What is the value of Training and People Development and how to measure the value of training?
In some cultures, the value of personal development is top of mind as it means advancement in personal prosperity. Even in our more saturated society where learning and training is often free and easy to get, it is seen as important – however, investments in learning always compete with other investments. To help our community, I try to sum up why those investments make sense and how to measure it.
Why is training and people development important for individual and business success?
Value of Learning: Four reasons why it is important to look at it
Support of learning strategy development and monitoring
To develop a learning strategy, you need to define what value you aim for and constantly measure this value. This can be accomplished by comparing alternatives of training approaches or simply measuring the business impact for example. This helps to ensure an efficient and effective use of resources like time, people and money, as well as to ensure that your learning strategy is going in the right direction.
Data supports learner focus
To ensure relevant learning experiences, personalization is more and more important, as learners have different historical pre-knowledge, skills proficiency or preferences toward learning methods. Therefore, we always need data about the learners and their context, the learning process, as well as the learning output.
Continuous Improvement of learning
Another reason why to look at the value of learning is the continuous improvement of learning content, approaches and processes. Monitoring the value, therefore, is important to constantly adapt and improve.
Positioning the story needs numbers
Management and other stakeholders think in numbers. To inform and convince them is another reason for looking at the value of learning.
This resonates well with the research from Brandon Hall on drivers of Learning Measurement: 77% respondents said that their driver is to improve training programs, 67% said it is to better align learning to organizational performance, 53% said it is to better align learning to individual performance.
So, now that we have looked at the reasons to deal with the topic, let’s look at what the value of learning and training is. First, I will lay out 6 general statements. With these I’ll then demonstrate several studies and examples.
What are the benefits of training and people development in general?
- Learning leads to higher productivity and performance of individuals, teams and organizations.
- Quality improvement is a result of competent, skilled and knowledgeable people making less errors.
- If employees are competent and know what they do, this results in an improved customer experience.
- Increased employee engagement, satisfaction and retention is a result of people knowing what they do, they see that they have perspectives and can grow.
- We live in constant change – learning and development leads to better and faster innovation adoption of processes, tools or business models.
- Companies, teams and individuals need to adapt to many new workforce skills demands due to changes in markets, technology or even society.
Hard facts on the value of training: studies and examples
Let me back up these points via additional hard facts about the Impact of Learning in successful organizations.
Scientific research shows clear value of Learning and Development
A valid scientific approach is a meta-analysis, which analyses different studies and thus has a larger sample and better evidence. The following two meta-analysis show a clear value of learning & training:
- Informal learning activities lead to 32% higher performance (Cerasoli, et al, 2018)
- Formal training leads to 23% higher job performance (Arthur, W.et al, 2003)
There is also a lot of research from public organizations as well as consulting companies on the value of training – please find here some I found helpful:
Organizations mature in upskilling perform better
They achieve the following outcomes compared to less mature organizations (PWC CEO Survey 2020)
- 60% stronger corporate culture and employee engagement vs 23%
- 43% higher workforce productivity vs 17%
- 37% greater business growth vs 15%
- 51% greater innovation and accelerated digital transformation vs 15%
- 35% reducing skill gaps and mismatches vs 10%
Learning fuels digital transformation
Nowadays we have constant transformation in companies, teams or markets. McKinsey research shows, that companies that invest in developing leaders during transformations are 2.4x times more likely to hit their performance targets (McKinsey 2020).
Training Maximizes the Business Value of SAP Implementations
- Greater Business Performance: With 25% more ongoing training, organizations saw a 123% greater improvement in their value drivers.
- Shorter Software implmentation: Training project team members and administrators speeds up deployment time by up to 2 months.
- Accelerated SAP Software Expansion & Innovation: Well trained implementation teams see new use cases and unlock more value by expanding the use of SAP solution more quickly.
- Higher Satisfaction: Better-trained organizations are 72% more likely to be satisfied than poorly trained organizations.
End-User Training Correlates With Significant Increases in Performance Across SAP Solutions
- Between the lowest and highest quarters, organizations saw between 8x and 17x improvement in key performance measures, depending on the SAP solution.
- Organizations can get improvement for every hour of ongoing training they add.
The more the Implementation Team is trained, the more SAP software is used. The numbers here vary up to 67% of consumed licensed if there is more training. This shows that trainingsupports the value realization of software investments. Find further information and studies here on the SAP Training site.
Top performing organizations provide more learning opportunities
Comparing Top-performing organizations with normal or poor performing organizations is seen rather often. Another research shows that top performing organizations simply spend more time on learning and training activities and involve more stakeholders in learning programs. An investment as low as US$1,500 per employee in training increases proﬁt margins by 24%, on average. (Building the Learning Business Case: The ROI of a Next-Generation LMS,” SAP SuccessFactors whitepaper).
The need for new skills is driven by changes in technology, markets and society
Another interesting finding from the World Economic Forum on the Top 10 Global Work Preferences shows that employees rate Learning over Job Security or Financial Compensation!
Also, the same study shows how skill demands change rapidly. They see a 52% growing skills demand in cognitive skills and 42% demand in change of systems skills. On average, employers expect to offer reskilling and upskilling to just over 70% of their employees by 2025.
New Challenges in Covid times for Corporate Learning
With –and probably also after– the Covid 19 pandemic Corporate Learning needs and offerings will change – as evaluated by the Executive Corporate Learning Forum (ECLF, 2020).
While virtual collaboration tools & skills have been set up fast, skills like developing social skills to create relationships and social cohesion in virtual settings, virtual visibility, or self-organization and separate work from private live are still a significant challenge. So, the perspective on value changes.
“What is clearly different today is that keeping people safe and reducing risk has, for now, displaced cost as the key driver behind digital learning”,
very well quoted by McKinsey.
Examples from SAP internally show improvements along different KPIs
- The Global Sales Challenger Program improves business KPIs, participants showed a 26% higher revenue generation, 25% time reduction in closing deals and in total more than 180 Mio$ attributable to the program
- The Social Selling Training for Channel Managers increases social reach e.g. by 58% on LinkedIn
- A People Analytics example SAP internal is focusing on newly appointed people managers to monitor the indices such as relationship, leadership-trust, relationship-retention to Identify areas of improvement and training gaps.
In a recent webinar on the value of training and people development we asked participants on their concrete opinions. See here some quotes on the question “What is the value of learning for you and your organization?”
- Upskilling to new technologies
- Adaption to current context and evolution
- New remote team collaboration (new ways of working)
- Improve team efficiency
- Knowledge sharing
- Network possibility between colleagues (peer learning)
- Software user adoption
These examples show that measurement is key for communication, improvement or decisions – however it differs depending on goals of the programs and context. So how can we measure the value of learning and training? Let’s look at how to measure the value in the next section.
How to measure the benefits of training and people development
Evaluating the impact of learning is the key priority in L&D (Learning & Development). According to the LinkedIn Workplace Learning Report it is the first priority of L & D leaders – before increasing learner engagement or enabling self-directed learning.
The same report states that if you look on ways of measurement, most L&D professionals use qualitative feedback from employees, number of online courses completed, number of employees learning online, satisfaction or qualitative feedback about behavior change.
Of course, you always get the results based on the questions you ask; however it is a good indicator on current practices.
To measure training benefits is a long tradition. It is rooted in social science, pedagogy, instructional design, and also driven in the field by consulting companies. As the goals of training are developing skills, knowledge, attitudes, behavior and similar internal human aspects, these are not clear to measure and there are different approaches to consider.
Helpful frameworks to measure the value of learning
Kirkpatricks 4 Levels – see further information here
This is an older model and the times nowadays must be considered. However, it is used often as a general framework. The 4 Levels define what and how learning is measured:
- Reaction: the degree to which participants find the training favorable, engaging and relevant to their jobs. Mostly this is measured via satisfaction surveys after learning e.g. in a class or an e-learning took place.
- Learning: the degree to which participants acquire the intended knowledge, skills, attitude, confidence and commitment based on participation in training. This is often measured via knowledge tests and via hands-on performance simulations.
- Behavior: the degree to which participants apply what they learned during training when they are back on the job. This is measured often via behavior assessment and observation from others like their manager or team members, Self-assessment surveys delivered post- training after a pre-determined time is another example.
- Results: the degree to which targeted outcomes occur as a result of the training and the support and accountability package. This can be any KPIs which the learning tries to influence, from error rates, sales revenue, time saved to cost saved.
Phillips ROI Model – see further information here
This is a further development of the Kirkpatrick model. It has two additional levels: the initial level of Data which I would name also Input, like number of hours, people trained, money spent etc. The second level is the ROI (Return on Investment) level, measuring monetary outputs.
Next to these levels this model also has a process proposal with an empiric, evidence based approach to measurement. After planning the evaluation and defining KPIs you collect data on the different levels. In the data analysis you try to convert the data to monetary values and calculate an ROI. The best approach to isolate the effect is to compare the people who get training to people who did not get training, another great option also via a random assignment. While a good experimental setting is hard to get and quite some effort it supports evaluating cause and effect and not only correlations.
High performance measurement impact model by BrandonHall.com
The US learning consulting & analyst company has developed another maturity model, which differentiates between the following levels
- Tactical: reactive manual measurement on team level
- Functional: includes also reporting, advanced data collection with respective tools in business unit level
- Operational: includes additional trend models, integrated tools on business unit level
- Strategic: includes a more proactive approach on enterprise level with forecasting models supporting management decisions and is integrated into corporate scorecards. It also measures performance outputs and is not limited to only inputs such as training events or learning hours.
Josh Bersin, another well-known analyst, compliments these models with a similar one. This is a good approach to help learning and development teams to assess where they stand and to which level they want to evolve.
Learning Analytics in Academia
Universities’ key mission around the globe is teaching and developing skills, knowledge and even competencies. In education science and instructional design theory, learning analytics has evolved as a concept and practice. One can describe it as socio-technological approaches that use statistical data from learner activities and their context in learning environments to analyze and visualize them. The goal is to model, support and optimize the teaching-learning processes and learning environments.
Prof. D. Ifenthaler wrote several books on learning analytics differentiates between summative, formative and predictive approaches. He proposes different KPIs on these levels analyzing Governance, Organizations, Learning Design, Teachers and Students. L & D practitioners can use the models as well as the KPIs shown in the table above of course also for corporate learning.
Summary and Recommendations
We see that there are many benefits around learning and people development. Some are more qualitative and some can be quantified. We saw that there are different approaches to measure the value. Let me describe the following recommendations around measurement and how to get the best value out of L & D:
- Focus on decision support instead of focusing on justification
Learning analytics and measurement is often used to justify investments, which may put you in a defensive mode. If you include measurement and evaluation as part of every learning project or program already from the start, it can help you to support decisions around where, what and how to invest and to improve continuously.
- Move from reporting inputs to analytics around processes and outcomes
Reporting is often done manually on input aspects like people trained, hours trained, cost spent which does not say anything around quality and outputs. While having a baseline on inputs to monitor investments, it makes more sense to focus additionally on evaluating the learning processes and their outcomes. By monitoring timelines and correlations of certain KPIs, you even can try to predict the future. Such forecasting is already common practice in finance reporting – so should also be done in Learning.
- Automate simple reporting
To get time to invest in higher value tasks you can automate simple reporting via self-services or scheduled reports via e-mail, so your stakeholders get the data and information when they need it.
- Look at ROE (Return on Expectations) and meaning – not only ROI
In theory often the ROI (Return on Investment) is seen as the best way to measure the value of learning. However, your stakeholders like learners, managers, employee representatives or customers may be interested in other information. Depending if your HR Head is preferring information on cost, learner satisfaction or learning experiences you may measure the value of learning quiet differently. A good story around the data, especially via valid and reliable interpretations and what the data means for your stakeholder is similarly important.
- Measure Impact via KPIs in an agile world
Agile approaches help to cope with the increasing complexity and mental overload. They also help us here. You should formulate the value of learning together in interdisciplinary teams, visualize it, as well as jointly develop your measurement strategy. Better start with a prototype and improve it while you go. You may use regular pulse checks like in agile models as the lean startup (build, measure, learn – repeat), where you iterate several prototypes or minimum viable (learning) products. Measurement of data points always thus needs to be part of learning projects and program.
I hope you found that summary helpful. We recently hosted webinars around this topic, as well as on the Value of SAP Training and Value of SAP Certification – please find them here.
Slides with more charts on the above information can be found here on Slideshare.
You might also want to check my latest articles on remote learning & working incl. many hacks, Learning Experience Design, or subscribe to our podcast – the EducationNewscast (general site / english only channel)
If you have any feedback, or would like to share your own examples, please let me know here in the comments.
Arthur, W., JR., Bennett, W., JR., Edens, P. S. & Bell, S. T. (2003). Effectiveness of training in organizations: A meta-analysis of design and evaluation features. Journal of Applied Psychology, 88 (2)
Brandon Hall Group’s 2020 Learning Measurement Study, 12/08/2020 via https://trainingmag.com/measuring-learning-s-impact/
Cerasoli, C. P., Alliger, G. M., Donsbach, J. S., Mathieu, J. E., Tannenbaum, S. I. & Orvis, K. A. (2018). Antecedents and outcomes of informal learning behaviors: A meta-analysis. Journal of Business and Psychology, 33(2)
ECLF, 2020: Work Transformation – Organizational Transformation. Highlights from the 16h Annual ECLF Survey. (not available online)
Ifenthaler, Dirk: Website with articles, books and more on Learning Analytics. 12/08/2020 via http://ifenthaler.info/website/
LinkedIn, 2020; 4th Annual 2020 Workplace Learning Report. 12/08/2020 via https://learning.linkedin.com/content/dam/me/learning/resources/pdfs/LinkedIn-Learning-2020-Workplace-Learning-Report.pdf
IDC (2020): The transformative impact of Training. Research study, 12/08/2020 via https://www.sap.com/cmp/dg/training-value/index.html
Kirkpatrick, Donald on Wikipedia – 12/08/2020 via https://en.wikipedia.org/wiki/Donald_Kirkpatrick
McKinsey, 2019: The essential components of a successful L&D strategy. 12/08/2020 via https://www.mckinsey.com/business-functions/organization/our-insights/the-essential-components-of-a-successful-l-and-d-strategy
McKinsey, 2020: Adapting workplace learning in the time of coronavirus. 12/08/2020 via https://www.mckinsey.com/business-functions/mckinsey-accelerate/our-insights/adapting-workplace-learning-in-the-time-of-coronavirus
Phillips ROI Model, 12/08/2020 via https://roiinstitute.net/
PWC, 2020: Navigating the rising tide of uncertainty – 23rd Annual Global CEO Survey, 12/08/2020 via https://www.pwc.com/ceosurvey#cs23DataExplorer
World Economic Forum, 2020: Towards a Reskilling Revolution Industry-Led Action for the Future of Work, 12/08/2020 via http://www3.weforum.org/docs/WEF_Towards_a_Reskilling_Revolution.pdf
SAP: Value of Learning and People Development, SAP Training, SAP Certification. Webinars, whitepaper and more. 12/08/2020 via https://www.sap.com/valueofsaptraining