Improving ROI metrics to showcase L&D’s value
Your L&D team creates significant value. You know it. We know it. And, hopefully, your learners know it. However, quantifying this value has long been a stumbling block for L&D teams. While you may have a strong sense of the value you are adding, expressing this value to decision-makers and business leaders in a measurable, meaningful way is an ongoing challenge for L&D teams.
There are several reasons for this. For starters, L&D teams don’t always align to support broader business strategies, so they find it hard to show their impact. Additionally, L&D has an indirect effect on profitability and cost-saving and doesn’t always think about setting metrics to demonstrate their value. As a result, L&D teams and businesses are in the dark about L&D’s true value.
To help overcome these challenges and quantify your team’s value, we have created this guide to improving L&D’s ROI metrics. We’ll start by analysing L&D’s ROI problem, before offering tips on how to measure and showcase L&D’s value and finishing with five concrete steps to prove L&D’s value.
L&D’s ROI problem
While there is no doubt that L&D offers significant value to organisations, L&D teams' methods for measuring the impact of their learning projects remain relatively unsophisticated.
For example, Emerald Works’ 2020 Back to the Future Report found that while 98% of L&D teams think ‘program evaluation’ is a priority, only 38% believe that they currently have this capability. Worse, this is trending in the wrong direction, down from 45% of teams in 2018.
Additionally, Emerald Works’ Report finds that just 8% of L&D teams calculate return on investment for their learning programs. That’s right, fewer than 1 in 10 organisations actively calculate the ROI of their learning programs. What’s more, only 18% say they regularly communicate performance impacts to senior management.
While these figures don’t paint L&D in the most flattering light, there is hope. Among high-impact learning cultures (defined as the top 10% of surveyed organisations), 52% say they calculate the ROI of their learning programs while 82% say they regularly communicate performance impacts to senior management, showing what a difference these factors can make to your L&D team's performance.
Further, CIPD’s 2021 Learning and Skills at Work survey finds that 76% of L&D teams evaluate the impact of their learning initiatives in some way, up from 70% in 2020. However, the ways that L&D teams evaluate their impact leaves a lot to be desired.
According to the CIPD, 36% evaluate their impact based on participant satisfaction, while 18% evaluate their impact based on a change in knowledge or skills. Only 13% go deeper and assess behavioural change by looking at the transfer of learning into the workplace. Finally, just 8% of L&D teams assess the impact of their learning initiatives by evaluating the wider impact on their organisation.
Even when teams actively try to demonstrate the ROI of their learning programs, the CIPD’s research shows that 16% rarely use the evidence they have gathered, while 17% don’t know how their organisation uses the evidence they gather.
Why does L&D struggle to demonstrate ROI?
According to the CIPD's 2021 Learning and Skills at Work survey, L&D teams run into several barriers when evaluating and showcasing their impact. 81% of L&D teams say they experience barriers when evaluating their initiatives, with the most common problems being the pressure of other business priorities (39%), lack of learner or management time (38%), funding (25%), the quality of data collected (20%), the quality of learning systems (19%), and L&D’s capability to conduct the evaluation (17%).
As the CIPD puts it, “Although pressures have meant greater barriers to evaluation, the battle to be evidence-based is one that L&D teams need to fight and to win. Again, aligning with business will be crucial, as well as adopting learning to take place within usual workflows.”
Showcasing L&D’s value
With this in mind, it’s worth asking, how can L&D better quantify and communicate its value?
LinkedIn’s 2021 Workplace Learning Report offers a few insights, explaining, “Quantifying the value of learning is not straightforward. Learning leaders have to rely on a wide spectrum of measures to gauge success and identify areas to improve. Gathering qualitative feedback from learners topped the list again, but a few quantitative measures — including the number of learners who keep coming back to online learning solutions and how many courses they complete — moved further up this year.”
Accordingly, their report finds that the top five ways that L&D professionals measure the impact of learning initiatives are: qualitative feedback from employees, the satisfaction of employees using online courses, the number of employees that consistently engage with online courses, employee survey engagement scores, and qualitative feedback about the behavioural changes that the learning was intended to drive.
Among these factors, the most notable is the rise of employee survey engagement scores. This category jumped markedly from 16% in 2021 to 27% in 2021.
Additionally, the CIPD’s survey offers important recommendations, stating, “A key shift is embracing the fact that learning impact measurement can’t just be a post-intervention activity. Effective learning requires evidence-gathering and needs definition to underpin decisions in design and delivery. Impactful learning journeys are underpinned by evidence from start to finish.”
Ultimately, their report offers three key recommendations to measure L&D’s impact and showcase value. Firstly, gather both qualitative and quantitative evidence. Secondly, engage key stakeholders to ensure learners can reflect on learning transfer in their work and managers are involved in observation and reporting. Finally, define your desired performance outcomes beforehand and work backwards.
5 concrete steps to prove L&D’s value
- Gather evidence and measure impact throughout the entirety of your learning program, not just after it has concluded
- Actively calculate the ROI of your learning program. According to Emerald Works, only 8% of teams consistently measure this
- Solicit and measure qualitative feedback from your learners via surveys and engagement scores
- Start with clearly defined outcomes in mind and gather data to measure the success of your initiative against these desired outcomes
- Actively allocate time and resources to measure the impact of your learning initiatives, as clashing priorities and lack of time are two of L&D’s biggest roadblocks