The ROI of Learning

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2 Demonstrating the ROI of Learning

Welcome + Introduction

April 22, 2015

[email protected]

[email protected]

Brian Smith

Director of Enterprise

Marketing

mailto:[email protected]

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 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


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Agenda

Return on Investment (ROI)

Your Context

Results That Matter

The Amazing Value of Learning

The ROI Method and Process


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Sources


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Agenda


Your Context

Results That Matter




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History

Peter 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


Results

Behavior

Transfer

Reaction

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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 Math

Benefit-cost Ratio (BCR)


Time to payback

Works with any currency

$ ¥ ₹ €, etc.


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Benefit-cost Ratio (BCR)

BCR =Program Benefits

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)

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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 = = 1.75

1.75:1Demonstrating the ROI of Learning

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

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ROI =

(Program Benefit

Minus Program Costs)

Program Costs


The benefit (return) of an investment is divided by the

cost; expressed as percentage.

X 100


%

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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 = .75

75%Demonstrating the ROI of Learning

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

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Time to Payoff

Payback = Program Costs

Program Benefits


Estimated time in which a program will break even (time

after that is added benefit); expressed in time.

X time unit


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.

= .57

6.84 monthsDemonstrating 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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Agenda


Your Context

Results That Matter




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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?


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Plenty of Options

Cost

Output

Time

Quality

Energy


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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 Options

Cost

Output

Time

Quality

Energy


Service

Creativity

Development

Culture

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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 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

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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 UCLA

Founded 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 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

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Agenda


Your Context

Results That Matter




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Business Cents > Business Sense

What 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

Evaluation

Isolate the effect of investment and

calculate its value

Demonstrate extent that expectations were met and

calculate the value

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Measuring Success

Identify metrics that matter

Use data you can get

Increasing vs. Decreasing

Activity vs. Results

Learning 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. Results

Lead and Lag Measures



Lead vs. Lag Measures

Lead Measure(activity)

Lag Measure(results)

measures goalpredictive of goal + influenceable

lose weight/sizediet + exercise

doing this… gets that

= LEVERAGE


Examples


reduce equipment failure

reduce safety incidents

increase accuracy/efficiency

reduce churn

increase retention of talent


routine maintenance

compliance with safety regs

time spent practicing

touchpoints with clients

coaching provided


Implement Manager Training


Increase retention of talent

Decrease complaints to HR


Regular one-on-ones

Provide coaching

Give autonomy

Support growth

Build cohesive teams


ReactionObjectives

LearningObjectives

ImplementationObjectives

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

• Reducedabsenteeism

ROI

Impact

Implementation

Learning

Reaction/Satisfaction

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Learning + Performance Outcome


ReactionObjectives

LearningObjectives

ImplementationObjectives

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

• Reducedabsenteeism

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Agenda


Your Context

Results That Matter




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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 performanceof 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 participation

Authentic motivation

Ongoing improvement

Employee engagement

Retention 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

Improvement

Growth mindset

Dr. Carol Dweck


Growth Mindsetleads 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 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 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 less than their full potential.

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Engagement

How 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 disengaged18%


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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 Maximize

the 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

Learning

Guide


They will help you show ROI.

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Agenda


Your Context

Results That Matter




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ROI Methodology


Five Levels of Evaluation

V Model for Business Alignment

Process Model to Analyze Impact

Data Collection

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Jack Phillips

ROI


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 data

Surveys/questionnaires

Tests

Observation

Interviews

Focus groups

Performance Records


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Isolating Effect of Program

Pre-test, post-test

Control group

Trend analysis

Use of expert studies/data

Estimation of impact by:• Participants

• Supervisors

• Leadership



Learn More About ROI

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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




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Questions + Answers


BrittAndreatta.comlynda.com