From Qualitative to Quantitative Gain
Business processes can be carefully calibrated, well-defined, widely available—and, if lacking good execution, worthless. Transmission of that knowledge is transformational and the essential element is training. Team members with good process knowledge perform better, with confidence, and understand their own talent as an asset to the company, generating a culture of high performance and elevated capability.
This understanding is at the heart of online training. By directly enabling employees with process knowledge, productivity improves. Employees understand their own talent to be important and relevant; their proficiency neither assumed, nor intractably established. There is room for human development. Employers, in turn, understand that this expertise will be a valuable asset. They see cultivating talent to improve business as a capital investment, rather than a sunk cost.
Qualitative Gain
Qualitative results from training range from improved employee experience of work, more developed skill and accuracy, to loyalty. Think again about the value of optimal execution of business processes. From that angle, not training employees is costly. Of course, training success isn’t guaranteed from access—good engagement and usage matters. Usage metrics are an added benefit of online programs. Through the way these platforms work, businesses can better understand employee engagement, as well as gain insight about which processes work and which may seem opaque, indicating a need to adapt.
Researchers in digital learning efficiency at Arizona State University have undertaken an investigative study using data from the Bill and Melinda Gates Foundation to try to understand the benefits of online learning further. In the midst of the work, lead investigator Lou Pugliese, Founder and CEO of Blackboard, said: “While much is still in development on the project, one thing is clear: It's important to view digital learning activities through the lens of return on investment.”
With the understanding that qualitative benefits exist, a successful online learning initiative should be able to demonstrate ROI, the value (or gain) after the investment (or cost). The ROI lens helps a business to track the quantitative impact of all those qualitative benefits—from fewer errors, better customer ratings, and increased productivity.
Quantitative Gain
For a good analysis of investment and the return, the key inputs are data before training and after. These can later be converted to monetary value for ROI calculation. From the organizational perspective, what are the key markers for successful training? What does accurate performance of a given business process look like in terms of speed and 
quality? In essence, for each relevant task, what does increased productivity look like? Concrete questions to isolate your data points include:
- Is there a productivity gain in terms of time spent per task?
- What is the average number of re-works on a task?
- How many work assets are right the first time?
If such data are difficult to measure, use data from self-reporting and customer reporting. Collect knowledge data, as well as confidence, through employee questionnaires. These can be anonymous to encourage accurate reporting. Repeat the questionnaire after training. Some learning initiatives include a pre-test that can be compared with scoring after the course, which serves a similar purpose. Solicit customer feedback or ratings with each possible transaction and monitor for changes.
Isolating the indicators that inspire the training is also a good basic rule of thumb for your ROI focus. Choosing the most relevant behaviors to analyze in this step translates to a more relevant ROI interpretation. Make sure that your data points relate meaningfully to the target outputs of the training. Comparisons between trained and untrained groups can also be useful, but in a correlative sense, rather than causative, owing to variability in performance.
Convert Data to Monetary Values
Next, take one of your data points, say ‘the number of re-works on a task’ and assign monetary value. Use institutional history, like payroll, benefits and quality expenses, to determine a profit contribution or cost savings for avoiding the re-work. This may be the same value as “work asset right the first time.” It may take some vision and patience to consider and quantify a given behavior, but this essential step is the work of translating business impact.
The program costs should be added up for use in calculating the total cost of the investment. If the program was developed in-house, it includes expense of design, development and administration. If training involves travel, include that expense. If taken online, include employee salaries for time in training and all materials provided, as well as any fees for the provider’s delivery.
A formula
With isolated training targets (data) and monetary value assigned, most of your work is done. Set your parameters, say: one trainee or team, one month’s performance and do the math. One popular formula for calculating the percentage ROI gain is:
% ROI = (net benefits ÷ program costs) x 100
From this equation, we see that decreasing training costs immediately improves ROI in terms of gain. Online learning programs usually translate to less disruptive delivery, with no travel or trainer costs. Xvoucher is here as your partner in the training process, presenting a tool for buyers of learning to streamline purchasing and better understand training usage—all of which can simplify your ROI calculation. Let us know if we can offer you a demo.
