How to measure the business impact of L&D

Measuring, analyzing and understanding learning impact is crucial for your L&D strategy. However, convincing stakeholders of the importance of learning and getting executive buy-in is often seen as a challenge by L&D leaders. It doesn’t have to be. In this article, we’ll discuss five steps to start measuring the impact of your efforts and ways how to prove its effect on employee happiness and overall business success.

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Intro: Are your L&D Efforts Paying Off?

How do you measure learning impact? It’s a legitimate question. It shouldn’t be too hard to answer either. At least, that’s what you would think, with all the tracking tools, learning management systems, and smart technologies for people analytics at the fingertips of HR and L&D professionals today. Except, it seems it’s not always that easy. Take a look at these statistics:

• According to Linkedin’s Workplace Learning Report, only 8% of CEOs saw the business impact of L&D programs, and even fewer than 4% had a clear ROI
• An older but still relevant report from 2016 shows that 96% of L&D leaders agree that they had to improve the way they gathered and analyzed data on learning impact. However, only 17% were actually doing it
• An Accenture study shows that although most organizations assess the impact of their L&D initiatives in some way, evaluations are often limited to surveying participant satisfaction. Only 16% evaluate the behavioral change of participants by assessing the transfer of learning into the workplace

What do these numbers tell us? First of all, measuring L&D effectiveness is an ongoing challenge. L&D professionals invest a lot of time, costs, and energy in finding the right L&D partner, setting up learning journeys, choosing the best L&D platform, and providing the right training at the right time for the right people. It only makes sense that they want the results of all those efforts to pay off.

It will get them the management buy-in and budgets they need to develop future training programs and learning strategies. In fact, the board will only think that valuable time and resources have been wasted without showing tangible L&D KPIs to stakeholders – like increased productivity, employees learning new skills, and a healthier organizational culture. In other words, there’s still quite some work to do for L&D leaders to change that mindset. On the bright side: this also implies that there is a substantial amount of opportunities when it comes to measuring the impact of training.

Read more: Challenges L&D departments are facing and how to solve them

How to Measure L&D Impact in 5 Steps

Understanding how to measure the impact and ROI of learning can lead to valuable insights. Based on the outcomes, it will be easier for L&D professionals to justify decisions, refine training courses, and get higher funding for L&D. That’s why it should be a key part of the overall L&D strategy. It will enable L&D leaders to be seen as strategic business partners. It gives them, so to speak, a seat at the table.

Measuring learning and development efforts doesn’t have to be a complicated process. In fact, there are 5 steps you can start implementing today:

1. Take a Look at the Organization’s Needs
2. Identify the Organization’s Skills Gap
3. Shape and Define Core L&D metrics
4. Measure Engagement and Unlock the True ROI of L&D
5. Integrate L&D in the Flow of Work and Optimize Continuously

Step 1: Take a Look at the Organization’s Needs

The first step in any L&D strategy is looking at the company itself. What do your employees need for the business to grow? What is the goal you would like teams to move towards? How can your employees become resilient enough to cope with all the technological changes and global disruptions influencing the new world of work and, more specifically, the industry your company operates in? What does a ‘future-proof workforce’ mean for your organization, and what does it take to get them there?

Asking yourself these questions helps to get a clear overview of where your talent stands, and it connects the dots between key business strategies, company goals, and learning needs.

You might also like: Top 10 Skills For Every Future Proof Organization according to the World Economic Forum

Step 2: Identify the Organization’s Skills Gap

The disparity between the skills needed for future business success and the skills currently held by your workforce is called the ‘skills gap.’ Chances are, there’s one in your organization today. In fact, according to Gartner, 64% of managers don’t think their employees can keep pace with future skill needs. Furthermore, 70% of employees say they haven’t even mastered the skills they need for their jobs today, and 45% of adult workers in Europe believe their skills can be better developed or utilized at work.

So the next step is to conduct a thorough skills analysis and identify the skills gap present in your organization:

• Scope the challenge: define what the company’s mission and goals are, and identify which skills are needed to reach those goals, now and in the future
• Collect and analyze data: what competencies do current employees have? What are they good at, and where do they need further upskilling or reskilling?
• Bridge the gap: once it is clear which skills are lacking, investigate what is the best L&D strategy to follow. For instance: targeted L&D programs, peer coaching and mentoring, or getting external L&D experts on board

A helpful method to conduct a skills analysis is the 9 Box Talent Review. This straightforward model for people analytics makes it easier to inventorize talent, measure performance, quantify skills gaps, and identify potential risks. Based on the outcomes, HR and L&D can work together to improve their talent management, coaching, and learning programs.

Read more: The 9 Box Talent Review  

When making a skills analysis, always question why there is a mismatch in the first place. Take this practical example: if your employee turnover is high, identify the drivers behind this problem. Is there perhaps a hurdle with leadership or communication? Do you invest enough time and money in your people’s personal and professional development? Are you training the relevant skills at the right time in your employees’ careers?

Want to gain more insights about the skills level of your team and how to develop them further? Request the Lepaya Team Scan and find out!

Request the Lepaya Team Scan

Step 3: Shape and Define Core L&D metrics

When you have decided to invest in upskilling your people and have chosen a learning path that will help them develop the required competencies, it’s time to shape the core L&D metrics for your company. Whether or not employees attend a course and their attendance figures are often the first metrics. So are metrics on how many of your employees are interested in the training you or your L&D partner provides.

L&D KPIs examples

These KPIs are used frequently to track the success of L&D programs:

• Hours of training: how many hours were devoted to face-to-face classroom activities, how much time did employees spend on other learning activities like group assessments, case studies, role play, etc
• Training & exam scores: how successful were the results of the exams, how did learners score, and how many attempts did they take
• Completion rates: how many students completed the course successfully, how many people dropped out
• Satisfaction ratings: how happy were the students with the content of the training, how did they rate the communication and cooperation with the trainer, how easy was it to apply the newly learned skills at work
• Cost of training: how much did the training actually cost (in total and per employee), was the available training budget met or exceeded, how did the costs of a particular training compare to other courses, what were the indirect costs (like time spent out of office, training materials) etc.

But there is more to explore. Because what you really want to know is how a training or course impacted the business objectives or team goals. After all, why invest in a training if it is unclear to what extent it boosted the organization’s bottom line?

Make sure your learning is aligned with business skills. Rather than looking at hours of learning and course completion rates, focus on identifying what skills are lacking in your organization. With that alignment and clarity, L&D can create a skill-building program that’s in lock-step with your business strategy.

Lori Niles-Hofmann, Senior EdTech Transformation, NilesNolen

Evaluating L&D impact with the KirkPatrick model

It makes complete sense when your employees’ skills are improved, they will be better at performing their work. This in turn will be profitable for your business. But how do you measure behavioral change and training effectiveness in terms of ROI?

A well-known method for evaluating the impact of L&D is the KirkPatrick model, which distinguishes between four several evaluation levels.

1. Reaction level: this is all about measuring the level of satisfaction of the participants and focuses on their key takeaways. How did they experience the training? Was the content engaging? Was the course material easy to navigate, and were the learning objectives clear? This level is usually evaluated through the well-known evaluation forms (also called smile-sheets), where participants grade the training
2. Learning level: here, the focus is on the learning outcome. What knowledge and skills can the participants reproduce at the end of the training? What new behavior do they show? Do they feel they can apply what they learned at work? Their level of accuracy and comprehension can be evaluated by for instance a skills test, exam, or assessment. This makes it easy to see if they achieved the results set beforehand
3. Behavior level: this level is about behavioral change and is crucial. It measures whether the training truly impacted participants and if they’re applying what they have learned in practice during their day-to-day work. It can be tested by pre-and post-training assessments and assessments on the job (usually a while after the training was finished to ensure it has sunk in)
4. Result level: this final level is about the direct consequences of the behavioral change for the company. What results did the changed behavior lead to? For example, did a training in time management lead to less absenteeism? Did a sales training lead to higher and better sales numbers? Depending on the type of training, KPIs will be set beforehand – and then, based on these KPIs, the ROI of the training can be measured.

Step 4: Measure Engagement and Unlock the True ROI of L&D

While L&D analytics are crucial to evaluate the success of a training and monitoring L&D impact on the business, hard metrics alone won’t provide a complete overview of your learning and development impact. Measuring the true ROI of learning can’t be done by simply handing out questionnaires and evaluation forms.

After all, training and developing staff remains to be human work. It’s the entire employee journey you want to dive into, and you can only do that by adding face-to-face conversations and group evaluations to the analysis. This will help to gain in-depth insights into trainee satisfaction, long-term knowledge acquisition, and engagement.

The more appropriate the training, the higher the employee engagement will be. And the higher the employee engagement, the more eager employees will be to practice what they’ve learned on-the-job and unlock their full potential. In other words: engagement and effectiveness are at the core of your KPIs for learning and development. When you measure engagement data, you can immediately see what works and what doesn’t for your teams.

Engagement is key for all the obvious reasons. If your employees are not involved, they will not grow, and you will lose those talents. Employees may quit their jobs for a number of reasons, but a lack of opportunities for learning and development is one of the most commonly cited factors.

Step 5: Integrate L&D in the Flow of Work and Optimize Continuously

In most cases, L&D teams measure the engagement and effectiveness of training programs because stakeholders like to see higher productivity rates and lower employee turnover. With a thorough analysis, L&D can prove how training leads to behavioral change, and how that affects both the business and employee happiness.

Behavioral change is very important if an employee wants to master new skills. Training is not a stand-alone activity. It is part of a learning path that leads to development in behavior, skills you have only learned when you can also apply them practically.

Learning in the flow of work is integral to this. Integrating learning and development into employees’ daily flow of work ensures that learning will be retained. While we often think of training as programs or courses that take place in classrooms, learning in the flow of work uses less formal practices like micro-learning, which is much easier to integrate into day-to-day business and also less time-consuming.

You might also like: The Endless Possibilities of Blended Learning

When learning in the flow of work, information is easily accessible through technical integrations with Microsoft Teams, Slack, or another tool. It helps employees to make real progress, and learn skills that stick as routines. Today’s smart learning systems (LMSs) make it easier to set clear goals, keep track of L&D progress and roll out customized reports. For instance, what increase in productivity (productivity metrics) do you want to see? How did a specific training influence behavior in the workplace? Continuously monitoring, analyzing, and discussing these outcomes can help L&D leaders to draw actionable insights and demonstrate the impact and importance learning has on business success.

Read more about KPMG and how they work on upskilling through personal, dynamic development programs.

KPMG Case Study

At Lepaya, we help organizations create a culture of continuous learning and build stronger teams by offering innovative learning experiences through our Power Skills training. These are essential, future-proof competencies, based on market needs, that require both soft and hard skills. Functional skills, such as math or coding, alongside non-functional skills, such as initiative and creativity. We also help L&D specialists to work in a data-driven way and to become better at measuring the success and impact of their learning programs and individual training courses.

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