The Problem With ROI in Learning & Development
Proving return on investment (ROI) is a challenge for most industries that apply social sciences, such as Consumer Research or Management Consultancy. Learning and Development (L&D) is no different. In fact, LearnUpon found that 61% of training leaders didn’t measure ROI at all1. D2L found only 33% of learning leaders included some form of ROI metric in their evaluation of learning efficacy, while 46% of businesses reported that ROI was a challenge2. With hard-to-measure outcomes, like improved communication and increased self-awareness, it becomes difficult to prove the real value of your training. Human behaviour can’t always be translated into hard data. So how do you go about measuring the effectiveness of your L&D programme?
How Can Alchemist Help?
To overcome this lack of effective methodology, we sat down with the experts and formed a Knowledge Transfer Partnership (KTP) with the University of Exeter. This research partnership is part of a UK-wide scheme that supports businesses to improve competitiveness and productivity by accessing the knowledge of the country’s leading universities. This relationship helps us to develop new diagnostics for L&D, improve processes for identifying learning needs and design bespoke training programmes.
You can read more about our KTP with the University of Exeter Business school here. Through this partnership we have formulated a model of evaluation for the L&D sector that stands on the shoulders of tried and tested methods, emergent research and innovative thinking:
Finding The Other Way To Measure ROI
While the Kirkpatrick model (1956) is the longest standing framework to measure training efficacy (including ROI), Alchemist implements it as a blueprint, from which we build a solution that goes beyond surface-level data. Leveraging the foundational elements of the Kirkpatrick model – Reaction, Learning, Behavioural and Results criteria – we form a strategy. Combining this with Kraiger’s Learning Outcomes Scheme (1993) – which evaluates cognitive development, skills development and affective change – we design bespoke evaluation journeys. These use objective-aligned principles, a theory and evidence based approach, and empirically validated measures to provide you with a clear picture of your results.
Applying The ROI Solution
Using this solution, we are much more likely to deduce the genuine impact that L&D is having on your business. There are three main categories found to be most studied in a meta-analysis by Tharenou et al (2007): Human Resource, Performance and Financial. Of course, the latter tends to be the focus in ROI evaluations. However, it isn’t the only factor that matters. Prior research shows a statistically significant positive impact of training – on employees’ attitudes, general human resource performance and managers’ perceived job performance of employees. The evidence also exhibits positive influence of training on product/service quality, productivity, and sales.
Our collaboration with the University of Exeter gives us access to frontier knowledge on this topic from academia in both Psychology and Management. Alchemist’s solutions are informed by thought leaders who truly appreciate the need to understand the impact of your L&D strategy.
The Action Plan
According to the Brandon Hall Group3, only 40% of businesses feel their learning strategy is aligned with their business goals. Right from the beginning, we will monitor how your objectives are being met and align this with our evaluation for a cohesive experience at every stage.
Our L&D experts will help you identify learning objectives and design solutions that align with your organisational strategy. The learning team will write content and facilitate the delivery, while our scientific researcher will map psychology and management mechanisms to your objectives and solutions. Together, we will evaluate your business transformation with an evidence-based approach and produce tangible outputs.
Through this aligned learning and evaluation process, Alchemist aren’t just paving the way for exceptional growth for your people, but can also deliver robust return on investment data for your stakeholders.
Frequently Asked Questions
Why is ROI important in training?
Return on investment is important in training because it helps clients to understand the impact and effectiveness of a programme, and helps to justify their budget.
How do you measure ROI of learning and development?
Alchemist measure the return on investment of L&D in a bespoke way that monitors metrics that actually affect your organisation. Informed by academic research, we go beyond the basic model to uncover data that delivers impressive impact.
How do you ensure good ROI?
You can ensure good return on investment in training by investing in carefully crafted training programmes. Buying outdated or off-the-shelf training for your organisation can lead to low engagement and poor outcomes, whereas a tailored and blended approach means you are securing success for your business.
Why do companies invest in learning and development?
Companies invest in learning and development to support the continuous improvement of their teams and individuals. This is crucial, as without continued growth, businesses can easily fall behind the curve – resulting in low performance.
What is the tool to measure ROI?
We measure return on investment using a robust evaluation model that is custom-fitted to your organisation and the programmes you invest in. Backed by academia, our innovative evaluation processes and diagnostic solutions align with your objectives to deliver a clear picture of the success of your investment.
Contact Us
Get in touch today to find out more about Alchemist’s approach to ROI in learning and development.