It’s commonly accepted – at least by those who pretend to know about these things - that learning brings benefits. Yet – for the benefit of C-suite executives who tend to deal in figures - assessing the value of corporate learning, via its return on investment (ROI), is a frustratingly imprecise science.
In determining the ROI of any piece of learning, you can’t measure progress, development or improvement unless you’ve also measured performance at the beginning of the exercise. After this - at the very least - you must answer five key questions:
Opting for a subjective approach to learning measurement is simple, if cynical. Decide upon the answer you want and then assemble the figures to prove it. Ensure that this figure is over 100% - to give a positive ROI - but not so over-the-top that it looks unbelievable.
An objective approach
Trying to be objective about measuring ROI is far more complex. You must bear in mind, at least, that:
The ROI of Teambuilding
If, for example, you had to provide an ROI for a teambuilding exercise, you might cost – in both money and time terms - specific situations or events in the past year involving members of the team where reduced efficiency and effectiveness in decision making resulted in increased costs; difficulty in completing an initiative, and/or delays. For each situation, you must identify the cost in terms of time and money to resolve the situation and the opportunity cost. Then you should include indirect costs - such as the negative impact on morale, customer churn, turnover and productivity losses.
Then, you should identify and calculate the value of the opportunities that could be generated by more cohesive teamwork and improved decision making. Add up the money that would have been saved or generated if the team had been able to work together more cohesively. Use these figures to determine the time and budget requirements, as well as what it would be reasonable and worthwhile to invest in teambuilding.
Carry out the teambuilding programme; then generate a new ROI along the same lines. Hopefully, the situation will have improved – but that might mean that the ROI of running further teambuilding training has fallenOnce you’ve produced the ROI figures, you can prove that, say, a department is now performing more efficiently and/or effectively than before – and attribute at least some of that improvement to the L&D input its members have received. However, bear in mind that the resulting performance improvement is also due, in part, to changes in the department’s personnel. So, L&D, along with HR-moderated talent management, is contributing to an improvement package whose value is maximised in the medium-to-long term, rather than the short term
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