elevating business performance: maximizing returns in a knowledge economy

the ROI of learning 

did you know that 87 percent of the companies worldwide are suffering from a skill shortage?
it’s only natural to hence observe a concurrent surge in the global investment towards upskilling and reskilling programs. amidst this scenario, it’s noteworthy that in 2022, the total training expenditure in the us surpassed the significant milestone of 100 billion dollars for the very first time. this underscores the growing recognition of the importance of addressing skill gaps in the workforce.

with new challenges on the horizon in post-pandemic world, companies are tending to invest in employee training with more enthusiasm. however, even after introducing the right training modules, the challenge of measuring and evaluating the success of these programs remains largely unaddressed.

introducing learning ROI: 

ROI of learning is a way to measure the efficacy of a certain training or program relative to the cost incurred. 

however, it is not necessarily about the money that learning ROI concerns itself with. the total amount of time saved as well as the total productivity are also constituted by the concept. the rationale behind learning ROI is simply to foster improved business outcomes and overall organizational performance. this makes it primarily an economic measure.  

how to calculate learning ROI: 

measuring the ROI when you’ve invested in your workplace’s upskilling is not rocket science. you can do it by following these steps.  

step 1 – picking tangible objectives: 

most of the time, tracking learning outcomes fails because of the incognizance of quantifiable objectives that you want out of the training. so the best way to go about this is to define your objectives from the offset. these can include improved employee performance, increased productivity, reduced turnover, or enhanced customer satisfaction. 

step 2 – measuring the impact: 

another step towards calculating learner ROI is collecting hard data based on three measures. learning effectiveness, job impact, and business outcomes. 

  • learning effectiveness: how satisfied are the employees? 
  • job impact: how quickly the employees were able to adapt and how much they have improved in their current roles.  
  • business outcomes: how was the overall performance of the training? compare the pre- and post-training business performance. this can include better customer feedback, increased revenue in sales, and lower turnover. 

step 3 – assignment and calculation: 

after having crafted solid data on the overall augmented business outcomes, now comes the most important step in measuring learning ROI – assigning a monetary value to the measured benefits. 
for example, if the training led to a 10% increase in sales, calculate the additional revenue generated due to this increase.  
you can then use the formula: [(benefits – cost) / cost] x 100 to calculate the ROI percentage.  
this represents the ratio of net gains (benefits minus costs) to the cost, expressed as a percentage. 
in case the ROI is greater than 100 percent, it would mean that the benefits of the training programmes outweigh the total cost incurred. on the other hand, if it is less, it would suggest that the cost incurred is greater.  
why should you evaluate the performance of a learning program? here are the  

advantages of calculating the return on investment (ROI) of learning: 

  1. enhancing training programs: learning ROI focuses on a comprehensive dataset, enabling you to allocate resources more effectively for future training programs. moreover, with access to this data, you can customize training programs to cater to the specific needs of learners, making them highly engaging. 
  2. improved cost-benefit analysis: by comparing and analyzing the calculated benefits against the costs of a training program, you gain a clearer understanding of the return on investment. this analysis helps you determine whether the benefits obtained justify the costs incurred. 
  3. optimized resource allocation: data-driven ROI analysis equips companies with valuable insights into resource allocation. this information allows organizations to direct resources toward areas where skill gaps are most evident and prioritize investments with a higher ROI. 
  4. continued room for improvement: by examining the data derived from learning ROI, previously unclear aspects become more apparent, pinpointing areas that require improvement. this enables you to make changes to better cater to varying needs, ranging from content delivery styles and assessment strategies to modes of learning. 

calculating learning ROI serves as a powerful compass that steers organizations toward well-informed decisions and efficient resource allocation. by quantifying the impact of learning initiatives, companies can strategically align their training efforts with business objectives, optimize budgets, and continually enhance their programs. this data-driven approach not only justifies investments but also nurtures a skilled workforce, fosters innovation, and propels companies forward in the ever-evolving landscape of today’s business world.   

if you are an L&D professional, HR, or talent manager looking to find solutions for workforce upskilling through a microlearning platform, then byteEDGE offers the easiest way of learning with customizable multilingual modules designed for the specific needs of a workforce.  

wanna get a taste of what it is like? book a demo now.