If you’ve missed the previous article…
Technology can make professional learning affordable, easy, and convenient. As distance‐learning programs grow ever more popular, companies have discovered that technology‐ driven learning can be a critical tool to communicate new information and regulations with far‐flung workers, and to help businesses that are experiencing significant growth get employ- ees quickly on the same page.
Many executives assume that e‐learning will result in tangible business gains, such as productivity improvements, more consistent practices, cost reductions, and time savings. The problem is that these benefits sometimes fail to materialize. To make matters worse, many companies lack a framework to truly measure the effects of the learning in which they invest.
We address these issues, as we discuss return on investment (ROI), and the importance of establishing clear business needs and program objectives. Realizing that ROI Isn’t Difficult! Working out ROI for distance‐learning efforts needn’t be a mystery. Properly measuring ROI provides an answer to the crucial question: for every dollar invested in distance learning, how many dollars are returned after the investment is recovered?
The basic calculation of ROI is as follows:
This well‐known equation, however, doesn’t capture all the potential benefits and nuances of e‐learning programs. To be meaningful, ROI needs to take into account other performance measures.
Measuring ROI: Evaluation framework
Jack Phillips, Chairman of the ROI Institute, developed a five‐ level method that you can use for measuring the ROI of your digital learning course:
- Reaction and planned action: Measures participants’ opinions of and satisfaction with the learning program as well as their future plans.
- Learning: Measures how much participants have learned, and what skills they’ve gained.
- Application and implementation: Measures the extent to which participants have applied their new knowledge and skills on the job.
- Business impact: Measures the extent to which business impact measures have changed since employees completed learning.
- Return on investment: Compares the monetary value of the business outcomes with the costs of the learning program.
Each level of evaluation provides important data that you can use on its own to measure the efficacy of distance learning. But when you take them together, a more complete and accurate measurement of ROI emerges. This fuller picture allows executives to justify spending on technology‐based learning, to improve programs, to eliminate unsuccessful ones, and to set smarter company priorities.
Clarifying What You’re Aiming For
To improve your digital learning program’s ROI, you need to define your business objectives. By isolating the business needs, and allowing those needs to drive the design of the learning program, your company is more likely to achieve what you’re after: a positive ROI.
Being clear on the business needs
Ask basic questions about your business aims and the need for the program, such as ‘Is this program required and why?’. The business issue and subsequent need may be: a decline in sales (perhaps suggesting the need for updated lessons on new products); an increase in compliance violations (suggesting the need for more consistent training across the organization); or excessive turnover of talent (suggesting a lack of career development offerings).
Identifying performance needs
When you’ve defined your business needs, you can identify performance needs to improve the desired business outcomes. For example, compliance discrepancies (business need) may be increasing because employees aren’t following the correct procedure (performance needs). Everything driving the e‐learning environment has to attempt to bridge the gap between business needs and performance targets.
Shedding light on learning needs
After you determine the performance needs, you can move on to the learning needs, which when met close the performance gaps. For example, if employees aren’t following a procedure, maybe it’s because they don’t know how: that’s the e‐learning solution.
Determining Your Program Objectives
Setting clear objectives for the program is critical for judging ROI properly. Some objectives are going to be straightforward and explicit. Perhaps employees need to demonstrate proficiency with new software at the end of learning, or complete a specific compliance certification. In those cases, you should set specific mastery goals. Other objectives may have timeframes beyond the end of the learning program, such as improvements in sales of new products. Others may be more focused on an improvement in engagement, productivity, and motivation.
Ideally the e‐learning program needs reaction objectives, learning objectives, application (performance) objectives, and (business) impact objectives. The more specific and targeted the objectives, the easier you’ll find measuring progress toward your goals. As executives attempt to match learning programs with strategic needs, they’re undoubtedly constrained by costs. After all, an e‐learning program has a budget, and you obviously want to obtain the most favorable outcomes for the least investment.
Here are some costs to consider when matching learning programs with business needs:
- Development of solutions: The cost of developing and designing the learning program, including experts’ costs, supplies, technology, and labor.
- Acquisition of solutions: Licensed materials and technology purchased from other sources.
- Implementation and application: Salaries for coordinators and program owners, as well as the time spent by participants in learning sessions. Also includes the hard- ware and software necessary for participants to engage in learning courses.
- Maintenance and monitoring: Maintaining and operating learning programs in good working order.
- Evaluation and reporting: Developing an evaluation plan, collecting and analyzing data, preparing and communicating the results.