that impact overall performance and profitability.
For example, let’s say Company X wishes to improve staff and customer retention and increase market penetration. The learning organization takes the following “before” measurements:
- Staff retention (represented as staff turnover): 35 percent.
- Customer retention: 60 percent.
- Customer satisfaction survey: 5 out of 10.
- New customers per annum: 10 percent growth.
The learning organization works to align learning activities with these business drivers. Six months later, it takes the following “after” measurements:
- Staff retention: 20 percent.
- Customer retention: 80 percent.
- Customer satisfaction survey: 8 out of 10.
- New customers per annum: 20 percent increase.
As indicated by the results, morale and product knowledge have improved. Service and product knowledge have also improved. Customer-facing skills have increased. And the company is bringing in more customers each year. Learning has become the pivot between business goals and the measured achievement of the goals.
However, despite these positive results, one must acknowledge that learning and the impact of learning on business goals is a process — not a project. It should be a lifelong corporate objective.
The ROS approach can be applied to any industry, from those in the private and public sector to sports organizations (using player stats) and political parties (using opinion polls). It is far more pertinent to measure the impact of learning across the entire organization than to attempt to measure only the financial repercussions.