ROI
and Distance Learning
This
month we're focusing on the thorny issue of ROI and how to calculate
it in E-Learning.
The
fate of e-learning has become so bound up in the dot.com fallout
that many people have been looking at trees when they should kept
their eyes on the forest. Though any immature industry must go through
the inevitable growing pains - and certainly e-learning has been
no exception - more and more companies are discovering that there
is a real return on their investment in this technology. One of
the problems for many training departments has been documenting
this return.
ROI?
Fortunately
for our industry a number of people have been working on this challenge
including Richard Hezel. Hezel's company, Hezel
Associates, is an independent educational technology and telecommunications
research firm. His company's clients consist primarily of colleges
and universities, state agencies and school districts, health care
organizations and corporations. Among many other things he has been
responsible for the planning, design and management of evaluation,
marketing, and research projects for his customers.
During
the past 3 years Hezel began looking at cost-effectiveness in distance
learning. As a result he began to develop ROI tools and analysis
for both educational institutions and those in the corporate world
offering e-learning opportunities. Hezel based his analysis on Kirkpatrick's
well established system of evaluation.
Kirkpatrick
Briefly,
Kirkpatrick's four-level system evaluates leader-led training on
the basis of 1) the students' reaction to the learning, 2) the amount
of information that participants actually learned and 3) how much
of that information students use in their everyday work. The fourth
level assesses the actual financial impact a course has on the company's
bottom line.
Companies
look to see specific gains in productivity within a department that
can be converted into some level of profitability for the company.
Often, however it's difficult to assess the productivity ROI. Many
employers can't demonstrate ROI that shows up in direct revenue
based output for the company. Hezel's company specializes in developing
appropriate measures.
Hezel's
company works with the client to make sure the goals of the learning
are clear, applying good measurement techniques to ascertain whether
or not the learning actually did take place and then look at the
cost. Cost and outcome become two criteria on a balance sheet of
sorts.
The
Importance of Marketing
When
some people measure the cost of e-learning they often forget to
include the cost of marketing - or even market to their organization
at all. Hezel doesn't. He includes in the total cost of e-learning
preparing content or re-versioning the original material to e-learning,
the interactive technology itself plus the cost of marketing (internal
or external), developing internal support, mentoring, books, support
resources, print materials, other administrative functions.
Clear
Gains in Productivity
It
was great talking to Richard Hezel because he reinforced what we
know-- there are clear financial benefits to e-learning. He sees
very real savings in what he calls windshield time, air fares, per
diems, loss of time while traveling, and other similar costs. That,
of course, doesn't include increased expertise and the rapidity
with which it's gained. Employees not only have an opportunity to
gain expertise but to also to practice it. Companies assume that
as a result of learning people will be able to incorporate what
they learned into their performance in their jobs, improving their
work, improving their productivity, and therefore that has an impact
on their company.
How
does he measure return? Hezel reported to me that the measurement
differs according to different clients: satisfaction, actual learning,
behavioral kinds of outcomes, or cost benefits. The key? The company
must begin with clear criteria that are then applied over time.
The criteria are determined by the answer to the question: What
do we want to achieve? The answers--more sales inquiries; fewer
complaints; gains in productivity; savings in travel expenses; less
time lost from work, etc. It's the very opposite of the original
approach that many companies took with e-learning when they offered
a smorgasbord of courses and let end-users pick and choose what
they would take regardless of the bottom line result to the business.
Helpful
Information
Want
to know more about this critically important topic? Check out the
June issue of e-Learning
Magazine. In it, read about AT&T's
use of ROI as a standard for selecting an e-learning vendor,
ultimately choosing our client X.HLP.
You
can contact Richard Hezel at www.hezel.com
to find out more about his ROI measurements.
And
if you need help marketing outside or inside your organization,
please contact
us at any time.
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