The ROI of learning

Return on Investment ROI Your Context Results That Matter The Amazing Value of Learning The ROI Method and Process... Return on Investment ROI Your Context Results That Matter The Amazin

Welcome + Introduction

April 22, 2015

Director of Enterprise

A Robust Online Training Library

Britt Andreatta

Leadership consultant since 1989

PhD in Education, Leadership + Organizations

Professor and Dean at UC Santa Barbara

and Antioch University, teaching leadership

and success skills

lynda.com Member > Author > Director of Learning + Development

Please view my seven courses on lynda.com

Return on Investment (ROI)

Your Context

Results That Matter

The Amazing Value of Learning

The ROI Method and Process

Sources

Return on Investment (ROI)

Your Context

Results That Matter

The Amazing Value of Learning

The ROI Method and Process

Peter Drucker

“If you can’t measure it,

you can’t manage it.”

Donald Kirkpatrick

Four levels of

evaluation

Results Behavior Transfer Reaction

Donald Kirkpatrick

Jack Phillips

The Father of ROI

R OI Impact Implementation

Benefit-cost Ratio (BCR)

Program Costs

Economic indicator of accountability for results.

The benefit (return) of an investment is compared to the

cost; expressed as a ratio.

(x:y)

BCR Example

$35,000

$20,000

It cost $20,000 to implement new learning program.

The learning resulted in $35,000 savings.

1.75:1

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

Return on Investment (ROI)

ROI =

(Program Benefit Minus Program Costs)

Economic indicator of accountability for results.

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

X 100

ROI Example

¥20,000

It cost ¥20,000 to implement new learning program.

The learning resulted in ¥35,000 savings.

75%

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

Time to Payoff

Economic indicator of accountability for results.

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

X time unit

Payoff Example

It cost 20,000 to implement new learning program ₹

The learning resulted in 35,000 savings ₹

= 57

6.84 months

The program would pay for itself in 6.84 months.

x 12 = 6.84

You only need to build a

compelling case for your

context.

Return on Investment (ROI)

Your Context

Results That Matter

The Amazing Value of Learning

The ROI Method and Process

Reality Check

Is 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?

Hard Data

Unit costs Overhead costs

Operating costs

Variances Insurance/legal

Penalties/fines

Accident costs

Sales expense

Units produced Tons manufactured Items assembled Reports processes Students graduated Grants awarded Tasks completed Accounts signed

Cycle time Response time Downtime Overtime Processing time Supervisory time Work stoppages

Errors Waste Rework Rejects Defects Shortages Failures Accidents

Water Fossil fuels Food Minerals Land Trees Pollution Waste

Soft Data

Impression Service Loyalty Retention Complaints Returns

New ideas Innovation Risk taking Suggestions Collaboration Partnership Alliances

Job effectiveness Capability Performance Potential Promotions Requests for transfer

Turnover Complaints Grievances Absenteeism Tardiness Engagement Job satisfaction

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 AEGIS

Denstu 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

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 UCLA

Founded in 1919, UCLA offers

125 undergraduate and graduate

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 EPA

Established 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

Return on Investment (ROI)

Your Context

Results That Matter

The Amazing Value of Learning

The ROI Method and Process

Business Cents > Business Sense

What problem are you solving?

How can progress be measured?

Who are the stakeholders?

Who has what expectations?

ROI vs ROE

Justification benefit of investment Estimate cost and estimate cost and benefit Align your design, and

Evaluation Isolate the effect of investment and

calculate its value

Demonstrate extent that expectations were met and calculate the value

Measuring Success

Identify metrics that matter

Use data you can get

Increasing vs Decreasing

Activity vs Results

Learning vs Performance

Increase productivity or decrease inefficiency?

Increase retention or decrease attrition?

Activity vs Results

Lead and Lag Measures

Lead vs Lag Measures

Lead Measure (activity) Lag Measure (results)

measures goal

predictive of goal + influenceable

lose weight/size diet + exercise

= LEVERAGE

Lag 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 Training

Lag Measure (results) Increase retention of talent Decrease complaints to HR

Lead Measure (activity) Regular one-on-ones Provide coaching Give autonomy Support growth

R OI Impact Implementation

Learning Reaction/Satisfaction

Reaction Objectives Objectives Learning Implementation Objectives Business Impact

• Perceive program to

be relevant to the job

• Perceive program to

be relevant to job performance

• Use skills and clarity coaching to develop employees

• Cultivate team cohesion and collaboration

• Improve personal effectiveness

Complete action planShow improvements in:

• coaching skills

• team management

• personal effectivenessIdentify barriers and enablers to application

of knowledge/skills

• Increased retention

• Increased productivity

• Reduced complaints to HR

• Reduced absenteeism

Learning + Performance Outcome

Reaction Objectives Objectives Learning Implementation Objectives Business Impact

• Perceive program to

be relevant to the job

• Perceive program to

be relevant to job performance

• Use skills and clarity coaching to develop employees

• Cultivate team cohesion and collaboration

Complete action planShow improvements in:

• coaching skills

• team management

• personal effectivenessIdentify barriers and enablers to application

• Increased retention

• Increased productivity

• Reduced complaints to HR

• Reduced absenteeism

Return on Investment (ROI)

Your Context

Results That Matter

The Amazing Value of Learning

The ROI Method and Process

Training + Learning

training

learning

Not to scale!

Training < - - > Learning

Specific 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

Continued

Improvement

Growth mindset

Dr Carol Dweck

Growth Mindset

leads to a desire to learn, so tends to:

Believe that skills can always improve with hard work

See effort as a path to mastery and therefore essential

Embrace challenges and see them as opportunity to grow

See feedback as useful for learning and improving

Views setbacks as a wake-up call to work harder next time

Find lessons and inspiration in the success of others

As a result, they reach ever-higher levels of

Fixed Mindset

leads to a desire to look good, so tends to:

Believe that most skills are based on traits that are

fixed and cannot change

See effort as unnecessary; something to do when

you’re not good enough

Avoid challenges because could reveal lack

of skill; tends to give up easily

See feedback as personally threatening to sense of

self and gets defensive

View setbacks as discouraging; tends to blame

others

Feel threatened by the success of others;

may undermine others in effort to look good

As a result, they may plateau early and achieve

How much people are emotionally

connected and committed to their

organizations, and their willingness

to go above and beyond the

expectations of their jobs

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.

In the US Around the World

% of US Workers

Engaged 30%

Not engaged 52%

Actively disengaged 18%

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”

L+D is a key

driver of

employee

engagement

The Role of L+D

Have data that show how

L+D is directly related to:

Retaining Top Talent

Cost to replace an employee is

50% to 250% of annual salary+benefits!

SHRM’s “Cost of Turnover” Worksheet

• Lost productivity (position + others)

• Offboarding

• Recruiting > hiring > training

ROI Calculator

How to Maximize

the Benefits of

Learning

Cultivate Potential

Having the capacity to become

or develop into something in

the future Unrealized ability

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.

Be a

Learning

Guide

They will help

you show ROI.

Return on Investment (ROI)

Your Context

Results That Matter

The Amazing Value of Learning

The ROI Method and Process

ROI Methodology

Five Levels of Evaluation

V Model for Business Alignment

Process Model to Analyze Impact

Data Collection

R OI Impact Implementation

Learning Reaction/Satisfaction

V Model

The ROI Process Methodology

Isolating Effect of Program

Pre-test, post-test

Control group

Trend analysis

Use of expert studies/data

Estimation of impact by:

• Participants

• Supervisors

Learn More About ROI

Learn More About Learning at lynda.com

Instructional 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 Stice

Finance Fundamentals with Jim and Kay Stice

Questions + Answers

BrittAndreatta.com lynda.com