Welcome back to our ongoing series on the ROI of learning programs. In Part One, 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 as it relates to how to measure return on investment. In Part Two, I focused on non-mathematical ROI considerations and examined the “employee happiness factor” as a possible key consideration for asking the right questions in terms of ROI. 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?
Stick to the ROI rules – ask the right questions, document your answers, and measure the results over time. This will properly guide you on your 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.
In this installment, I want to close the circle – how integrated talent management, specifically performance management can help to answer the more difficult “why” questions and how compliance can be a “slam-dunk” for determining ROI.
Closing the Circle with Employee Performance
If one of your reasons to procure an LMS was to improve employee job performance, your ROI plan should be very clear in terms of why and how an LMS will make a positive difference. But can an LMS measure job performance? Not really. An LMS will serve up training content and track an individual’s training progress which should always be a component of employee performance. One could argue, and for that matter measure, that an employee’s performance measurably improved because of training delivered by an LMS (e.g., Cornerstone for Salesforce).
On the other hand, if you decided that one of your reasons for procuring an LMS was to improve employee job performance, consider including an employee performance module (EPM) in your purchase. Why? Because you will not be able to measure all of the criteria for job performance through an LMS – only some components.
By design, an EPM module is configured to align with corporate goals and cascade down to individual role performance and numerically measure (usually as a percentage) whether the goals that were established were indeed achieved. This data can be aggregated to measure overall performance by the workforce and the achievement of improved performance or increased productivity. Be sure to include these goals in your ROI plan and identify the reports from the EPM that will be used to measure success.
Dirty Laundry & Compliance Risk
Let’s talk about compliance training. Compliance ensures that an organization has the processes and internal controls to meet the requirements imposed by governmental bodies, regulators, industry mandates or internal policies. Put more simply, don’t lie, don’t steal, and don’t cheat.
Compliance training is a way to keep the business out of hot water and ensure that safe business practices are upheld. They are usually recurring requirements and require accurate reporting (tasks well suited for an LMS).
Research conducted by the ADP Research Institute stated that the average employment lawsuit award exceeds $490,000 and that 52% of midsized companies report at least one recent incident of HR-related complaints. Consider industries where lives are at stake – energy, manufacturing, and transportation are just examples. Each year, large, multi-national firms pay billions of dollars for a variety of infractions that translate to non-compliance. Do you think these firms take compliance training seriously? You bet they do.
So what does that have to do with learning ROI? Ask your legal department about compliance and the cost of non-compliance. It’s the kind of dirty laundry in a company that is closely held information. Depending on what your company does, the dirty laundry pile might be small or it could be huge. Consider these costs and potential non-compliance risks as a sensible reason to invest in an LMS. Your ROI calculations can quickly become very impressive.