How do I measure the
return (ROI) of online learning?
You’re probably facing the challenge of convincing your upper management that investing in learning is worthwhile and worth the requested budget. We know, it’s tricky. They are interested in knowing how revenue is made (or saved!) thanks to your L&D activities. We hear you! So, let’s start digging into the numbers.
L&D Challenges & Solutions
In this article:
We discuss if it's possible to calculate the ROI of an investment in online learning
You'd be surprised what researchers found about the ROI of online learning and personal development
Discover the ROI business case to calculate how much money your company can save by replacing traditional learning with e-learning
Numbers to back-up your personal development investment
Showing the number of completed courses or platform usage are great, but we all know that your board wants to know how learning can improve your employee’s ability to excel at their jobs, to learn new skills, or how it affects the retention or hire of talents.
We as HR professionals know that investing in personal development will result in overall organisational growth and an increase in your profit. First things first, let's break the benefits of investing in personal development down into the most important measurable benefits.
Investing in online training will result in:
Improved retention rates
Improved teamwork and customer service
Better and more structured communication
Higher level of employee engagement
We backed all benefits up with market research, study data, and finally a business case.
What researchers say about the ROI of online personal development
In 2016, Gallup further researched the financial impact of offering personal development to the entire workforce and found that organisations see an 10-19% increase in revenue, 14-20% increase in profit, 3-7% increase in customer satisfaction and up to a 15% increase in employee engagement. Now those are numbers that make a difference.
And coming back to that employee engagement, more than 70% state that they would be happier in their current role if they had more opportunities to work on their personal development, according to 2022 'The current state of Talent Management' study by Markteffect and GoodHabitz.
Furthermore, the study found that 65% of UK employees agree to the statement that the lack of personal development opportunities within one's organisation would be a reason to seek out a new employer who offers such opportunities.
It is important to know that the cost of recruiting and training a new employee is 33% of the annual salary (Work Institute’s 2017 Retention Report). Now you don't have to be a math wizard to understand that investing in personal development for the complete organisation is actually a cost reduction. All in all, it’s a great win!
If we look into investing in soft skills specifically, we see an even higher return-on-investment. Training in self-awareness and soft skills, like interpersonal communication and problem-solving, produces a 256% return on investment, based on an average rate of 12% higher team productivity and retention. This was found in a study by Boston University, Harvard University, and the Ross School of Business at the University of Michigan.
In addition, there’s a direct link between soft skill training and employee satisfaction and motivation. Employees who attended one or more soft skill training courses in the past year (average of all researched countries) are significantly more satisfied with their employer (7.7 out of 10) than those who didn’t (7.3). Furthermore, they are more motivated, and they enjoy their job significantly more. (GoodHabitz’ Trend report, 2019)
Training in self-awareness and soft skillsproduces a 256% return on investment, based on an average rate of 12% higher team productivity and retention.
Why you should invest in soft skill development
We already stated that offering soft skill development opportunities for everyone within your organisation has a very positive ROI, but it’s also beneficial for your organisation as a whole. Developing these soft skills are not only limited to one employment group – everyone should have the opportunity to further develop themselves. Regardless of if you work as a CEO of a restaurant franchise or as a waitress in the same group.
Let’s set an example. The waitress is great with the customers, always friendly and personal. However, lately you have noticed that many of the orders are wrong once they reach the table. Somewhere in the pipeline something goes wrong, what is happening from the moment the order is made until the order makes it back to the table?
When talking to the other employees in the restaurant you realise that they are not communicating or working together as a team. Orders are misplaced, allergy requirements miscommunicated and the people in the kitchen are not working efficiently. The results? Unhappy customers and a decrease in profit. What would happen if you only focused on the 5% of upper management in this case?
Even if is this an easy example, the moral of the story is that everyone needs to work on personal development, regardless of the position they have within the company.
Business case: costs and ROI of online training vs. costs and ROI of classroom training
At GoodHabitz, we believe in spending a small percentage (5% to10%) of your personal development budget on 100% of your employees. If you spend only a fraction of your budget to train the entire organisation, you will see an increase on personal development across all levels. This will result in overall organisational growth and an increase of your profit.
To be concrete, investing in online training for all your employees instead of offline training for all your employees will result in:
Higher level of employee engagement -increased motivation & happiness at work for all employees
Improved retention – decrease of 12% turnover rate
€289.500 saved per year compared to classroom training based on 200 employees
This may sound too good to be true, but we promise you – it's not! Let’s have a look at what the numbers say. The table below shows a comparison of investing in classroom trainings for your whole organisation versus online courses.
In short: giving all your employees the opportunity to work on their personal development through online courses actually saves you money, if you would go with an online approach.
But you don't have to say goodbye to your current training program. We encourage you to go with blended learning formats, a mix between on- and offline trainings. This is why we made sure that all our courses can be done both at home from the comfort of your couch, or together as a team at the office. We like to refer to them as WorkOuts – a way to make blended team learning possible.
Business case: summarising the pros of online learning