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Return On Investment (ROI) in Learning - a blended approach beyond numbers

Updated: Apr 24, 2022

Return on investment (ROI) is a major topic in the learning and development world, and one that is not to be ignored. Companies want to know how much a training "pays off" and get to work with complex calculations and estimations that lead to a number: a percentage that indicates the benefits of the training compared to the sums invested.

As part of my job as a Learning Consultant, I made research on this subject and quickly faced a fairly impressive amount of information. However, I realized that most of the articles or webinars only addressed the easy part, explaining in details the concept but without really going deeper into challenging examples. I have come to the conclusion that a relevant and effective approach seems to go far beyond a mathematical formula.

In this article

ROI return on investment
  • How to assess training efficiency?

  • How is a return on investment (ROI) calculated?

  • Why ROI is not the best approach to identify the impacts of a training?

  • The Success Case Method to show the real impact.

  • A blended approach for a complete overview.

  • Set clear goals in advance.

How to evaluate the efficiency of a training?

The most commonly used structure was invented by Donald Kirkpatrick in 1954. The "Kirkpatrick model" evaluates trainings at four levels, with the fifth being added later:

1. Reaction: the degree to which participants find the training useful, engaging, and relevant to their jobs.

2. Learning: acquisition of new knowledge, skills, attitude, confidence, and commitment based on their participation in the training.

3. Behaviour: do the participants apply what they learned during training when they are back on the job?

4. Result: the degree to which targeted outcomes occur as a result of the training and the support and accountability package.

Kirkpatrick model roi training
Kirkpatrick model

Here is an example of the application of the model to training on new sales techniques:

1. A satisfaction survey is given to participants to collect their feedback on the training (content, duration, value...)

2. Participants take a test to evaluate their knowledge of new techniques learned. Role-plays are organised.

3. One year after the training, participants and their managers are asked whether the new tools have been implemented or not.

4. The results within the company / teams / salespeople are analysed and show, for example, that sales are up by 20% for those who attended the training.

This model therefore gives a structure that help to have an idea of the impact of a training on different levels.

ROI calculation and challenges:

A few decades later, Jack J. Phillips added a fifth level, the calculation of return on investment (ROI) and created the ROI Institute.

It is pretty straight forward. You simply divide the benefits of training by the costs and multiply by 100.

Formula ROI calculation how to calculate return on investment

Back to the sales training example above that results in a 20% increase, let's imagine that this represents an increase of 45,000€ and that the training cost 15,000€, the ROI is therefore 300%.

It sounds simple but this figure does not really give us information on the real impact except that the training brought in three times more than it cost. Has customer satisfaction increased? What about customer retention? Are the new techniques effective on all types of products? Moreover, what about calculation on trainings on the topic of Leadership or emotional intelligence, or time management? This is where lies the most important challenge in ROI calculation: convert results to monetary value.

Certainly there are data available. For example, Gallup has estimated that a disengaged employee costs his company 34% of his annual salary and that an engaged employee leads to -25% absenteeism. So numbers exist but how can we isolate the real impact of training? If employees are more engaged, is it thanks to the leadership training that their manager has taken? Partially probably. The fact is that all these calculations require a lot of time and energy to finally get a value that will not necessarily be very accurate and will not reflect reality.

A qualitative approach.

Another approach is needed, that which consists of telling a story: the Success Case Method (SCM) according to a book by Robert O. Brinkerhoff published in 2003.

It requires to change perspective meaning that we will not analyse all the results and data but we will focus in purpose on cases where the application of learning has been a success and/or a failure by asking the following questions:

  • When the program worked, how did it work?

  • What worked and what didn't?

This may seem unusual, but focusing your time and energy on these "extremes" rather than on complicated and uncertain calculations makes it possible to see much further: what factors help to implement new skills.

It is a four steps process.

scm process steps
SCM process

A blended approach

The SCM is therefore very interesting to tell a story about what was achieved thanks to the training and how we could improve it. All the data mentioned earlier are no longer at the centre of the approach but can be used to complete the picture and support the SCM conclusions. You can also highlight obstacles and factors that have helped the implementation of new knowledge. This type of blended approach seems to me to be the most effective way to get an overview that really reflects reality. Moreover, when you want to present the results, telling a story is the best way to captivate the audience.

Last thought: determining goals in advance is the key to success

Finally, in order to remain focused, no matter how you want to figure out the impact of a training, it is essential to define precisely the objectives to be achieved before the start of the program. According to a 2019 Brandon Hall Group study "The current state of talent assessments", only 16% of organizations connect team skills to performance goals (ROI). Yet when direction is clear and precise, it is much easier and more efficient to implement the right program. Then you need to take Kirkpatrick's pyramid in reverse.

  • What are the results we want to achieve? Increase sales, improve customer satisfaction, decrease the number of accidents, improve employee engagement...

  • What behaviours will participants should implement to achieve these results? Better listening to customers, new tools to approach customers, improved manager communication, change of behaviour at the workstation

  • What will the participants need to learn during the training to master and then implement these new concepts? What techniques and tools?

  • How will the training be structured to foster this learning?

Not only will this approach allow you to create training tailored to the needs but you will also set the scene for the ROI calculation and/or for the implementation of SCM. In the end you will have a pretty clear idea of the impact that the training program will have had.

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