How to measure ROI in learning and development 

In today's competitive business landscape, organisations are constantly seeking ways to maximise their investments and drive tangible results. When it comes to learning and development (L&D) initiatives, measuring return on investment (ROI) has become crucial for forward-thinking companies. If you're struggling with how to measure ROI in learning and development, you've come to the right place. 

Read on to unlock the true value of your training and learning initiatives. 

Why should you be measuring ROI in learning and development? 

Regardless of the size of your business or its stage of learning maturity, measuring the ROI of learning and development is of paramount importance.  

ROI measurement serves as a critical tool for assessing the effectiveness and impact of your L&D initiatives, enabling you to make data-driven decisions and communicate the value of your programme to stakeholders. 

How to measure ROI in learning and development 

When businesses talk about return on investment, they tend to think primarily about financial gain. Executive teams want to know how much money they will get back from their initial spend, and how long that return will take.  

Sounds easy enough, right? We can even use a standardised formula to calculate return on investment in the context of an L&D programme: 

ROI = (Total Benefits - Total Costs) / Total Costs x 100 

So, let’s say your investment in employee learning is £20,000 and the value of your total benefits is £50,000: 

ROI = (£50,000 - £20,000) / £20,000 x 100 

In this scenario, your ROI would be 150%.   

The problem for HR and L&D leaders is that developing skills across their workforce leads to all kinds of benefits that are tough to quantify. It’s fairly simple to estimate the total cost of an investment; but far more challenging to put a figure on the total benefits that come as a result.  

How does L&D currently measure success? 

The idea of measuring ROI in learning and development is enough to strike fear into the heart of even the bravest of L&D leaders. That’s why so few teams actually do it – in fact, only 1 in 10 learning functions say they have a reliable way of measuring ROI.

So, if it’s not return on investment, how do most organisations evaluate the success of their learning programmes? 

The latest study from CIPD shows that the types of metrics L&D teams tend to use are limited: 

36% evaluate impact based on participant satisfaction 

24% have no systematic evaluation 

18% evaluate impact based on a change in knowledge or skills 

13% assess employee behavioural change  

8% assess the wider impact of their learning initiatives on their organisation 

The fact that a quarter of L&D teams (24%) don’t measure the impact of their skills strategies at all speaks volumes.  

Interestingly, the CIPD report also reveals that most organisations share the same barriers to evaluating programmes:  

• lack of management time 
• pressure of other priorities 
• poor data collection 
• limited LMS capability 

Broadening ROI in L&D 

The perspective of measuring ROI in learning and development has been limited for too long, it’s important that organisations now start to see and communicate the bigger picture of learning and development impact. 

Methods to measure the effectiveness of employee training like ‘participant satisfaction’ and ‘number of completions’ are relatively shallow compared to key performance indicators that are integral to long-term business growth, such as:   

1. Organisational performance  
   
   
2. Staff retention
     
3. Employee engagement  
   
   
4. Regulatory compliance  
   
   
5. Health and safety efficacy  
   
   
6. Wellbeing  
   
   
7. Customer satisfaction 
    

If HR and L&D leaders are going to demonstrate the tangible differences that employee learning makes, they first need to take a step back and see the bigger picture.  

Clear objectives, clear results 

Every organisation is different, but the first step in determining the ROI of learning is always the same:  
define your objectives. 

All too often businesses roll out new learning programmes without first detailing a set of clear goals and methods for measuring the effectiveness of employee training. This is the reason so many learning programmes don’t produce tangible gains and fall into the trap of becoming a tick-box exercise. 

The key is to determine what really matters to your organisation. Whether it’s boosting retention, freeing up time spent on admin or reducing external costs, aligning your learning strategy with organisational goals is crucial because this is how L&D can start mapping out benefits and proving its real value. 

Six Simple Steps for measuring ROI in learning and development 

Here are some simple bullet point steps on how to measure ROI in Learning and Development:

1. Determine the costs of the L&D programme, including for example the cost of content development, trainer fees, materials, systems, facilities, travel expenses, time away from work.  

2. List the benefits of your L&D programme in relation to your objectives, such as for example:

• increased staff engagement
• reduced L&D administration time
• reduced staff turnover
• increased regulation compliance
• increased health and safety training completion rates
• increased staff wellbeing
• improved customer satisfaction rates  

3. Allocate monetary values to each of the benefits. This can be done by estimating the financial impact of each of the benefits on the organisation's bottom line.  

4. Calculate the ROI by dividing the benefits by the costs and multiplying by 100 to get a percentage.  

5. Analyse the data and adjust the L&D programme as needed to improve ROI in future iterations, consider how you can make your L&D initiatives more cost efficient – both in outlay and in learning effectiveness.  

6. Continuously track and measure ROI over time to assess the programme's ongoing impact and make informed decisions about its future. 

Let’s take staff turnover as an example: According to the CIPD, the total cost of replacing an employee is around £3,000 – and that’s a conservative estimate. 

You can work this out for your own organisation by drilling down into your time-to-hire, time-to-productivity, recruitment costs and induction costs. 

View that cost alongside recent surveys from McKinsey which revealed 40% of employees are considering quitting their job, with the top reason being due to a lack of career development opportunities, it becomes easier to join the dots between L&D and a key business outcome. 

Systems, Processes, and Tools 

Measuring and reporting on ROI in learning and development is undeniably crucial. The Six Steps may seem straightforward and common sense, but the reality is a bit more complex. It's like assembling a puzzle, ensuring that all the pieces fit seamlessly together. 

To achieve accurate measurement and reporting, it's essential to establish systems that work together, sharing data effortlessly. For example, integrating HR and L&D systems, leveraging employee feedback surveys, and utilising learning systems that can connect and span all of your L&D initiatives (from Governance, Risk and Compliance through to Cyber Awareness and Professional Development Training). 

This setup and monitoring process may require some time and effort, but it is the key to the success of measuring ROI in learning and development.  

Fortunately, we live in a digital era brimming with digital learning tools and software that can transform your ROI measurement journey. These technologies both connect and streamline the measurement process and elevate your learning to new heights. 

Armed with the right systems, processes, and tools, you'll be empowered to make data-driven decisions, unlock the full potential of your L&D initiatives, and pave the way for lasting success.  

In conclusion

Measuring ROI in learning and development provides invaluable insights, empowers decision-making, supports buy-in and ensures alignment with overall business goals.  

Are you ready to unlock the true potential of your L&D initiatives? Take the next step and get in touch with our team of Digital Learning Experts or download our full comprehensive guide, ‘The ROI of Employee Learning: Calculating the true value of L&D’.

When you’re ready, we’re here to help you explore Access Learning solutions that encompass all the tools you’ll need for effective learning, measurement, and reporting.