Build in ROI calculation into your eLearning instructional design model
As we navigate through challenging economic times, opportunities abound for eLearning developers. Where many see bleakness and despair, savvy eLearning enthusiasts see a remarkable opportunity to demonstrate how online education can reduce costs, increase quality, and finally earn a solid and permanent position in their company’s business strategy. But are you demonstrating in unmistakable and quantifiable terms exactly how your training initiatives have already benefited the company and how increasing your budget will actually increase the company’s bottom line? Here are some tips on how to do calculate and communicate the return on investment (ROI) that you generate when companies invest in your eLearning programs:
1. Think “Economic Value Add”, not ROI: Rather than worry about developing a comprehensive ROI study, examine the financial impact that your eLearning program has in common sense dollars and cents. Technically, ROI is expressed as a percentage (our eLearning program ROI is 15%), whereas economic value add (EVA) is expressed as a dollar figure. Let’s say your instructor-led training budget for a particular audience and content (field sales training) is $300,000 per year. You know that you can deliver this training via eLearning for an average of $200,000 per year. You’re EVA is $100,000 per year. See this article for more detail.
2. More than savings – it’s money better invested: In the example above, let’s say that the bulk of savings is travel related. Not only are you spending less money on travel expenses, the money that you are spending on salaries is now going toward paying your trainers to act as subject matter experts, learn new eLearning development technologies, and modernizing your training approach. The time otherwise spent traveling and refreshing on the content is spent developing eLearning! Money savings and improved operations? It’s a two-for-one! Remember – it’s not just about saving money. You don’t want your executive sponsors to say, “wow – now you only need $200,000, so let’s cut your budget!” You want to stress the importance of how your division will be positioned to even better serve the company long-term. But just in case you do need to show cost savings, here are some instructor-led costs you can cut through eLearning:
- Trainer and learner Transportation/meals/Accommodations
- Room rental or conference room space and energy
- Training day hand outs, refreshments
- Employee salaries and productivity (time away from workplace)
3. Build-in Kirkpatrick’s Level 3 Evaluations: Level 3 evaluations measure whether the there was an actual transfer of learning to the actual work setting. If you are already doing this, be sure to communicate to those who control your budget what level 3 is, and describe in some detail how this benefits the company. This will increase the visibility of your learning and development efforts, because successful implementation of Level 3 evaluations positively affects learners, managers, project stakeholders, subject matter experts (SMEs), line supervisors, and everyone else the training touches.
4. Making the eLearning Business Case: If you want to bullet (and budget cut) proof your eLearning development budget and likely grow it, then you need to build into your instructional design process your business case. The best way to do this is to implement a formal competency model that ties specific job skills to training lessons (learning objects) within your eLearning courses. This will allow you to measure and communicate results, as well as identify and address any weaknesses in your training program (continuous improvement). In doing so, your department will actually be doing and demonstrating the kinds of continuous improvement qualities that all departments should exhibit. To accomplish this, you must take both a personal and technological approach. From interviewing executives to determine what they see as key corporate objectives, to addressing these in your instructional design, to then measuring learning outcomes through your LMS and Talent Management System, you must execute across the organization and across your training systems to make the best possible case. The good news is you probably already have all the tools you need – you just need to develop and execute a plan. The first step – tell whoever will listen about what you are up to and why. That will buy you some time and potentially get you more immediate support. Here’s a great article on this subject.
5. eLearning benefits: Do you communicate the benefits of eLearning such as; 1) Consistency of training materials and message. 2) Automated and qualitative analysis of learner performance. 3) Documented compliance with mandated training fed into your HRIS system. 4) Automated succession planning and talent management. 5) Increased employee productivity and automated “just-in-time” training interventions. If you need help implementing any of the above, then an investment in outside consulting will provide a great return on your investment!