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Corporate training efficiency and ROI measurement techniques

Corporate training efficiency and ROI measurement techniques

Corporate training in the US accounted for more than $140 billion back in 2013, and the sums grow year by year, making it more than $1,000 per employee on average. While common employees might not be too interested in the background of their corporate learning, HR and L&D departments have to report to stakeholders and show some measurable results to justify these expenses. Proclaiming the boost in employee performance and engagement is great, yet providing detailed statistics on the Return On Investments (ROI) is much better - and quite hard. We present you several ROI measurement techniques to understand the real outcomes of your corporate training.

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Corporate training efficiency and ROI measurement techniques

Before taking any action to begin the corporate training program, business leaders request the Learning and Development (L&D) team for some estimates, timeframes, and the expected outcomes of the training. This information should be evaluated using KPIs – Key Performance Indicators, which allow providing measurable statistics of the training outcomes.

KPI-based learning efficiency and ROI measurement

If you want to measure effectiveness, you need to understand what kind of effect you expect to receive from your actions, what changes and improvements will be the result. Correctly chosen and set KPIs allow measuring the degree of changes.

Key Performance Indicator or KPI is a measurable value of business goal completion effectiveness.

Setting KPIs and tracking them helps evaluate business performance in general and corporate training efficiency in particular. Thus said, determining the right KPIs for each corporate training course it’s not an easy task to accomplish, yet it is essential for efficient ROI measurement. We suggest establishing 3 types of KPIs, grouped according to their intended goals:

  1. Bottom line key performance indicators. These KPIs are the quantitative indicators that can be used to measure the business’s or department’s productivity improvement. For the aforementioned sales department these indicators might describe the growth of closed deals number, the growth of enlisted clients quantity, etc.
  2. Performance improvement KPIs. These relate to the improvement of the established processes resulting from the training. For example, such KPIs can include the reduction in the number of hours a sales agent spends prospecting; decrease in the number of errors/omissions in the established sales process; growth in the number of customer needs identified during the prospecting; significant reduction in the number of quotes revision and discounts provided due to staff-originated errors and issues.
  3. Quality improvement KPIs. As satisfactory customer experience is the cornerstone of obtaining and retaining customers, such KPIs are undoubtedly amongst the most important goals of employee training. These indicators should describe the quality of the service provided and can be measured through parameters like reduction of customer complaints, reduction of order/service cancellations, reduction of irrelevant information gathered during the prospecting, increase of appraisals/recommendations/referrals. Adding surveys with semantic differentials helps transforming the emotions of user experience into measurable statistics.

After choosing the KPIs, the next problems arise — collecting data, scaling and measuring. With these processes set wrong you can’t calculate some integral index. It is not the end of the story though, but we won’t cover the next steps in details here. If you are interested, leave your comments below so we’ll understand whether we should cover the process in details.

Training efficiency evaluation

KPIs alone are not enough for providing the whole picture of the improvements. To say even more, indicators like those described above are influenced by a plethora of other factors, so they are not precise. Therefore, a more in-depth tool is needed. There is a time-proven Kirkpatrick’s Model for evaluating the training events, developed back in the 50ies and actively used worldwide ever since. It consists of 4 levels.

Level 1 — Reaction to training

The reaction to training should be measured by conducting a series of surveys (pre-course, after the first session and after the whole course) and questionnaires, where the learners should describe their expectations from the training, whether they are engaged with it, whether they find it related to their job requirements and beneficial for their careers. Learners’ feedback is essential and collecting it is crucial for evaluating the corporate training alignment with the business goals and learner’s expectations.

Level 2 — Learning efficiency

This level depicts the degree to which the learners obtain the intended skills, attitude, knowledge, commitment and confidence they should gain by completing the training course. This measurement is best reached through establishing clear and simple learning objectives (improving the presentation-making skills, etc.) and selecting the correct skills that will allow achieving these goals (mastering the Microsoft Powerpoint, for example). Pairing one skill with one learning objective makes the assessment easy.

Level 3 — Behavioral changes and improvements

This level of learning outcomes evaluation is conducted after the end of the training course and carried out by the line managers of the employees trained. The managers should compare the behavioral improvements against certain observation checklists, allowing to determine the changes originating from the training. For example, the checklist after finishing the training on improving time management skills might include such points:

  • Did the employee stop coming late?
  • Did the employee become able to accomplish mundane tasks on time?
  • Did the employee develop a habit of informing the manager of unexpected obstacles in the tasks?
  • Did the employee begin using the time-tracking system appropriately?
  • etc.

Level 4 — Training results

This level of corporate training analysis shows the degree to which the real training outcomes correspond to the goals proclaimed. These assessments might include the increase in monthly unit manufacturing or sales, subscriptions, conversions of long-time reluctant prospects into loyal customers, etc. Such measurement can be quite effective if used in conjunction with other methods. For example, a company can measure how much the performance of the learner with higher mark on level 2 differs from the performance of employees with lower marks on the same level.

Another question arises, though — if the improvement in results is achieved thanks to training or due to certain other factors. That is why excluding said factors from the calculations is essential to provide a precise ROI measurement.

Excluding side factors from training efficiency measurement

Certain actions should be planned ahead of training in order to ensure correct calculation of its efficiency:

  1. Isolation of the training effects. L&D department should clearly state what results in the business’s performance originate from training and what are not (training the sales department should not be combined with hiring new sales representatives, etc.) Precise monitoring and calculation of the events and actions resulting from training is needed in order to separate the training outcomes from other business improvement factors.
  2. Creation of detailed evaluation plan. The training outcomes should be assessed incrementally, according to a stale metrics and with consistent approach in order to ensure collection of representative and informative data.
  3. Defining the possible barriers. L&D department should build a model of the training process based on their experience and a multitude of materials available online. This model should provide the understanding what barriers might appear in the training process and what are the means to mitigate them (what if the learner becomes ill/injured or quits? What if the learner is transitioned to another department or office? What if the company merger/acquisition takes place? What if the company strategy changes mid-course and the training goals no longer align with the business goals?). Even if some obstacle is missed in the plan, having an experience of solving such issues will help L&D department deal with unexpected situations should they arise.

Once all of this is set and done, the only question remains — what LMS will do the job?

Open edX benefits for corporate training ROI measurement

As you can see, L&D team’s good intentions and personnel’s general willingness to improve  can be quite easily expressed using strict KPIs and the training ROI can be measured following a simple and efficient evaluation model. To set all these things up, company needs to do the following:

  • sync the LMS with ERP/CRM/etc. to provide a unified profile of learner/employee
  • configure the tools for measuring all the ratios, marks etc.
  • configure reporting options and processing these reports
  • instate the process of periodical reassessment to monitor the training results
  • have the tools for adjusting the training materials according to the results of assessments

Open edX is an LMS boasting a wide range of features and tools that cater to the needs described above:

  • Open edX can be easily integrated with various ERP/CRM systems using various API extensions to use the existing employee profiles
  • Single sign-on feature with powerful OAuth2 authentication system allows the learners log in through their email, social profiles, Microsoft account or any other account they prefer
  • Convenient grading system helps evaluate each learner’s progress precisely
  • Powerful analytics tool – Insights helps track and analyze the learner’s performance during training
  • Surveys and reports can be easily integrated into the course content
  • Open edX Credentials tool enables convenient certification and periodic recertification features
  • Simple Open edX Studio CMS helps adjusting the training materials easily

This helps create a finished and informative picture of the corporate training outcomes and allows precise measurement of the corporate training ROI.

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