What’s the Best ROI Calculation? It depends.
Here at Unboxed, you’ll often hear us say “It depends.”
“What should I have for lunch?”
“It depends.”
“Which gif best describes this meeting?”
“It depends.”
“How should I calculate the ROI on this training?”
“It depends.”
We’re big into context: how does information about a situation, its stakeholders, and the desired outcome influence the decision-making process? It’s just as true for the grocery store hot bar as it is the return on investment (ROI). This month, our blog posts will focus on the theme of “Show Me the Money: Strategies for Calculating ROI of Learning Initiatives.” Our weekly musings will investigate the pivotal role of ROI in the world of learning and development (L&D).
What is ROI?
ROI articulates the quantitative benefit a company receives for funding something. That “something” can range from a new time-tracking system, expanded professional development, or even flexible scheduling.
In the L&D world, we use ROI to determine if a learning initiative has positively impacted business outcomes. This data gives practitioners evidence that what they’re doing works. Ideally, this leads to continued financial investment from their business, allowing them to sustain the change or expand their work.
So, what’s the best ROI formula for your L&D initiative? Well, it depends…
Formulas That Work
You can choose from a variety of ROI formulas based on your needs. For example, LinkedIn Learning features five different ways to determine quantitative success. These methods range from ROI calculators to surveys and impact studies.
Determining the right formula means considering the type of learning initiatives. Ask yourself about your program’s goal and type of training content. For example, you’ll measure and collect data differently for a leadership development program than you would for a system training rollout. Taking an “it depends” mindset for ROI calculation gives you the freedom to curate relevant data for your team.
Looking Beyond the Numbers
Ideally, your ROI method accounts for a more holistic view of training. Janet Clarey, practice lead for Learning Solutions at McLean & Company, believes that “the current approach to measuring learning effectiveness just isn't working.” Her HR research firm found that most measurement techniques are too narrow. Instead, McLean & Company advocates for evaluating multiple perspectives, including “the impact on learners [and] the impact of the learning solution on the organization.” Quantifying the intangible benefits of learning, such as improved employee morale or increased innovation, can admittingly add complexity to the ROI calculation. This more inclusive view, however, empowers L&D teams to better define and track success across a broad group of factors.
Realizing the Unboxed Vision
Unboxed Training & Technology is poised to help you go from where you are to where you want to be with creative, actionable solutions. With our consulting services, we partner with you to leverage creative, data-driven solutions.
Our Efficiency Assessment service compares time spent in training to performance outcomes, providing insights into training efficiency. Organizations can assess whether the time invested in training translates into improved skills, productivity, or other desired outcomes.
With us as your partner, navigating this landscape becomes an opportunity to significantly enhance your organizational capabilities. We are committed to transforming your L&D strategy into a measurable driver of success, ensuring every training initiative is optimized for maximum impact.
