1. education
2. distance learning

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How to find the RoI of your
Next Training Initiative?
Presented by Nidhi Khanna
L&D Consultant – 24x7 Learning
nidhi.khanna@24x7learning.com
www.24x7learning.com
© 2013, Copyright, 24x7 Learning Private Limited.
© 2013, Copyright, 24x7 Learning Private Limited.
What do we stand for
We help the corporates leverage technology enabled
learning to achieve positive business impact
www.24x7learning.com
© 2013, Copyright, 24x7 Learning Private Limited.
The Journey so far
Highest Performance and Moderate Financial
Capability ~ SE1B CRISIL rating
PC Quest Best Implementation Award 2008 & 2009
Invited by Bureau of India Standards to help
setup India eLearning Standards
Listed among NASSCOM’s 100 IT Innovators
Winner Deloitte Technology Fast 50 India and
Fast 500 Asia 2007, 2008, 2009
Top 10 emerging companies in India – Business
Today 2007
Top 100 emerging companies in Asia – Red
Herring 2006
www.24x7learning.com
© 2013, Copyright, 24x7 Learning Private Limited.
Learning Solutions
• 24x7 LearnTrak(Learning Management System)
• Custom eLearning
• Off the shelf courses (IT, Oil & Gas, Steel, BFSI,
Telecom, Pharma, Business skills)
• Books 24x7 (eBooks on Finance, IT, Business &
Engineering)
• 50Lessons (Over 1200 digital business lessons featuring
more than 250 recognized global business leaders)
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© 2013, Copyright, 24x7 Learning Private Limited.
Our agenda….
1. A comparison in the ROI of
traditional training versus
eLearning
3. What usage can be
expected from eLearning
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2. How do we calculate the
ROI for our training model
4. What is scrap learning
and ways to reduce it
© 2013, Copyright, 24x7 Learning Private Limited.
What is ROI?
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© 2013, Copyright, 24x7 Learning Private Limited.
eLearning benefits versus traditional training
1. Saves time without decaying
learning benefits
2. Cost effective
3. Minimizes travel costs
5. Consistent course delivery
4. Flexible
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© 2013, Copyright, 24x7 Learning Private Limited.
ROI comparison of traditional training vs. eLearning
Classroom Training
E-learning
Wages of Trainees
($20/hr, burdened)
$ 400,000
$ 240,000
Travel Costs
(50% of people
traveling)
$ 250,000
$ ----------
Trainer Wages
$ 47,500
$ 11,400
Trainer Travel
$ 20,000
$ ----------
Development Costs
(custom training)
$ 160,000
$ 400,000
Delivery Systems
(1st year amortized)
$ ---------
$ 35,000
Totals
$877,500
$686,400
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© 2013, Copyright, 24x7 Learning Private Limited.
Why evaluate training?
Reasons
1.
Validation
2.
Justify
3.
Improvement
4.
Methodology
Training process
Training
Needs
Identification
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Setting
Learning
Objectives
Delivering
Training
Program
© 2013, Copyright, 24x7 Learning Private Limited.
Evaluating
Training
Return on Investment Formula
Formula 1: ROI: The Costs were X; the Benefits were Y
Formula 2: ROI = Benefits – Costs
Formula 3: ROI = Benefits/ Costs
Formula 4: ROI = Benefits-Costs/ Costs
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© 2013, Copyright, 24x7 Learning Private Limited.
ROI of Training Model
Collect
Data
Isolate the
Effects of
Training
Convert Data
to Monetary
Values
Identify
Intangible
Benefits
Calculate ROI
of Training
Tabulate
Program
Costs
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© 2013, Copyright, 24x7 Learning Private Limited.
Collecting Data
•
Identify appropriate performance
indicators
•
Develop a collection plan
Collect
Data
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Example of performance indicators
Output
•
•
•
•
•
•
Units produced
Items sold
Work backlog
New accounts opened
Productivity
Inventory turnover
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Time
•
•
•
•
•
•
Equipment downtime
Overtime
Time to project completion
Processing time
Repair time
Lost time days
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Example of performance results
Some performance results after training program
Scrap
Reduced
from a 11 to
7.4 %
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Absenteeism
Dropped from
7 to 3.25 %
Turn over
Reduced
from 30 to
16%
Lost time
Accidents
came down to
95%
© 2013, Copyright, 24x7 Learning Private Limited.
Isolating the effects of training
1. Using
Control Group
2. Trend
Lines
Methods to Isolate
the Effects of
Training
3. Participants
Estimate
4. Supervisors of
Participants
Estimate
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© 2013, Copyright, 24x7 Learning Private Limited.
Isolating the Effects of Training
1. Using
Control Group
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•
A control group arrangement can be used to
isolate training impact
•
With this strategy, one group receives
training, while another, similar group does
not receive training
•
The difference in the performance of the two
groups is attributed to the training program.
© 2013, Copyright, 24x7 Learning Private Limited.
Isolating the Effects of Training
2. Trend
Lines
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•
Trend lines are used to project the values of
specific output variables if training had not
been undertaken.
•
The projection is compared to the actual
data after training, and the difference
represents the estimate impact of training.
© 2013, Copyright, 24x7 Learning Private Limited.
Trend Lines Analysis
Actual sales performance
At the beginning of May, a Sales
training Program session was
held
Volume of Sales
The
difference
represents
the estimate
impact of
training.
Trend Projection
Jan
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Feb
Mar
Apr
May
Jun
Jul
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Aug
Isolating the Effects of Training
3. Participants
Estimate of Training’s
Impact
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•
This method rests on the assumption that
participants are capable of estimating how
much a performance improvement is related to
the training program
•
Because their actions have produced the
improvement, participants (and their
supervisors) may have very accurate input on
the issue
•
They should know how much of the change
was caused by applying what they have
learned in the program
© 2013, Copyright, 24x7 Learning Private Limited.
Isolating the Effects of Training
Typical Questions to Estimate :
•
What percent this improvement can be
attributed to the application of
skills/techniques/knowledge gained in the
training program?
•
What confidence do you have in this
estimate, expresses as a percent?
•
What other factors contributed to this
improvement in performance?
4. Participants and
Supervisors of
Participants Estimate
of Training’s Impact
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© 2013, Copyright, 24x7 Learning Private Limited.
Converting Data to Monetary Values
Steps to Convert Data to Monetary Values
Converting
Data to
Monetary
Values
www.24x7learning.com
1.
Focus on a unit of improvement
2.
Determine a value of each unit
3.
Calculate the change in performance data
4.
Determine an annual amount of change
5.
Calculate the annual value of improvement
© 2013, Copyright, 24x7 Learning Private Limited.
Steps to Convert Data to Monetary Values
An example to illustrate the steps to convert data to monetary values
Steps
Illustration
1. Focus on unit
improvement
•
2. Determine a
value of each
unit
•
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Reaching the measure unit in the four-step
customer complain resolution process
Using internal experts, the cost of an average
complaint was estimated to be $ 6,500 when
considering time and direct costs (V = $
6,500)
© 2013, Copyright, 24x7 Learning Private Limited.
Steps to Convert Data to Monetary Values
Steps
Illustration
3. Calculate the
change in
performance
data
•
4. Determine an
annual amount
for the change
•
www.24x7learning.com
•
Six months after the program was completed,
total complains per month declined by ten
Seven of the then grievance reductions were
related to the program as determined by
supervisors (isolating the effects of training)
Using the six month value, seven per month
(complain reductions), yields an annual
improvement of 84 (7 x 12 months)
© 2013, Copyright, 24x7 Learning Private Limited.
Steps to Convert Data to Monetary Values
Steps
5. Calculate the
annual value of
improvement
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Illustration
•
Annual value = value (units appreciated x 6,500)
84 x $ 6,500 = $ 546,000
© 2013, Copyright, 24x7 Learning Private Limited.
Tabulating Cost of the Program
Tabulating
cost of the
program
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•
Tabulating the costs involves monitoring or
developing all of the related costs of the
program targeted for the ROI calculation
© 2013, Copyright, 24x7 Learning Private Limited.
Tabulating Cost of the Program
Cost components that should be included are :
Tabulating
cost of the
program
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•
Travel, lodging, and meal costs for the
participants
•
Salaries, plus employee benefits of the
participants who attend the training
•
Administrative and overhead costs of
the training function, allocated in some
convenient way
•
Cost of designing developing the
program
© 2013, Copyright, 24x7 Learning Private Limited.
An Example to Illustrate ROI analysis
A sales training program delivered to 34 retail sales associates, which
results in an increase in sales contributing an increase in profits to the
organization of $120,000 per year. The total cost of the program was
$90,000
The benefit cost ratio is
BCR = $120,000: $90,000
= 1.33:1
In other words, for every $1.00 spent on the training program, $1.33 is a return
www.24x7learning.com
© 2013, Copyright, 24x7 Learning Private Limited.
An Example to Illustrate ROI analysis
The ROI of the program is:
ROI= Profit – cost of program x 100
Cost of program
ROI = $120,000 -$90,000 x 100
$90,000
= $30,000 x 100
$90,000
= 33%
This means that every dollar spent on the training program is returned and an additional
$0.33 is returned as profit or a profit of 33%
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© 2013, Copyright, 24x7 Learning Private Limited.
Intangible Benefits
Intangible variables includes such as
• Stress reduction
• Employee engagement
• Grievance reduction
• Improved customer satisfaction
• Complaint reduction
• Conflict reduction/avoidance
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What usage can be expected from eLearning
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Learning Growth Model
*Adapted from Skillsoft
www.24x7learning.com
© 2013, Copyright, 24x7 Learning Private Limited.
Gauge adoption within your organization…
To gauge what kind of adoption of eLearning may take effect in your organization, take one
can look at the indicators of the learning growth model as a diagnostic way
Review the descriptions of the following indicators within each of the five stages:
• Business Drivers for Learning
• Business Case for Learning
• Learning & Development Department’s Role
• Blended Learning Design
• Marketing of Learning
• Evaluation of Learning
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© 2013, Copyright, 24x7 Learning Private Limited.
Guide to reducing scrap learning
Scrap learning—The failure of learning transfer
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© 2013, Copyright, 24x7 Learning Private Limited.
What is scrap learning
•
“Scrap Learning" is learning that successfully occurs but is not applied
•
Learning that fails to meet the expectations for improved performance
•
Just like manufacturing scrap, learning scrap also has a high cost –
̶ Direct costs for trainers, travel, material, etc.
̶ Opportunity costs of people spending time learning things that they
cannot or will not use
̶ Cost of customer dissatisfaction when departments that invest in
training observe no subsequent improvement
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© 2013, Copyright, 24x7 Learning Private Limited.
Learning interrupted
Level 1 –
Reaction
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Level 2 –
Learning
LevelScrap
3–
Application
Learning
to job
Level 4 –
Business
Results
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Level 5 –
ROI
Why should organization be concerned about it
•
Silent drain on learning investments
•
Costs organizations productivity
•
Prevents achievement of what matters most to the Executives…
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© 2013, Copyright, 24x7 Learning Private Limited.
Five key ways to reduce scrap learning
• Embed
learning
into the
workflow
• Ensure
quality
content
• Align
learning
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• Reinforce
learning
• Enlist
greater
manager
support
© 2013, Copyright, 24x7 Learning Private Limited.
Final word
Building a culture of eLearning with 24x7 Learning
We consult you to …
1. Integrate eLearning into other HR programs like PMS, Leader feedback,
mentoring
2. Create internal communication to encourage staff & leaders to learn
3.Utilize onboarding to orient new hires
4. Design Rewards, recognition and/or incentives to learners
5. Make training relevant, self-paced & flexible
6. Set stretch goals to push learning
7. Encourage both formal (e-learning, coaching) & informal (on-the-job
special projects) learning
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© 2013, Copyright, 24x7 Learning Private Limited.
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Free Courses for grabs:
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Phone: +91 80 4069 9100
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