(From UNC Kenan-Flagler) -- A recent report by the Chartered Institute of Personnel & Development found that evaluation was a top priority among learning and development (L&D) professionals (Personnel Today staff, 2012). Despite this fact, calculating return on investment (ROI) on development programs is still rarely done; a McKinsey Quarterly report found that only 8 percent of organizations actually evaluate the value of L&D initiatives (Palmer, 2010). And too often, those who do track ROI rarely go beyond asking for feedback from participants immediately after the event.
With today’s challenging economy, L&D budgets are receiving more scrutiny than ever. Participant feedback forms (i.e., smiley sheets) administered immediately after a learning program are no longer enough, and HR and talent management professionals are feeling the pressure to look for more solid evidence to justify the investment in their programs. This is particularly the case in leadership development programs, where the focus is often on the development of intangible skills. Because L&D programs often provide more long-term value rather than short-term effects, senior leaders may consider eliminating them as an easy way to cut costs. Even if executive sponsors are satisfied today, they may not be tomorrow. It makes sound fiscal sense to go beyond smiley sheets and to establish robust measures that capture ROI so that even the most critical of reviewers can see the value of L&D programs in an organization.
In the mid-1990s, Laurie Bassi, then a researcher for the American Society for Training and Development, discovered that the more a company invested toward developing employees, the higher its stock value went the following year (McCann, 2011). Her research put actual dollar figures to something L&D professionals have known for years-- investing in employees pays off. Learning opportunities result in higher levels of employee promotion, retention, satisfaction, skills and knowledge, and this translates to better organizational performance. Yet connecting the dots by demonstrating a real bottom-line ROI remains a continued challenge.
To help connect the dots and overcome the challenge of measuring the ROI of development programs, this white paper:
- Reviews the classic four-level model of evaluation.
- Discusses the challenges in assessing value for new and existing development initiatives.
- Offers suggestions on how to ensure that L&D evaluations reflect what executive leadership expects.
- Provides steps to consider when evaluating the ROI of development programs.
- Shares examples of companies that have effectively demonstrated the value of their L&D programs.
