The ROI of Learning

2 Demonstrating the ROI of Learning

Welcome + IntroductionApril 22, 2015

[email protected]@lynda.com

Brian SmithDirector of Enterprise Marketing

mailto:[email protected]



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A Robust Online Training Library Content in BusinessLeadership, Management, Productivity, Software, Communication, Career Development, and more.

3,400+ coursesAvg. 20 courses released per week

10,000+ hours of learningAvg. 5 hours released per day

138,000+ videosAvg. 750 released per week

Demonstrating the ROI of Learning

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Britt AndreattaLeadership consultant since 1989PhD in Education, Leadership + OrganizationsProfessor and Dean at UC Santa Barbaraand Antioch University, teaching leadership and success skillslynda.com Member > Author > Director of Learning + DevelopmentPlease view my seven courses on lynda.com


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AgendaReturn on Investment (ROI)Your ContextResults That MatterThe Amazing Value of LearningThe ROI Method and Process


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Sources


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HistoryPeter Drucker

“If you can’t measure it, you can’t manage it.”


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Donald Kirkpatrick


Four levels of evaluation

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Donald Kirkpatrick


ResultsBehaviorTransferReaction

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Jack Phillips


The Father of ROI

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ROI


Did the learners like the program?

Did the learners learn the content?

Did the learners deploy the learning on the job?

Did the learning impact business results?

Did the learning investment payoff?

Jack PhillipsROI

Impact

Implementation

Learning

Reaction/Satisfaction

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The MathBenefit-cost Ratio (BCR)

Return on Investment (ROI)

Time to payback

Works with any currency $ ¥ ₹ €, etc.


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Benefit-cost Ratio (BCR)

BCR = Program BenefitsProgram Costs

Economic indicator of accountability for results.

The benefit (return) of an investment is compared to the cost; expressed as a ratio.


(x:y)

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BCR Example

$35,000$20,000

It cost $20,000 to implement new learning program.The learning resulted in $35,000 savings.

BCR = = 1.751.75:1


For every $1 spent, you received $1.75 in total benefit.

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Return on Investment (ROI)

ROI =(Program Benefit

Minus Program Costs) Program Costs


The benefit (return) of an investment is divided by the cost; expressed as percentage.

X 100Demonstrating the ROI of Learning

%

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ROI Example

ROI = ¥35,000-¥20,000¥20,000

It cost ¥20,000 to implement new learning program.The learning resulted in ¥35,000 savings.

X 100 = .7575%


For every ¥1 spent, you received ¥.75 in net benefit.

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Time to Payoff

Payback = Program CostsProgram Benefits


Estimated time in which a program will break even (time after that is added benefit); expressed in time.

X time unitDemonstrating the ROI of Learning

Time

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Payoff Example

Payback = ₹20,000₹35,000

It cost ₹20,000 to implement new learning program.The learning resulted in ₹35,000 savings.

= .576.84

months Demonstrating the ROI of Learning

The program would pay for itself in 6.84 months.

x 12 = 6.84

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Overwhelmed?You only need to build a compelling case for your context.


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Reality CheckIs HR/L+D seen as a trusted and valued business partner?Do you have an established record of success?Are you empowered to take intelligent risks and make decisions?Are you justifying an upcoming purchase or evaluating one you have already implemented? Demonstrating the ROI of Learning

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Plenty of OptionsCostOutputTimeQualityEnergy


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Hard Data


Cost Output Time Quality Energy

Unit costsOverhead costsOperating costs

VariancesInsurance/legalPenalties/finesAccident costsSales expense

Units producedTons manufactured

Items assembledReports processes

Students graduatedGrants awardedTasks completedAccounts signed

Cycle timeResponse time

DowntimeOvertime

Processing timeSupervisory timeWork stoppages

ErrorsWaste

ReworkRejectsDefects

ShortagesFailures

Accidents

WaterFossil fuels

FoodMinerals

LandTrees

PollutionWaste

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Plenty of OptionsCostOutputTimeQualityEnergy


ServiceCreativityDevelopmentCulture

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Soft Data


Customer Service Creativity Development Culture

ImpressionServiceLoyalty

RetentionComplaints

Returns

New ideasInnovationRisk taking

SuggestionsCollaborationPartnership

Alliances

Job effectivenessCapability

PerformancePotential

PromotionsRequests for

transfer

TurnoverComplaintsGrievances

AbsenteeismTardiness

EngagementJob satisfaction

Loyalty

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Case Study


“lynda.com access means there is a constant learning resource for employees. Sometimes it only takes two minutes to improve their knowledge, rather than a full day in a classroom to achieve the same outcome.”

BENEFITS• Complements live

training• Lets employees

quickly find answers to questions

• Provides detailed reports that inform future training initiatives

ABOUT DENTSU AEGISDenstu Aegis Network helps clients build relationships with consumers through content creation, digital creative execution, market analysis, and much more.

23,000 employees in 110 countries on 5 continents

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Case Study


“I honestly think this hands-on learning is the best way to learn software. I’m glad UCLA provides lynda.com to all students. I think the more software we know, the more it prepares us for the job market once we graduate.”

BENEFITS• Supports students in

any major• Provides tools training

outside of class• Encourages staff and

faculty professional development

ABOUT UCLAFounded in 1919, UCLA offers 125 undergraduate and graduate degrees in business, engineering, medicine and more.

35,000 students + 31,000 full- and part-time faculty and administrative staff.

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Case Study


“If we’re struggling to learn something, or if we’re frustrated trying to get something to work, someone will see if a lynda.com course exists. With such a large amount of content at an affordable price, lynda.com was by far our best bet.”

BENEFITS• Provides convenient

on-demand solution• Offers cost-effective

and current training• Teaches wide range of

software, creative, and business skills

• Helps employees learn at their own level and pace

ABOUT EPAEstablished in 1970, the EPA enforces federal health and environmental laws so that all Americans are safe where they live, learn and work.

17,000 employees located in 10 regional offices across US

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Business Cents > Business SenseWhat problem are you solving?How can progress be measured?Who are the stakeholders?Who has what expectations?


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ROI vs. ROE


Investment Expectation

JustificationEstimate cost and

benefit of investmentAlign your design, and

estimate cost and benefit

EvaluationIsolate the effect of

investment and calculate its value

Demonstrate extent that expectations were met and

calculate the value

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Measuring SuccessIdentify metrics that matterUse data you can getIncreasing vs. DecreasingActivity vs. ResultsLearning vs. Performance


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Increasing X vs. Decreasing Y


From A

To B by when

Time

From A

Time

To B by when

Increase productivity or decrease inefficiency?Increase retention or decrease attrition?Increase revenue or decrease waste?

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Activity vs. ResultsLead and Lag Measures



Lead vs. Lag MeasuresLead Measure

(activity)Lag Measure

(results)

measures goalpredictive of goal + influenceable

lose weight/sizediet + exercise

doing this… gets that

= LEVERAGE


ExamplesLag Measure

(results)

reduce equipment failure

reduce safety incidents

increase accuracy/efficiency

reduce churn

increase retention of talent

Lead Measure(activity)

routine maintenance

compliance with safety regs

time spent practicing

touchpoints with clients

coaching provided


Implement Manager TrainingLag Measure

(results)

Increase retention of talent

Decrease complaints to HR

Lead Measure(activity)

Regular one-on-ones

Provide coaching

Give autonomy

Support growth

Build cohesive teams


ReactionObjectives

LearningObjectives

Implementation Objectives

BusinessImpact

• Perceive program to be relevant to the job

• Perceive program to be relevant to job performance

• Perceive program to be value added

• Rate the program as effective

• Would recommend to others

• Understand the value of engagement and their influence

• Use skills and clarity coaching to develop employees

• Cultivate team cohesion and collaboration

• Improve personal effectiveness

Complete action plan

Show improvements in:• coaching skills• team management• personal

effectiveness

Identify barriers and enablers to application of knowledge/skills acquired

• Increased retention

• Increased productivity

• Reduced complaints to HR

• Reduced absenteeism

ROI

Impact

Implementation

Learning

Reaction/Satisfaction

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Learning + Performance Outcome


ReactionObjectives

LearningObjectives

Implementation Objectives

BusinessImpact

• Perceive program to be relevant to the job

• Perceive program to be relevant to job performance

• Perceive program to be value added

• Rate the program as effective

• Would recommend to others

• Understand the value of engagement and their influence on it

• Use skills and clarity coaching to develop employees

• Cultivate team cohesion and collaboration

• Improve personal effectiveness

Complete action plan

Show improvements in:• coaching skills• team management• personal

effectiveness

Identify barriers and enablers to application of knowledge/skills acquired

• Increased retention

• Increased productivity

• Reduced complaints to HR

• Reduced absenteeism

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Training + Learning


training

learning

Not to scale!


Training < ----------- ---------- > LearningSpecific event or activity Anywhere, any time

Designed from organization’s perspective Designed from learner’s perspective

Develop new skills, so can carry out specific behavior/process on own (prescriptive)

Absorb and retain information to be used in non-specific, unexpected future use (creative)

Given to; Organization tells/teaches/directs employee

Engaged with; Organization partners with learner to grow, develop, adapt

May have goal for compliance and/or risk reduction

Goal is to enhance potential and performance of employee in ways that are meaningful

Employee can perceive content to be irrelevant or boring, so may be disengaged and unmotivated to pursue further learning

Employee perceives content as immediately useful and helpful, so active participant and motivated to pursue further learning

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Benefits of Learning


Active participationAuthentic motivationOngoing improvementEmployee engagementRetention of talent

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Motivation


Autonomy opportunities to be self directed Masteryopportunities to learn and grow

Purposecontribute to something meaningful

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Continued ImprovementGrowth mindsetDr. Carol Dweck


Growth Mindsetleads to a desire to learn, so

tends to:Believe that skills can always improve with hard workSee effort as a path to mastery and therefore essentialEmbrace challenges and see them as opportunity to growSee feedback as useful for learning and improvingViews setbacks as a wake-up call to work harder next timeFind lessons and inspiration in the success of othersAs a result, they reach ever-higher levels of potential and performance.

Fixed Mindsetleads to a desire to look good, so

tends to:Believe that most skills are based on traits that are fixed and cannot changeSee effort as unnecessary; something to do when you’re not good enoughAvoid challenges because could reveal lack of skill; tends to give up easilySee feedback as personally threatening to sense of self and gets defensiveView setbacks as discouraging; tends to blame othersFeel threatened by the success of others;

may undermine others in effort to look goodAs a result, they may plateau early and achieve less than their full potential.

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EngagementHow much people are emotionally connected and committed to their organizations, and their willingness to go above and beyond the expectations of their jobs.


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Measuring Engagement


1. I am proud to work for this company. 2. This company motivates me to go beyond what

I would in a similar role elsewhere. 3. I see myself still working here in 3 years.4. I would recommend this company as a great place to

work.5. I rarely think about looking for a job at another

organization.

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In the US Around the World


% of US Workers

Engaged 30%

Not engaged 52%

Actively disengaged 18%

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The Power of Engagement


A disengaged employee costs an organization approximately $3,400 for every $10,000 of salary (Gallup).

Engaged employees are 127% more likely to be A performers than C performers (McLean & Company).

Highly engaged organizations have the potential to decrease employee turnover by 87% (Human Capital Institute).


From “Making the Case for Employee Engagement”

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L+D is a key driver of employee engagement


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The Role of L+D


Have data that show how L+D is directly related to:increases in overall employee engagement increases in employee identification with organization’s values increase in positive organization culture

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Retaining Top Talent


Cost to replace an employee is50% to 250% of annual salary+benefits!

SHRM’s “Cost of Turnover” Worksheet• Lost productivity (position + others)• Offboarding• Recruiting > hiring > training• Time to previous employee’s performance

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ROI Calculator


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How to Maximizethe Benefits of Learning


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Cultivate Potential


Having the capacity to become or develop into something in the future. Unrealized ability.

Performance =Potential + Support

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Put Learners First


What is their context?What would make their work life immediately better or easier?Design to solve their problems and maximize their potential.

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Be a LearningGuide


They will help you show ROI.

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ROI Methodology


Five Levels of EvaluationV Model for Business AlignmentProcess Model to Analyze ImpactData Collection

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Jack PhillipsROI


ROI

Impact

Implementation

Learning

Reaction/SatisfactionDid the learners like the program?

Did the learners learn the content?

Did the learners deploy the learning on the job?

Did the learning impact business results?

Did the learning investment payoff?


V Model

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The ROI Process Methodology


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Data Options


Hard/soft dataSurveys/questionnairesTestsObservationInterviewsFocus groupsPerformance Records

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Isolating Effect of ProgramPre-test, post-testControl groupTrend analysisUse of expert studies/dataEstimation of impact by:

• Participants• Supervisors• Leadership



Learn More About ROI

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Learn More About Learning at lynda.comInstructional Design Essentials series:

❯ The Neuroscience of Learning with Britt Andreatta❯ Flipping the Classroom with Aaron Quigley❯ Models of Instructional Design with Shea Hanson❯ Needs Analysis with Jeff Toister

Running a Profitable Business with Jim SticeFinance Fundamentals with Jim and Kay Stice


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Questions + Answers


BrittAndreatta.com

lynda.com

The ROI of Learning

Education

Transcript of The ROI of Learning