In the modern business, workforce training is a continuous and important component of success, which is evidenced by growing learning and development (L&D) budgets. Measuring the effectiveness of training is a crucial activity to ensure expected return on investment (ROI). In the ever-changing business environment, corporate training needs are continually evolving. ROI continues to evolve accordingly.
Why do we measure ROI? The simple answer is that measuring ROI is a foolproof way of justifying training budget. If the cost of creating and delivering training is proportionately impacting business results, the training program is on the right path. L&D professionals can also use ROI as a reference for evaluating training methods and to identify areas for improvement.
LMS Implementation: The Cost Advantage
More and more organizations are investing in training technologies, including learning management systems (LMSs). One benefit of LMSs is the power of the data it provides to help organizations measure ROI.
Here’s an analogy: Let’s say you need to repair and service your car. In deciding where to go, you need information such as cost, reputation, time needed for repairs and quality of the repairs. If you decide on the least expensive option and receive a high-quality, fast service, your return on investment is high. However, if you use the least expensive option with a fast turn-around time, but the car problems recur quickly, your return on investment is low, as you now need to invest additional time and money. In another scenario, if you select a mid-priced option, your return might be lower than the cheapest option, but if the repair is good, then you still have a reasonable ROI.
The LMS vendor providing the cheapest option might not have the features that you need for your millennial workforce. Its customer training and support might also be ineffective, creating a drain on both time and money. The greatest benefit of a corporate LMS is to boost efficiency and provide more effective e-learning opportunities within budget. Here are a few indicators of a cost-effective LMS:
- The LMS provides benefits for large as well as small numbers of users.
- The LMS has a flexible architecture that enables custom features at minimal cost.
- System training and support is available without additional charge, especially for the initial months of implementation.
- There are no or minimal upgrade costs associated with replacing existing technology or upgrading the same system.
- A cost-effective LMS improves operational efficiency and does not increase the administrative support required.
A corporate LMS will provide a high ROI by improving training, productivity and satisfaction. Modern LMSs can also increase ROI beyond those initial benefits:
- The modern LMS can help make training more relevant to learners and close skills gaps across the workforce.
- With greater skill alignment, the workforce is better equipped to work together toward organizational goals.
- With just-in-time training delivery, LMSs ensure that training is accessible at the point of need.
- LMSs promote peer collaboration and engagement through social learning opportunities.
Measuring training effectiveness is vital to the success of the modern business. With e-learning and a corporate LMS, it becomes easier for organizations to quantify the impact of L&D programs, ensuring that training is successful and sustainable.