The ROI of corporate learning is an important foundational component of all businesses. Return on investment (ROI) and learning and development (L&D) are important metrics to measure, and take special care to ensure that they are done correctly and efficiently. Experts say that learning and development is the most direct route to aligning a business’ capabilities with its goals.

Millions of employees across the globe complete learning and development programs every year. The most common courses are those on compliance, soft skills, upskilling, product training, onboarding, and reskilling. Especially in the wake of COVID-19, companies are investing in training now more than ever. In 2022, no matter the size of the company, hundreds if not thousands of dollars were invested into individual learners and their goals.

Measuring ROI of Corporate Learning

Today, measuring both the ROI of corporate learning and development efforts is critical to tracking and assessing impact. In addition, several metrics have recently become more important than others as we move towards a post-pandemic corporate world. Increased sales, higher engagement , increased employee confidence, and lower employee churn are just the beginning of these analyses. Because of this, pre-pandemic metrics, like training attendance or webinar completion, are less likely to remain relevant.

Regardless of the nature of these metrics, the true alarming issue is that today, less than 10% of L&D teams calculate their ROI. Over 90% of learning and development programs do not have any measurable success metrics, and many experts are encouraging leaders to change that. It is no lie that calculating an honest return for an organization can be challenging. Especially when looking at less specific metrics, the process is not always as simple as the basic formula for ROI. When taking into consideration time, effort, and money, things can get dicey and are worth taking an extra look at.

In terms of time, it can take between 55 and 177 hours to create just 20 minutes of corporate learning. Effort is also a large expense, especially when employees need to sacrifice valuable working time to complete traditional learning courses. In addition, most companies spend up to 71 hours of training per employee, totaling to a sunk cost of over $1000 per employee (based on a $15 per hours salary). Clearly money is also a significant expense, given that the average in-person training session can cost up to $40,000. This does not include tertiary costs like transportation, hotels, venues, catering, speakers, equipment, and much more.

All Training is Not Created Equal

To make matters worse, online or alternative training methods are not always the cheaper option. For example, Linkedin Learning can cost $180,000 for content library use. Also, Firstup communication tools can cost nearly $100,000 per 1,000 learners for simple communication tools. Expenses play a significant role in ROI for a company, making these figures paramount to the success of the business.
In order to move towards success in the realm of L&D, it is important to measure and recognize how much the training efforts are actually increasing employee ability. Unfortunately, most employees are not happy with their outcomes. Many report forgetting what they learned almost immediately, some finding their training irreverent to their role, and others claiming that their training content is out of date. Organizers simply do not have what they need to satisfy the needs of their employees, leading to a lackluster L&D effort and in turn a poor ROI.

Ineffective training currently costs nearly $1.5 million per 1000 employees. Only 10% of money spent on traditional L&D delivers any tangible results for companies. Luckily, there are now many emerging services that are assisting companies with properly using these metrics to their advantage. Using these methods can give employees a confidence list, help them to apply the knowledge that they have learned, and can even increase employee retention.

Conclusion

By saving time, money, and energy, these precious resources can be allocated elsewhere to better the company in more ways than one. Not only can ROI be boosted, but revenue can as well, helping business to boom and learners to feel understood and better equipped to take on their role in the company. There is no relationship more valuable to a business than that which is between an employee and their employer. It is paramount that companies encourage that connection and relationship, all while furthering their goals and reaching their full potential in the market.

Source: Arist