Measuring ROI on Training and Development
Each year, businesses spend millions on training, with the aim of developing their people, and ultimately their organisation. Whether it is skills training, on the job training, coaching, or leadership development programs, the question remains: How much of the training spend is effective? Furthermore, could the return on investment (ROI) of this spend be improved?
The problem in answering these questions is first establishing how to measure the ROI of training spend.
There’s no denying that employee training and development is crucial to the success of any organisation, with workplace learning providing a wide range of benefits.
Studies have shown that L&D plays a huge role in engagement. 41% of the fluctuation in employee engagement is driven by activities, that learning and development professionals have the opportunity to influence.
According to Robert Half, businesses with a strong learning culture enjoy employee engagement and retention rates around 30-50% higher than those that don’t.
These statistics are also backed up by research conducted several years ago by Bersin & Associates (now Bersin at Deloitte), which documents the revenue-boosting impact a culture of continuous learning creates within an organisation. The study unearthed that people employed at companies with a strong workplace learning culture, are 37% more productive than their peers who are at organisations that don’t value workplace learning.
There are differences between measuring tangible benefits of workplace learning, like reduced costs and increased revenue, and intangible benefits, such as wellbeing and commitment to the organisation and engagement, resulting in higher concentration. Both are equally as important.
A Report published by Leo Learning found that 53% of L&D departments are subject to either no or basic measurement, with 63% of respondents strongly agreeing that they feel executive pressure to measure learning impact, up from 35% four years ago. Meanwhile, 92% of CEO’s say they don’t see the business impact of L&D programmes, and just 4% see the ROI.
Here at MyPeople our team have spent over 20 years working with elite sporting and business teams, to identify where and how the impact of training on an organisation can be measured.
Throughout our journey, we discovered, when individuals felt they had received effective training (especially training of softer skills), there were positive changes in their commitment to their role, their team, and their organisation.
Our research insights are supported in countless academic studies. The perception of effective training, when combined with good manager relations is linked with increased meaningfulness of work for an individual. Therefore, an increase in behaviours, alignment, and relationship quality. Training positively impacts individual effort and commitment, and that influences productivity and performance.
After decades of research, we created an automated measuring approach, a methodology and a reporting tool that enables organisations to continuously track employee’s commitment and team performance. Enabling HR Leaders to measure how commitment changes over time in relation to training initiatives, to really see what is working and what’s not.
One of the biggest stumbling blocks HR Leaders face, is commercial buy in. Rather than perceiving training as an expensive luxury or trying to do more while spending less, demonstrate how training is a worthwhile investment. When you can prove your ROI, you’ll soon shift their mindset.