Learning ROI, Part Two: Revenue & Happiness
November 10, 2020
In the first part of this series on the ROI of employee learning, I discussed the importance of asking the right questions starting with why you wish to procure an LMS and why you will want to document your answers. Answering these questions will properly start you on the path to a successful implementation, provide legitimacy for your reasoning through solid documentation that specified how you will measure success over time, and ultimately, validate the rationale for your investment.
Revisiting the "Why?" Question
In review, my last blog discussed possible reasons for why you are procuring an LMS. Are your reasons:
- To increase productivity?
- To decrease costs (e.g., less travel to classrooms and more eLearning)?
- To satisfy mandatory training for compliance?
- To improve employee job performance?
- To increase revenue (e.g., beef up sales training to drive more sales)?
- To enhance career development?
- Some combination of the above?
In part one, I focused on decreasing costs by demonstrating that, by having more online training, an organization can reduce travel costs for training and, therefore, becomes a component of demonstrating a return on investment (ROI). But what if, in addition to reducing travel costs, your reason for procuring an LMS was to increase revenue and also enhance employee career development? How do you do that? To start with, don’t take short cuts – carefully examine "why" these are important to you and document your answer AND how you intend to measure success over time.
Driving Revenue with Your Learning Initiatives
In most organizations, increased revenue is directly linked to its sales team productivity. How do you relate increasing sales team productivity as a reason to procure an LMS? If increased sales productivity is an organizational goal, and you can legitimately make the case that sales training can make a difference, how do you document your answer and measure results? Be careful with your reasoning because sales people measure success by age-old axioms of pursuing leads, follow-up, and closing deals. It’s a game of percentages and sales people are sensitive about how they spend their time – in training or time with potential clients.
Salesforce.com is a dominant tool today that sales people are immersed in on a daily basis. Cornerstone OnDemand has done some interesting work in their integration with Salesforce. Specifically, the Cornerstone for Salesforce product allows sales people to immediately access sales training courses directly from their normal workflows in the Salesforce platform. Although Cornerstone’s LMS is the engine behind serving up training content and recording data, the transition to training content is invisible to the end user and, in addition to accessing training content, requisite training data can also be reported from Salesforce. Has it worked? Yes it has and, in terms of achieving increased revenue, you can run a report from Salesforce that documents sales before and after training interventions. That’s a great way to measure sales training effectiveness over time – hence ROI from the LMS.
Measuring the Slippery Employee Happiness Factor
So far, I have discussed ROI in terms of decreased costs or increased revenue or, in other words, justify ROI by using math. But what about non-math "why" reasons – the "soft" returns -- like enhanced employee career development opportunities? These are reasons that are a bit harder to quantify and measure. But as I mentioned in my last blog on this subject, this is where consideration of Integrated Talent Management comes into play.
If one of your goals or "why" reasons is to enhance employee career development, then you should determine what tools to use. For example, employee exposure to other jobs within the organization and the prerequisites required for those jobs are capabilities that are typically available in an integrated talent suite. But how do you measure success? How do you know if the steps you have taken and/or the tools that you have employed are working to enhance career development?
This is often characterized as the "employee happiness factor". But it is measurable and is usually accomplished through an organizational communications plan that routinely surveys employees and solicits their feedback.
Establish and document what metrics are required to measure success when documenting your ROI plan (e.g., on a 1 to 5 scale, survey employees to see how they rate the organization’s ability to enhance their career opportunities). Then document what success looks like over time. If, after introducing these tools, employee feedback trends more positively over time, then you are doing the right things.
You should also measure employee attrition over time. Employee attrition is an important indicator but don’t limit your ROI plan to just that. A number of factors play a role in employee attrition including leadership, compensation, and corporate culture.
In the next in this series on learning ROI, I will share my thoughts on how integrated talent management, specifically performance management integration, can help to answer and measure the more difficult "why" questions and how compliance can be a "slam-dunk" for determining ROI.