The High Cost of Not Measuring Learning Impact

In i4CP founder Kevin Oakes' best-selling book “Culture Renovations: 18 Leadership Actions to Build an Unshakable Company,” he highlights research that shows how high-performance organizations — those who “plan, build, and maintain a corporate culture that drives profits, growth, and business sustainability now and well into the future” — are three times more likely to hold leaders accountable for actively demonstrating the importance of learning.

In fact, the same study found that the #1 trait of successful learning cultures was that learning’s effectiveness is constantly measured. 

“Learning leaders face massive challenges in this post-pandemic era, and talent is at the center of many of the key business issues facing most businesses,” says Perfomitiv CEO Kent Barnett.

“What every learning leader is trying to do these days is demonstrate how they add more value to the business. How do they address the business issues and the business needs? The only way to do that is having great data,” says Barnett.

It’s clear that those organizations that embrace measurement and implement continuous improvement reap the rewards with:

Reduced Scrap Learning:
The easiest L&D metric to focus on reducing is scrap learning - learning that is not applied to the job. One recent study highlighted in Training Industry Magazine found typical scrap learning at about 60%, with an average of $779 wasted on every $1300 spent on training employees. Most Performitiv clients reduce their scrap by double digit percentages, simply by tracking learning effectiveness and acting on the data by eliminating or improving programs that are not delivering the desired results.

The cost of not taking action: An organization with a $2 million training budget that did not take steps to reduce scrap would likely see at least 10% more scrap learning than if they had a continuous improvement system in place, resulting in an impact of $200k worth of wasted L&D spend. Given the impact of those dollars if applied strategically elsewhere, the impact is enormous.

Improved productivity:
Organizations that use data to drive continuous improvement, for example, can generate 5% to 15% improvement in overall productivity, and McKinsey reports clients that see operating performance improve as much as 80% and productivity improve as much as 20% in as little as two months due to continuous improvement efforts.

The cost of not taking action: A 5-15% impact in productivity for most organizations represents billions in shareholder value. At a time where many organizations are crunched either by a talent shortage or potentially by recent layoffs, employee productivity is even more important than ever.

‍Improved Retention: While most strategic learning programs can help reduce regrettable employee loss by 2 employees out of every employee trained, Performitiv data shows that those organizations who deploy a comprehensive continuous improvement process can reduce regrettable losses by an additional one to two employees out of every 100 trained.

‍The cost of not taking action: In the midst of what is being called the Great Talent Recession, development is a powerful tool to improve retention rates, upskill your existing teams to fill open roles and drive improved engagement. If just one program properly optimized and applied can reduce regrettable losses by 2%, imagine the impact improving all of your programs could make in keeping great team members on board. Can you really afford not to?

‍Improved Business Outcomes: Visit the Performitiv website for countless examples of companies measuring the impact of L&D on business outcomes, and providing the data to optimize those business results. One client saw a 30% increase in their sales results due to optimizations in their training process driven by L&D and analytics. Another insurance industry client saw a 4x increase in business impact from their new product training.

‍The cost of not taking action: When you do measure for business outcomes, it becomes much easier to demonstrate the massive impact you can make programmatically and over the long-term. Performitiv regularly works with our clients to define not only the actual financial impact of L&D programs, but also the likelihood of a significant return on an investment in those programs.

When it comes to implementing an outcomes-focused measurement process for your L&D programs, you cannot afford to wait because the cost of inaction is simply too high.

If you hope to compete with high performing organizations, or simply are looking for a way to increase retention and engagement in the midst of tumultuous times, the time to get started is now.