BENEFITS OF ROI
The ultimate use of results generated through the ROI Methodology is to show value of programs, specifically the economic value. However, there are a variety of other uses for ROI data, including justification of spending, improvement of the programs, and gain of support for learning through technology.
Justifying spending on technology-based learning is becoming critical today. Learning managers are often required to justify investments in existing and new programs, as well as investment in changes or enhancements to existing programs. For those who are serious about justifying investments in learning through technology, the ROI Methodology described in this book is a valuable tool. For new programs where a preprogram justification is required, there are two approaches: preprogram forecasts and ROI calculated on pilot implementation.
Calculating ROI in existing programs is more common in practice than forecasting success for new programs. Typically, ROI is used to justify continued investments in existing programs. While technology-based learning programs have been routinely conducted, there is sometimes a concern that the value does not justify continuation of the program.
Improve the Learning Program
The most important use of the ROI Methodology is to improve programs. Data are collected along a chain of impact as the results are generated. When there is a lack of success, the causes are pinpointed. These are the barriers. In addition, certain factors that have caused the success are identified. These are the enablers. Together, this information helps to improve the learning program.
In almost all organizations, the need for learning exceeds available resources. A comprehensive evaluation process, such as the ROI Methodology, can help determine which programs rank as the highest priority. Learning programs with greatest impact (or the potential for greatest impact) are often top priority. Of course, this approach has to be moderated by taking a long view, ensuring that developmental efforts are in place for a long-term payoff.
Eliminate Unsuccessful Programs
While eliminating a learning initiative is rare, it's possible that this action would be taken only if the learning program cannot add the value that was envisioned (it was the wrong solution). Sometimes, a program is no longer needed or necessary, but a new need for a different process emerges. The ROI Methodology can help determine which approach is eliminated and which alternative is selected as a replacement.
Another use for the ROI Methodology is to gain support for learning through technology. A successful program needs support from key executives and administrators. Showing the ROI for programs can alter managers' and executives' perceptions and enhance the respect and credibility of all technology-based learning.
Key executives and administrators are likely the most important group to influence learning programs. They commit resources and show support for learning with the need to achieve results that positively affect business impact. To ensure that effective programs are continued, it is necessary for learning managers to think like business leaders—focusing programs on results in the organization. ROI is one way this focus can occur. ROI evaluation provides the economic justification and value of investing in the technology-based learning program selected to solve a problem or take advantage of an opportunity.
Managers and supervisors of participants can sometimes be antagonistic about learning programs, questioning their value. When this occurs, it is generally because the manager or supervisor has not seen success with a change in behavior from participants. Managers and supervisors aren't interested in what their participants learn; they are interested in what they do with what they learn. Participants also must take learning gained through the programs a step further by showing the effect on the job with outcomes in errors, rejects, sales, new accounts, incidents, down time, operating costs, and engagement. If the programs can show results linked to the business, managers and supervisors will provide increased support for these programs.
Participants and prospective participants should also support the program. Showing the value of programs, including ROI, can enhance their credibility. When a technologybased learning program is achieving serious results, participants will view programs in a value-add way and may be willing to spend time away from their pressing duties. Also, by making adjustments in the learning based on the evaluation findings, participants will see that the evaluation process is not just a superficial attempt to show value.
This chapter introduced the concept of the ROI Methodology, a systematic and logical process with conservative standards that is used by more than 5,000 organizations. The process collects and generates six types of data: reaction, learning, application, impact, ROI, and intangible benefits. It also includes techniques to isolate the effects of the learning on impact data, such as sales, productivity, new accounts, quality, costs, and time. The next three chapters explain this process in more detail and form the basis for the case studies presented in later chapters. Chapter 3 introduces the important steps of evaluation planning and the first major challenge, data collection.