{"id":51128,"date":"2024-03-27T12:10:45","date_gmt":"2024-03-27T12:10:45","guid":{"rendered":"https:\/\/staging.totara.fortyapp.com\/articles\/training-roi-formula-how-to-measure-roi-of-learning-and-development\/"},"modified":"2024-08-28T20:13:33","modified_gmt":"2024-08-28T20:13:33","slug":"training-roi-formula-how-to-measure-roi-of-learning-and-development","status":"publish","type":"article","link":"https:\/\/staging.totara.fortyapp.com\/us\/articles\/training-roi-formula-how-to-measure-roi-of-learning-and-development\/","title":{"rendered":"Training ROI formula: How to measure ROI of learning and development"},"content":{"rendered":"\n<div class='inline-text-container MobileAlignment DesktopAlignment'>\n  <div class='richText'><p class=\"large\"><b>Learn how to measure your training ROI so you can better quantify your impact.\u00a0<\/b><span style=\"font-weight: 400;\">Learning and development is an area that requires a lot of investment.\u00a0<\/span><span style=\"font-weight: 400;\">And year on year, that investment is going up.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the LinkedIn Learning Workplace report, <\/span><a href=\"https:\/\/learning.linkedin.com\/resources\/workplace-learning-report\"><span style=\"font-weight: 400;\">48% of companies<\/span><\/a><span style=\"font-weight: 400;\"> plan to increase their spending on employee training.\u00a0<\/span><span style=\"font-weight: 400;\">But as investments grow, so does the pressure to prove your impact. And as we all know, proving the impact of learning and development isn&#8217;t simple.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this blog, learn:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What L&amp;D ROI is\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What the challenges and benefits of measuring training ROI are\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How to prove the impact of L&amp;D\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The formula for training ROI\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Let&#8217;s get started.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"font-weight: 600;\">1. What is learning ROI?\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Learning ROI, or training ROI, is a way to measure the financial impact of learning and training.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Chances are you&#8217;ve heard of return on investment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ROI is the return you get on an investment, i.e., how much did you make because of a particular action. And when you&#8217;re investing in learning, particularly in a <\/span><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/learning-management-system\/what-is-a-learning-management-system\/\"><span style=\"font-weight: 400;\">learning management system<\/span><\/a><span style=\"font-weight: 400;\">, you want to ensure you&#8217;re getting a good return.\u00a0<\/span><\/p>\n<p><b>Related: <\/b><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/learning-management-system\/lms-features\/\"><span style=\"font-weight: 400;\">10 key features to look for in your LMS<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Learning ROI is the same, it just specifically applies to your learning and development investments.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let&#8217;s say you invest \u00a3100 into your learning strategy, and as a result you make \u00a3200. Your learning ROI would be 200%, or 2:1.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of course, ROI isn&#8217;t just about monetary value in the sense of profit. It could also relate to the time you save, or the increase in quality of work. These all have a value too.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, let&#8217;s say you have a team of 10 and it takes them 2 hours to do a particular task which they perform twice per week.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You might invest in training for that group which means that that task now only takes one hour per person. You&#8217;ve decreased the time taken by half, which across all ten employees is 10 hours per week. That over 52 weeks is 520 hours a year!\u00a0<\/span><\/p>\n<p class=\"large\"><strong>Challenges of L&amp;D ROI\u00a0<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Return on investment is never easy to measure. It can be hard to quantify some of the things that you&#8217;re measuring. And the same is true for <\/span><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/learning-management-system\/employee-learning-and-development\/\"><span style=\"font-weight: 400;\">employee learning and development<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One key challenge is that learning initiatives can sometimes be looked at a box checking, rather than a critical part of a business strategy.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When you create learning strategies without a clear foundation tied to business outcomes, you will always struggle to measure your L&amp;D ROI.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While many organisations are using L&amp;D for improved employee and company performance, some of the more traditional tactics are difficult to measure and so seem to have underwhelming impact.\u00a0<\/span><\/p>\n<p class=\"large \"><span style=\"font-weight: 600;\"><strong>Benefits of L&amp;D ROI<\/strong>\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Calculating your learning ROI has a lot of benefits.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While you might have great ideas when it comes to your learning strategy, it can be tricky to ensure that what you&#8217;re creating is having the right outcomes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Calculating your training ROI can help you:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Understand the value of your training\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Create the best learning strategy ahead<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Improve your current learning programmes\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Justify L&amp;D budgets\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">With all of these benefits, you can see why it&#8217;s so important to invest in measuring training ROI properly.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"font-weight: 600;\">2. How do you measure the impact of L&amp;D?\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Calculating your training ROI can be broken down to three simple steps:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Identify the business challenges\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Decide what you&#8217;re measuring\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Benchmark your data\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Let&#8217;s look at each in practice.\u00a0<\/span><\/p>\n<p class=\"large\"><span style=\"font-weight: 600;\">Identify the business challenges\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What are you trying to achieve with your learning and development?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Are you hoping to:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Improve learning transfer?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Create a strong onboarding process?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Increase compliance rates?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Centralise your people data?\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">There are a range of ways that your <\/span><a href=\"https:\/\/staging.totara.fortyapp.com\/learning-management-system-lms\/\"><span style=\"font-weight: 400;\">LMS<\/span><\/a><span style=\"font-weight: 400;\"> and learning solutions can improve your outcomes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Take a look at your strategy and identify what you&#8217;re striving to improve.\u00a0<\/span><\/p>\n<p class=\"large\"><span style=\"font-weight: 600;\">Decide what you&#8217;re measuring\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Understanding what you&#8217;re trying to achieve will help you start to understand which metrics are the most important.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you&#8217;re looking to improve <\/span><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/learning-management-system\/learning-transfer\/\"><span style=\"font-weight: 400;\">learning transfer<\/span><\/a><span style=\"font-weight: 400;\">, then you would want to measure knowledge pre and post-training.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Meanwhile, if you want to upgrade your onboarding process, you might look at how quickly people complete their <\/span><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/onboarding\/onboarding-checklist\/\"><span style=\"font-weight: 400;\">onboarding checklist<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><b>Related: <\/b><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/onboarding\/onboarding-process\/\"><span style=\"font-weight: 400;\">How to create a good onboarding experience for new starters<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">First, define your goals, and then define the measurements and KPIs to correlate to those.\u00a0<\/span><\/p>\n<p class=\"large\"><span style=\"font-weight: 600;\">Benchmark your data\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once you&#8217;ve measured the impact of your learning, you need to benchmark your metrics.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When you have this data in place, you can start to compare your results to see how your learning strategy evolves.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Keeping constant evaluation on these key statistics allows you to be agile with how you develop your learning opportunities and continue to put your people first.\u00a0<\/span><\/p>\n<p class=\"large\"><span style=\"font-weight: 600;\">What metrics to track in L&amp;D<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are a number of <\/span><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/learning-impact\/learning-and-development-kpis\/\"><span style=\"font-weight: 400;\">L&amp;D metrics<\/span><\/a><span style=\"font-weight: 400;\"> you will want to measure when it comes to understanding your impact.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We usually suggest tracking:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Course attendance rate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Course completion rate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Average time to completion<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Learner satisfaction rate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Learner retention rate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Job performance impact<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Training ROI<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Tracking each of these can help you understand the success of your training and what is and what isn&#8217;t working.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While learning ROI is important, understanding these other KPIs can help you quantify the success of your learning.\u00a0<\/span><\/p>\n<p class=\"large\"><b>Pro Tip\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Not sure exactly how to track these metrics? We run through the best <\/span><a href=\"https:\/\/staging.totara.fortyapp.com\/articles\/learning-impact\/learning-and-development-kpis\/\"><span style=\"font-weight: 400;\">learning and development KPIs<\/span><\/a><span style=\"font-weight: 400;\"> to track and measure.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"font-weight: 600;\">3. How to calculate learning ROI\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Calculating ROI is easy, just use this simple formula.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ROI = (Benefits \u2013 Costs) \/ Costs<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With this formula in play, you can easily work out the return you&#8217;re getting on your L&amp;D programme.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Benefits might include:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Money saved on improving employee retention\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Money saved on insurance by having 100% compliance\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Money saved on training thanks to good learning transfer\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Of course, some benefits are more difficult to apply value to.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As such, you might need to apply your own value to them.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, you might attribute a value to every hour saved following taking a training course.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Or you might add a value to improved business outcomes and how learning and development has impacted that.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However you do it, it&#8217;s worth tallying up all the way L&amp;D has impacted your business outcomes.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p class=\"large\"><span style=\"font-weight: 600;\">What is the average ROI for training?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A recent study by <\/span><a href=\"https:\/\/www.immagic.com\/eLibrary\/ARCHIVES\/GENERAL\/ACNTR_BM\/A061026S.pdf\"><span style=\"font-weight: 400;\">Accenture<\/span><\/a><span style=\"font-weight: 400;\"> found that the average ROI for training was 353%. They found that for every dollar spent, it return $4.53.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You may not be able to attribute the same level of ROI to your own learning. Remember, not every company will adopt the same tools, the same processes or the same strategy when it comes to L&amp;D.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While it&#8217;s good to be aware of an average ROI, it&#8217;s much more prudent to assess your own ROI and use that as your benchmark.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"font-weight: 600;\">4. Improve your learning ROI with Totara &amp; Think\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Think is a leading learning solution that offers its customers a range of tools and plugins on top of the Totara basecode to create bespoke platforms.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These solutions help users improve learning engagement, create lasting business relationships, decrease employee attrition and all in all, improve L&amp;D ROI.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Book a demo with one of our L&amp;D experts and they&#8217;ll walk you through the key features of our platform, to help build you a solution that works for you and your people.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<\/div>\n  <\/div>","protected":false},"template":"","tax\/tags":[684,806],"tax\/solutions":[778,798],"tax\/topics":[688,808],"tax\/industries":[],"tax\/article-types":[],"class_list":["post-51128","article","type-article","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/articles\/51128","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/types\/article"}],"wp:attachment":[{"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/media?parent=51128"}],"wp:term":[{"taxonomy":"tag","embeddable":true,"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/tax\/tags?post=51128"},{"taxonomy":"solution","embeddable":true,"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/tax\/solutions?post=51128"},{"taxonomy":"topic","embeddable":true,"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/tax\/topics?post=51128"},{"taxonomy":"industry-tax","embeddable":true,"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/tax\/industries?post=51128"},{"taxonomy":"article-type","embeddable":true,"href":"https:\/\/staging.totara.fortyapp.com\/us\/wp-json\/wp\/v2\/tax\/article-types?post=51128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}