April 26 2016

The 4 Levels of ROI

Written by Nimritta P.

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software_measurement_metrics1.jpgIf you've adopted an eLearning solution or methodology, you will likely be required to prove the return on investment. This is to show that the money you've invested in training has a tangible outcome, and isn't going to waste.  

Understanding investment

ROI is immediately associated with dollar investments, but the return isn’t always going to be financial. There are a number of measures for ROI:

  • Effectiveness - This is the impact, or the scale of the outcome that was produced.
  • Job impact - The increased efficiency of performance by employees based on training.
  • Behaviour change - change in attitude, and better compliance with organizational goals.
  • Minimized exposure - minimizing risk of employee’s violating regulations or rules, through training (Eg. Sexual harassment training, safety training, etc.).

We can break down ROI into 4 categories

1. Engagement and Reaction

To measure engagement, you need to understand whether trainees felt their training was beneficial, and determine their attitudes toward the training they received. These answers can be found through post-training evaluations, asking specific but open ended questions.

    • How do you expect this training will apply to your job?
    • In what aspects of your work can you apply this training?
    • Which aspects of training did you find most/least beneficial?
    • Monitoring performance

2. Learning and Retention

Determine what was learned, what skills were developed and/or improved, and how well the learned information stays with trainees. Another important question to consider is whether trainees learned what the training was intended to teach (this brings us back to dollar investments, as it helps us determine whether the money spent on training produced an outcome).

One effective method of determining 3 tests - one pre-training, and 2 post-training.

  1. Conducting a test that allows you to understand employee knowledge and skill-level prior to training.
  2. Conduct a course within 1 day after the last training session. This will allow you to determine and measure the skills learned through comparison to the results of the first test.
  3. Conduct a second post-course test 4-5 weeks after the last day of training, asking employees to recall what they learned, and to apply those skills. This will allow you to determine what information was retained, how well it was retained, and simultaneously reinforce the retention of that material.
3. Application, Behaviour, and Learner Response

Are employees effectively able to apply their trained skills to their job, and are their positive changes being made, based on the training that is delivered? Determining the application and behaviour is understanding how well trainees are able to apply their learned skills to their job. Here are some questions you should keep in mind:

  • What percentage of employees are applying their training to their job?
  • What are the visible and tangible improvements that have been made in the efficiency of work?
  • What is the connection/correlation between the new learned behaviours and the organizational goals?

This is an essential evaluation - the first two categories (Engagement, and Retention) don’t mean very much if trainees are not able to apply their skills to the job. To most effectively measure this, it’s best to conduct observations, interviews, and assessments over time, so you can see the change in knowledge and behaviour based on training.

4. Impact on business - Results

These are measures typically collected by the business, based on the improvements made, money made, and vulnerability to threats reduced or eliminated. The challenge here is understanding which measures pre-existed before the training, and which measures are a result of the trainee’s influence and work. The key is to link measurements to training input, by pre-identifying and agree on which aspects of the business trainee's will be accountable for. 

To learn more about Return on Investment, download our eBook on assessing the ROI of a Learning Management System. 
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