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Training for Results: Why measuring for ROI matters

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World news networks are in no short supply of headlines confirming a global economy under strain and continuous pressure from a variety of fronts including technological advances, political sentiments, world conflicts, and capital powerhouses seeking higher yielding opportunities.

While there isn’t much we can do about events on the world stage, business executives certainly have their work cut out in terms of how cost-effectively they manage their day-to-day operations. The message is clear: businesses can’t afford to waste resources on activities that don’t add to the bottom line, and training is no exception.

THE CHANGING FACE OF THE GLOBAL WORKFORCE

Across the world and in almost all sectors, remote work is here to stay. Backed by high-end technology, software and time tracking tools, running fully remote teams have almost become common practice. There has been some pushback by the larger corporate brands to get employees back in the cubicles, but this has been met by some resistance. Fully remote work will remain under fire and hybrid models have become the bare minimum that educated workers will accept.

At the opposite end of the spectrum, many of the developing economies, especially in sub-Saharan Africa, don’t yet have the required skills to participate competitively in this new global marketplace. According to the International Labour Organisation, more than 30% of employers in Sub-Saharan Africa struggle to find skilled workers, not helped by the COVID-19 pandemic which accelerated the shift to remote work that requires technology and skills.

NEW CHALLENGES REQUIRE NEW WAYS OF DOING

The shift in the workforce has necessitated that senior executives, HR Directors, and Talent Acquisition Managers move away from traditional methods to online platforms as better alternatives.

Cultivating a culture of continuous learning and development are no longer optional; they have become essential for organizational success and the development of the workforce. However, investing in employee training requires a significant commitment of resources. To justify this investment, organizations must be able to demonstrate a clear return on investment (ROI).

WHAT DO WE MEAN BY ROI?

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Return on Investment (ROI) is the profit you make from an investment, compared to the cost of that investment. For example, Sarah spends R30 making cupcakes which she sells for a turnover of R50. The ROI is calculated as follows:

ROI ((Turnover - Investment) / Investment) X 100

Using the formula above we calculate Sarah’s ROI as follows: 

((R50 – R30) / R30) X 100 = 66.6%

WHAT EXACTLY IS THE TRAINING ROI?

Using the same example, let’s imagine Sarah’s cupcakes turn into a bakery with several operating units. She decides to invest funds into an employee development program to improve the overall skills and production.

  She spends R 15 000 (cost of training) and shows an increase in her turnover of R 25 000 (benefits of the training). In similar fashion we can now calculate Sarah’s Training ROI:

Training ROI ((Benefits of training – Cost of training) / Cost of training) X 100

Using the formula above we calculate Sarah’s Training ROI as follows:

((25 000 – 15 000) / 15 000) x 100) = 66.6%

Thus, for every R 1 invested Sarah’s training returned R 1.67 (rounded).

WHY DO WE MEASURE ROI?

Besides making sure we get good value or return on the funds invested into training, measuring the ROI of training programs also offers several crucial benefits:

  • Demonstrating a positive ROI strengthens the business case for future training initiatives, ensuring continued financial support and investment into training initiatives.
  • By analysing data on training outcomes, organizations can identify areas for improvement in training design, delivery, and content. This leads to more cost effective and impactful learning experiences.
  • ROI data provides valuable insights into the effectiveness of different training modalities, enabling organizations to make informed decisions about their learning and development strategies.
  • When employees see the value of their training and understand how it contributes to their professional growth and the organization's success, they are more likely to be engaged and motivated.
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MEASURING ROI IN THE CONTEXT OF A DEVELOPING ECONOMY

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In Sub-Saharan Africa, where many organizations face unique challenges such as limited budgets, skilled labour shortages, and rapid technological advancements, accurately measuring the ROI of training is crucial.

There are several Key Performance Indicators (KPIs) to track during a training program, including:

  • Increased Productivity – track and analyse improvements in employee productivity after training through metrics such as increased output, faster task completion times, and reduced error rates.
  • Improved Employee Performance - track and evaluate changes in employee performance through performance reviews, 360-degree feedback, and skills assessments.
  • Reduced Costs - track and analyse cost savings associated with training, such as reduced employee turnover, lower recruitment costs, and decreased errors that lead to financial losses.
  • Enhanced Customer Satisfaction - track and measure the impact of training on customer satisfaction through customer feedback surveys, net promoter scores, and other relevant metrics.
  • Improved Employee Engagement and Retention - track and monitor employee engagement levels through surveys, pulse checks, and other measures. One should also track employee retention rates to assess the long-term impact of training on employee loyalty and overall employee wellness and job satisfaction.

LEVERAGING TECHNOLOGY FOR EFFECTIVE ROI MEASUREMENT

In the online training environment, platforms now offer numerous advantages and capabilities for tracking and measuring ROI.

  • Online platforms can capture real-time data on learner engagement, such as time spent on courses, completion rates, and assessment scores.
  • Automated reports can be generated to provide insights into training effectiveness, allowing organizations to quickly identify discrepancies between the skills an organization's employees have and the skills required to meet current and future business objectives.
  • Online platforms can personalize learning paths based on individual learner needs and preferences, leading to more effective training and improved outcomes.
  • Online training platforms have useful post-course reports and assessment tools, essential for designing optimized content and integrating more useful methodologies of learning. This feedback must be circulated to senior and executive management teams to highlight the value of training interventions and projects.

CLOSING COMMENTS

Measuring the ROI of online training is essential for demonstrating the value of learning and development initiatives in the workplace. No enterprise can continue to plough funds into training projects and endeavours without somehow assessing and measuring the value of these funds spent.

By carefully selecting KPIs, leveraging technology, and utilizing appropriate online tools, organizations can effectively track training outcomes, optimize their learning strategies, and ultimately drive business success.

For more details on our range of online education & training tools and services, please visit our website or send us an email at info@eduflex.com

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