How to prove the ROI on L&D

All too often, L&D is the neglected arm of HR

How to prove the ROI on L&D

At the tender age of 87, the great Renaissance artist Michelangelo said: “Yet, I am still learning.”

The garnering of knowledge should never stop or pause – it continues on and on through our childhood, our career, and our retirement. However, all too often, L&D is the neglected arm of HR. When a company is thriving, there’s this idea that upskilling isn’t necessary. When a company is floundering, there’s simply no funds to invest in development.

Widening skills gap

A recent report form LinkedIn found that 99% of L&D professionals are worried about the skills gap. The COVID-19 pandemic only served to highlight the chasm between what employers need and what employees are capable of delivering.

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At the close 2019, Gartner predicted that talent shortage would be the number one risk factor for future businesses – and this was pre-pandemic. As the world slowly recovers from the COVID-19 chaos, HR leaders should be approaching the C-suite to ask for a slice of the investment pie.

As always, the key to securing boardroom buy-in is in the numbers. HR professionals now have to wear many hats, one of them being strategic mathematician. Afterall, no CEO worth his salt with concede to invest in an HR initiative if the numbers don’t add up.

How to measure ROI on L&D

“To ensure and display effective return on investment it is important to begin with the end in mind,” explained Dr Melanie Peacock, associate professor of HR and one of our Global 100. “Therefore, careful attention to the ADDIE model (Muruganantham, 2015) is important. This includes a needs’ assessment, proper design and development, followed by effective implementation and evaluation.  Understanding the processes used and desired outcomes is critical for strategic review of return received.

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“Kirkpatrick’s framework (Smidt, Balandin, Sigafoos & Reed, 2009) provides a useful four-step framework for evaluating ROI by assessing how the learning met the requirements of both employees and the company through the following steps.”

  1. Reaction

Asking learners for their immediate feedback provides a quick litmus test for how the learning was perceived. On-line surveys can be used. This is especially useful if ongoing use of the same training is planned.

  1. Learning

Testing learners through quick end-of-module on-line assessments will provide data on knowledge obtained and retained.

  1. Behavior

Managers can assess changes in employees’ actions and how these align with desired learning outcomes.  Feedback should be built into ongoing coaching conversations as well as more formal performance assessments and documented changes in behavior.

  1. Results

This involves creativity and planning.  Reviewing costs involved in providing training, followed by evaluating savings achieved or increased profit achieved provides a cost versus benefit.  For example, were there increased sales?  Was there a decrease in cycle time? Has customer retention been enhanced, thereby diminishing the cost of lost business or cost associated with building new relationships?

Remember – when it comes to measuring the ROI and securing that all-important backing, data is your best friend. Track, monitor and record all changes, both direct and indirect, that can be attributed to a new L&D model. That way, when you’re facing the boardroom, you’ll be prepared for any questions the C-suite has in store.

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