Discovering the E-Learning Real ROI

Hidden savings over traditional training

If you're calculating Return On Investment (ROI) on eLearning, make sure your equation factors in some often (substantial) hidden savings over traditional training methods: deduct travel, facility rental, instructor fees, printing, and storage costs. Then, add back in the time your staff won't lose time away from the job and the flexibility they will enjoy with eLearning. They now can take courses on their own time and/or during non-billable "downtime" at the office.

Calculation Factors

To calculate the total benefits, you must evaluate the tangible results of training and assign a monetary value to such factors as:

increased productivity (units produced, items sold, forms processed, tasks completed)
improved quality (less scrap, less waste, less rework of product, fewer defects)
reduced turnover
reduction in lost-time injuries
reduction in workers' compensation insurance claims
increase in customer satisfaction as reflected in an increase in repeat sales.

Hard Benefits

These benefits are often called "hard benefits" because they can be converted easily to a monetary value. Other training benefits such as improved communication, enhanced corporate image, improved conflict resolution, increased sensitivity to human diversity, improved employee morale, and increased employee loyalty are less tangible, more difficult to convert to dollar figures, and called "soft benefits."

Soft Benefits

Soft benefits are important, and although they cannot be directly measured, they can be inferred or indirectly measured by associated outcomes. One way to approximate the value of soft benefits is to ask experts within your organization to give a monetary figure for these intangibles. Talk to employees, managers, supervisors, and executives and then take an average of the numbers they give you.

ROI on Training Dollars

It's often difficult to demonstrate increased value of a company's human capital. But that doesn't mean that your training investment must end up on the expense side of the balance sheet, ripe for budget slicing. By measuring carefully the results of training and tying training to the strategic metrics a company uses to measure its business success, a company can increase--and demonstrate the increase in--its return on training dollars.

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Enter the Virtual University

Studies have shown that the indirect cost of an incident can be up to 10 times that of the direct costs. For every $1 invested in an effective workplace safety program, $4 to $6 may be saved as illnesses, injuries and fatalities decline. Indirect costs include: training and compensating replacement workers; repairing damaged property; accident investigation and implementation of corrective action; scheduling delays and lost productivity; administrative expenses; low employee morale and increased absenteeism; and, poor customer and community relations.