Let’s get straight to the point. To measure learning ROI, you must connect learning to the right metric.
The secret is picking the right metric to measure and then showing how the learning contributed to that metric change.
It seems so logical, but learning professionals miss this connection all the time.
ROI Calculation Is Not the Problem
Every business understands ROI. It’s a financial calculation that compares cost to benefit. ROI proves if money was well spent or wasted.
Calculating ROI is not your biggest challenge. ROI is a simple calculation. You know this from how often it is used to measure all other areas of your business.
Choosing a Metric Is Not the Problem
You can pick any metric and compare the change in it to the cost of a learning program.
For example, you can calculate the ROI of a learning program that teaches “how to create an Excel spreadsheet” with a metric that shows errors in manufacturing. Did one really impact the other? No, but you can calculate an ROI and claim the Excel course made all the difference!
The Formula to Measure Learning ROI
The goal of all learning is to improve performance. Learning changes knowledge, skills, or attitudes. Those changes create greater competency and improved performance. Here’s the formula you need to understand:
- Learning = improved performance = metric change
The challenge comes in choosing the right metric. So, you must design a learning program to change performance (change the knowledge, skill, or attitude of an employee) that influences the metric. After the learning, you measure changes in the metric.
This process is how you tie learning directly to the metric that you want to change.
How to Choose the Right Metric
I’ll delve into this more in my next post, but you can start by asking two questions:
- What needs to change?
- When that change occurs, where will it show up?
Choose the metric that reflects performance. Why? Because, as I said above, learning improves performance through a knowledge, skill, or attitude change.
Once you choose the metric, ask what learning will improve the metric. The behavior change that needs to occur becomes the goal of the learning program.
If your learning creates behavior change, then the metric that measures that behavior will change. This direct line provides clear evidence of ROI.
Are you struggling to measure learning ROI? You are not alone. ROI is the language that every business speaks. But all too often, businesses fail to apply ROI measures to learning programs.
The ROI by Design® model teaches a clear cause and effect connection between your learning intervention and business unit metrics.
Do you need help measuring learning ROI? Contact eParamus and we can guide you in the process to measure learning ROI.
Please follow eParamus on LinkedIn and feel free to connect with me, Laura Paramoure, PhD. I’d love to know more about your training challenges.