Learning and development managers are under an enormous amount of pressure today. Training employees to meet current and future needs is critical to a company’s long-term success; however, C-level executives don’t always see the direct business value that L&D drives.
A recent survey1 found only 12 percent of C-level executives are confident that spending in L&D is effective; less than one-third believe that L&D is relevant, and 34 percent of business leaders believe that training impacts business outcomes.
That’s a major red flag for L&D staff, managers, and department heads. If your C-suite doesn’t feel they’re getting value out of your program, it will likely be the first area to see budget and resource cuts.
To improve L&D’s standing in the eyes of business leaders, learning professionals need to report on results that the C-suite cares about. The number one result that C-suite executives are interested in2 is business impact of L&D, but only eight percent receive reports that demonstrate this. The second most valuable result, ROI of L&D programs, is only clearly reported by four percent of respondents.
Another survey3 supported this finding: 75 percent of CEOs believe that L&D analytics are important, but only 25 percent receive sufficient information.
So how can L&D professionals effectively report on the metrics business leaders want? Business impact and ROI are substantial categories that often cover a number of different departments and specific results. For example, in sales, training on a new product line should result in the business impact of improved sales numbers. An overly simplified ROI calculation in this scenario would be increased revenue divided by sales training cost.
Related Reading: How Learning Management Systems Increase ROI
To speak to your C-level executives and provide results that demonstrate business impact and ROI of L&D programs, you need to create reports with these types of metrics. Below are four business impact and ROI metrics that your C-suite wants to see.
Metrics that will Get Your C-Suite’s Attention
Several studies have shown that sales training improves the effectiveness of sales professions, helping them close deals that increase company revenue. For example, one recent report found that sales training can improve performance by 20 percent4.
A sales skills training program should result in an increase in sales across product categories. If your L&D program includes sales training, start measuring your sales team’s performance. What percentage of deals does the sales team close prior to training? After training? What about average deal size? How many sales professionals meet their quota? Use the same metrics the sales team uses to measure their performance, and report on how the L&D program is improving those numbers.
Pro Tip: To add an extra kick to this metric, quantify any changes in terms of revenue. If sales training helped increase average deal size by five percent, explain how much extra revenue that change brought in. Revenue generation is a clear business value metric that will get any C-suite leader’s attention.
2. Employee Retention and Productivity
Research from Glassdoor found that an effective employee onboarding program can improve employee retention by 82 percent, and employee productivity by over 70 percent. Demonstrate the value of a new or improved onboarding program with information on improved retention, reduced turnover, and new hire productivity for those employees that complete onboarding training.
Like with sales increases, the best way to illustrate onboarding efficacy is by benchmarking employee retention and productivity both before and after changes are made to the L&D program. Once those initial benchmarks and improvements are illustrated, continue showing value by charting additional improvements in metrics over time.
Pro Tip: Productivity can be hard to measure, so to get started, look at key metrics within your company. If you have a call center and onboarding including customer service training, consider leveraging productivity measure like call time or QA scores. Other productivity measures will vary by department. Software engineers and developers might measure productivity by the time it takes to release new software or enhancements, for example.
3. Time to Productivity
The longer it takes for an employee to get up to speed and start producing results, the more money businesses spend on salaries and training without seeing a return. To demonstrate the efficacy of your L&D program, show how training shortens time to productivity, which helps your business see ROI from employees faster.
Time to productivity is a metric that’s usually specific to new hires, but can sometimes be applied to workers who transfer to new positions internally. To start measuring this, consider reviewing your onboarding program. Can you shorten it without affecting results? Could eLearning help reduce the training time required in traditional classroom environments? Any decrease in training time that doesn’t hurt results will improve time to productivity. Do the same for ongoing training programs that employees go through when switching positions.
Most companies deal with some type of compliance training, whether that’s sexual harassment courses or the more advanced compliance requirements included in financial services training. Companies need to demonstrate that they’ve not only supplied said compliance training, but that all applicable employees have completed the training.
L&D professionals can use tools like learning management systems to improve compliance tracking and audits. Simply convert compliance training into an eLearning format and use built-in LMS reporting tools to see which employees have completed the training and when.
For the C-suite, an improvement in compliance tracking is enough to make an impact, since failing an audit could result in large fines. However, if you can also show that the number of employees who have taken the training has increased since switching to eLearning, that will provide an even bigger boost for your L&D program.
Use Business Metrics to Increase Support for L&D Programs
To communicate effectively with C-level executives, L&D managers must look at their programs from a fresh perspective. While information on employee engagement, course completion, and training activity are critical to the L&D function, these reports generally do not incorporate the information that the C-suite requires.
L&D managers should look at their outcomes from the perspective of top executives, and speak to their specific interests. This involves considering how each training program can be evaluated for business impact and ROI, and reports generated to demonstrate the value of L&D in those areas.
Effectively communicating L&D results in terms of business impact and ROI takes time and resources, but can have a significant benefit to the training function. Linking L&D to business outcomes may result in:
- Increased funding for L&D programs and staff
- Increased support for L&D initiatives throughout the company
- Improved relationships between L&D and other departments
According to research by Statista5, the top challenges facing L&D departments are the small size of their team, employee lack of time, and budget restrictions. Gaining executive buy-in for L&D programs can help to solve these problems: an improved budget, more support, and strengthened relationships throughout the company.