At a time when it’s important to save money, eLearning can be a viable substitute for instructor-led training. In many situations, it is a way to cut costs and to achieve measurable goals. Instructors and trainers can still serve a valuable role. They can remain gainfully employed by contributing as subject matter experts to the online training courses, by helping to develop the courses, by providing follow-up virtual conferences and ensuring that learners have a good grasp of the subject matter.
Although face-to-face time with an expert instructor is invaluable, the number of in-person contact training hours can probably be reduced without a noticeable drop in performance and learning. Many situations make instructor-led training impossible—the audience may be dispersed, a supply of good trainers may not be available, or the cost of employee travel to a training site is prohibitive.
Evaluating and Measuring Training
Your eLearning curriculum or individual course can be evaluated according to specific criteria. In his book, How to Measure Training Results, Jack Phillips lists six measurement criteria:
- Participant reaction and satisfaction
- Learning results
- On-the-job application of training
- Business impact of training
- Return on Investment (ROI)
- Intangible benefits
Focusing on Return on Investment (ROI)
During economic downturns, most decision-makers want the hard numbers so that is the focus of this article. As a general term, ROI is defined as the earnings per dollar of investment. When this concept is applied to a training program, you can identify whether the investment in the program is worth the cost and you can compare eLearning with other types of approaches.
The formula Jack Phillips teaches is a ratio (one measure is divided by another) and expressed as a percentage (multiplied by 100). The trick is to understand what is meant by Net Training Benefits. These are the training benefits minus the training costs. So when using the formula below, be sure to subtract the costs from the benefits in the numerator.
Here is the formula with an example below it:
ROI = (Net Training Benefits/Program Costs) * 100 = ______%
ROI = (200,000 – 40,000)/20,000) * 100 = ______%
ROI = (160,000/40,000) * 100 = 400%
In the example, an ROI of 400% ($4.00) means that for each $1.00 of investment in training, $4.00 was returned after recovering the costs of the program.
How to Identify Net Training Benefits and Costs
At first it may seem difficult to quantify the measures that make up the net training benefits. Think about benefits in terms of money saved by your organization as a result of training (such as less travel, fewer mistakes, reduced litigation … ) and money made as a result of training (such as increased productivity, more sales … ). Costs include money spent to develop the training and the time that participants spent in training and away from their jobs.
Yahoo’s ROInet (Discussion forum for HR and HRD Professionals)
Measurement, Evaluation and ROI News (for ASTD members)
What Return on Investment does eLearning Provide? (White Paper from SkillSoft)