Unfortunately, many companies see training as a financial drain, so it is one of the first functions to take a hit when there are budget cuts. Do you, as a training manager, have the ability to change it? Yes! Crunching numbers to determine the return on investment (ROI) of your training programs is the best way to prove that training is not an expense but instead increases the company’s profit.
Measuring ROI helps you gain support and funding from your stakeholders, who will be much more willing to fund your initiatives if you can show them numbers to justify the investment. Assessing a program’s ROI also helps you improve training efforts. Measuring the business impact of your courses will help you optimize them to be effective at teaching skills as well as improving the bottom line.
Why Use Training Games?
Stakeholders focus on the ROI, but managers are concerned about how well their employees learn the required information. Your challenge is to balance both expectations. Interestingly, when you focus on transferring knowledge effectively among your employees, the ROI almost always trends upward.
Training games are an effective format that increases both effectiveness and ROI. Employees retain more information through games than classroom training or e-learning, because they are engaged and invested in the experience. A training game, also called a serious game, requires learners to apply their understanding of a topic in order to succeed or win. For example, in a game where learners race to find all the items needed for a sales presentation, they must constantly think through the items on their list so they know what to collect and avoid inside the game. This repeated recall helps learners store information in their long-term memory.
In addition to being highly interactive, serious games provide instant feedback and realistic consequences. What happens if the learner gathers the wrong items for a sales presentation? Well, you could show the avatar trying to set up a laptop in a client’s conference room, only to realize she forgot the adaptor required to connect to the projector. The learner could lose points for botching the presentation, miss out on a new sale or lose the client to a competing firm. Experiencing these real-world consequences will be much more memorable to the learner than missing a multiple-choice question and reading, “Incorrect. You should always pack your adaptor.” Repeated recall and realistic consequences go a long way in enhancing the ROI of training programs.
According to a 2011 study by Tracy Sitzmann, games are the best way to learn compared to traditional learning. They increase learner confidence by 20 percent, improve knowledge by 11 percent and enhance knowledge retention by almost 90 percent.
Designing a Game to Maximize ROI
Start considering the ROI of your training game in the initial design phase. First, identify the pain points that are costing the company money. Work with the subject matter experts (SMEs) to ask “why,” and dig deep into the underlying problems. Then, write out learning objectives for your game that align with these company goals. For example, a pain point could be that sales are down because employees are not adequately prepared for their presentations. A specific objective would be for salespeople to pack everything they need. You could create a survey for salespeople or their managers to pinpoint the exact percentage of people who are currently achieving that goal. Then, you have a baseline to measure against after the training is released.
Measuring the ROI of Training Games
One of the most popular models of training evaluation is the Kirkpatrick model. There are four levels to this model, created by Donald Kirkpatrick, that range from learner reaction to business impact. In 1991, Jack Phillips added another level to the Kirkpatrick model: ROI.
Level 1: Reaction
This level measures the learners’ reaction to the training game. You can add a simple survey to the end of the game with questions about the their learning experience. At this level, the answers will only provide information on whether the learners found the training relevant and whether they enjoyed. You may want to use the data to assess whether the program needs any improvement.
Level 2: Learning
Level 2 determines how much knowledge the learners gained from the training. For example, you would find out if learners know what items they need to pack for a sales presentation. You can obtain this knowledge by giving assessments before and after learners play the game.
Level 3: Behavior
At the third level, you assess the behavior change in the learners. Are the salespeople actually confirming they have what they need for each presentation? Is there an increase from your baseline measurement? This level is sometimes challenging to validate. You may find that the learners have gained skills and knowledge from the training, but they are not applying the information in their work. If so, it is critical to determine why this is happening and then take corrective actions.
Level 4: Impact
At this level, you measure the impact the training has on the organization in terms of increased revenue, higher productivity, less product loss, longer employee retention, etc. For example, are salespeople closing more deals after delivering presentations? It may not be easy to quantify these metrics, but it is the only way to measure the true impact of training.
Level 5: ROI
At this level, you can express the data obtained at Level 4 in monetary terms. This level helps determine if the training impact is greater than the cost of creating and delivering the training. The typical formula for calculating your ROI for training is: ROI (percentage) = ((monetary benefits – training costs)/training costs) x 100.
To be as accurate as possible, try to ascertain the amount of performance improvement that is directly related to the effects of the training. Don’t let benefits from other factors skew your actual ROI calculation.
Calculating the ROI as a monetary value may be challenging, but you can accomplish it with enough determination. The metrics you compile could make a monumental impact on the future of your company.