Seven Reasons to Measure Impact and ROI of Your Programs

A study conducted by CLO Magazine’s Business Intelligence Board, involving 335 Chief Learning Officers (CLOs), reveals interesting results describing the current and future use of ROI. In the "Measurement and Metrics Study," 35.6 percent of the CLOs use business impact data to show the impact of the training organization; 21.6 percent of the CLOs use ROI data for the same purpose. In terms of planning, 22.6 percent plan to implement ROI in the next twelve months, and 9.7 percent plan to implement it in the next 12 to 24-month time frame. Also, 17.3 percent plan to implement it with no particular time frame. This means that almost 50 percent of the CLOs plan to implement ROI in the future. Adding this to those currently using ROI, it appears that 71.2 percent of CLOs are either using or plan to use ROI in the future.

Your organization must be ready to address the challenge. Taking a more serious approach to measurement requires moving to impact and ROI analysis, connecting programs to business measures, and isolating the effects of the program from other influences. A few projects may need to measure to the financial ROI, as the impact is converted to money and compared to the cost of the program. When serious evaluation is pursued on key programs, the payoffs are huge. Here are the seven reasons to do it.

1. ROI Can Make the Programs Better.

The number one reason to measure impact and ROI is to improve programs, particularly ones designed to add value to the business. Whether the program has a negative ROI or a positive ROI this analysis will provide information to improve them. In essence, evaluation at this level leads to optimization where a higher ROI is attainable. Ultimately, this can lead to allocation, investing more in programs that deliver more value.

2. ROI Helps You Keep Programs, Not Eliminate Them.

When a program has a clear business connection, it will stand the test of time. A negative program does not mean that you eliminate it. Instead, it is usually improved to deliver more value. It is rare to kill a program because of a negative ROI.

3. ROI Proves That You Have An Impact.

Most team members want to know that they make a difference, contributing business value to the organization. Having a credible analysis that connects learning to impact and isolates the effects of the program from other influences is satisfying. It is even more satisfying when the results show a positive ROI has been delivered. Reporting a positive ROI allows learning to move from simply being perceived as a cost, to being perceived as an investment.

4. The Boss Wants It.

For executives, the number one desired category of results from programs is business impact and the number two is ROI. This is according to a major study sponsored by the Association of Talent Development (ATD) reported in an earlier column. Contrast this with the number of L&D functions actually providing that level of results and it is easy to visualize a huge gap.

5. ROI Can Protect Your Budget.

In tough economic times, budgets are often under scrutiny. Programs could be eliminated. The strategy is simple: To continue funding or increase funding, show the business value of current and proposed programs. Impact and ROI is a must. With this approach, many organizations have reported progress in maintaining their budgets and enhancing their budgets, even in downturns.

6. ROI Helps to Build Key Relationships.

To survive and thrive in the learning and development function, you must have key relationships, particularly with important executives and administrators. These executives support you, provide your funding, or request projects and programs. They need to see business value for what you do. Showing the impact and ROI is a great way to be perceived as a business contributor and that will help create these necessary relationships.

7. ROI Can Build the Support That You Need.

We frequently hear comments that operating units will not allow access to data or the managers do not support learning programs. These are often middle-level managers who see learning as a disruption, not as an investment. They only support what they have to. The problem may lie in the results that we show to this important group of people. Connecting learning to impact is often connecting to their KPIs (Key Performance Indicators). When you do that, you will get their attention and more than likely, their support in the future

To learn more about evaluation and the ROI Methodology, contact [email protected].