Human Resources

Prove the ROI of Your Organization’s Learning Program

By Adrienne SmithApril 20, 2017

With the ever-increasing pace of work, taking a step back to focus on employee development can feel challenging. As a result, employees often lack the opportunity or tools to grow within their companies. That said, building a professional development program can improve engagement, growth, and productivity. Not only that, it can net a positive Return On Investment, or be ROI-positive.

Companies in the top quartile of employee engagement see 21% higher productivity than companies in the bottom quartile. They also see higher customer ratings and profitability, as well as lower turnover.

Increase your employee engagement with the 70:20:10 learning model, which empowers employees to play a direct role in their own growth.

Set the Wheels in Motion

According to the 70:20:10 method, knowledge is best gained through experience. However, the method includes using action, mentorship, and formal education to foster employee growth across leaderships levels.

It suggests that:

  • 70% knowledge comes from job-related experiences
  • 20% knowledge comes from interaction with others
  • 10% knowledge comes from formal education events

To build knowledge from job-related experiences, employees should first identify skills they’d like to improve upon. Then, they can seek out on-the-job challenges that strengthen those skills. This helps employees develop the competencies they’ll need in future roles. The on-the-job challenges might include new cross-functional projects, increased management, and increased insight into senior leadership projects.

To build knowledge through interaction with others, your company must first empower strong managers and strong mentors. Find managers who are excellent at coaching, rather than project managing. They’ll push employees in the day-to-day challenges and drive career growth. Mentors will help employees develop soft skills required to become the next generation of leaders at your company.

Want to learn more about the 70:20:10 ratio? Read more about the model in this blog post.

Prove ROI in Your Learning Development Program

Sure, ROI can be as simple as measuring the cost against the time and resources involved. But proving ROI isn’t just about money spent; you should also point to increased retention and improved employee engagement. Doing so is hard; there are myriad ways to measure against retention and engagement efforts. But it’s also worth it, and will give you a holistic view into your efforts’ success.

In proving the benefit of the effective learning model you’ve built, consider also pointing to:

  • Reduced attrition
  • Improved individual and team performances
  • Internal mobility increases
  • More inclusive culture

Reduced Attrition

Employee turnover, churn, attrition. However you name it, this formula should measure the rate of your employees leaving over time.

To do this, follow the formula:

(employees that left during the time period) / (total employees at the beginning of the time period)

So, say your company had 90 employees at the beginning of the month. At the end of the month, your company had 86 employees. You would divide:

4 employees lost during the time period / 90 employees at the beginning of the time period = 0.044 or 4.4% attrition

Look at attrition rate for your entire company and for employees involved in the program. Doing so can help identify if your learning development program is moving the needle.

Improved Individual and Team Performances

There are a lot of qualitative and quantitative ways to measure higher employee performance. Look into how employees are growing, why they’re staying and why they’re leaving.

Ideally, you’ll learn that turnover is reducing and individual performance is increasing. Here are some ideas on how to measure against these two goals:

 

  • Conduct regular check-ins with employees, managers and mentors involved in the program. Develop a standard set of questions to ask each, so you can review how answers develop over time.
  • Conduct exit interviews. Among other insights, learn why the employee became ready to leave your company and what resources they wish they’d had more of.
  • Regularly distribute employee surveys. And again, develop one set of questions. Over time, you’ll be able to measure improvements on engagement, happiness, and investment in the company.
  • Check in on team goals and how they were achieved. Hold team members accountable. This will help measure how employees are learning and growing in their day-to-day — and how managers are helping them achieve their goals.

Increased Internal Mobility

There are two ways to look at improved internal mobility.

First, compare success you’ve had filling positions with external candidates against internal candidates. Look at the respective costs of each hire, time spent on the interview process, and performance a few months after the position fills.

Second, you can look at the internal promotions of employees involved in your learning development programs.

First, consider these questions:

  • Do employees in the program grow more quickly than employees not in the program?
  • How do employees with mentors grow compared to employees without mentors?
  • When employees are promoted, what do they cite as the reason for their growth?

Then, determine promotion rates of employees. Compare promotion rates across different facets of your company, to better set benchmarks and measure success. For instance, compare the promotion rate of employees involved in your learning development program against the rate of all employees within your company.

To do so, follow the formula below:

(total promotions during the time period) / (average headcount in the learning development program)

So, say your company supported the internal growth and mobility of 8 employees in the program last year. The program, on average, had 70 employees last year. You would divide:

8 employees in the program promoted last year / 70 employees in the program, on average, last year = 0.114 or 11.4% promotion rate.

Looking at the promotion rate of your development program will show its effectiveness in driving career growth.

More Inclusive Culture

Measure how diversity — and thus, inclusiveness — has positively impacted your company. Measure improved diversity across teams, within the learning programs, within the mentorship programs, and in senior leadership. Once you’ve done so, gather feedback. Do employees feel more motivated? Listened to? Engaged?

Improved diversity only helps your company. By ensuring everyone has equal access to resources and growth, you’ll set the stage for an optimally effective development program.

Adrienne Smith

Adrienne Smith

About the Author

Adrienne is a writer, editor, and content marketer from New York. She's passionate about creating equal opportunity in the workplace.

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