Think HBR

Calculating Return-on-Investment (ROI) from eLearning

Stephen Philips
Catalyst eLearning
eLearning has revolutionised education and training and this is especially true in the workplace. Corporate training directly impacts an organisation’s productivity in at least three ways:
1. The costs associated with training - including direct costs such as staff, delivery systems, travel, per diems and opportunity costs
2. The costs associated with lost productivity during training time, and
3. The benefits that accrue to the organisation as a result of formal training- including increased productivity.
These impacts are further amplified when taking into account the obligation to train not only employees, but anyone who performs work on behalf of an organisation including contractors and volunteers.
For example: if an organisation sends 100 employees on a threeday course (assuming average on-costed wages are $45/hour), the cost in wages alone is $108,000 (100 people x $45/hr x24hrs = $108,000). When all costs such as travel time, room hire, trainer hire, plus the costs of creating or purchasing materials and general administration are factored in; these costs can add a further 25% or more to the training budget – meaning that total training costs are in the order of $135,000 plus.
In our experience, Catalyst’s customers are saving in the order of 40-60% of their training budget when incorporating eLearning into their workplace development program. Opportunities for cost savings include:
• reduced training expenses such as printing of training materials, room hire etc.
• reduced staffing expenses, including travel to and from training venues
• reduced reporting and record-keeping expenses
• reductions in training time
• reductions in orientation time
• improved staff performance
• increased consistency of training materials
• increased utilisation of training platforms
As an accounting exercise, calculating ROI is relatively straightforward. But it is equally important to include other key factors when determining the true value of eLearning in the workplace.
Catalyst’s customers have reported that employee retention is something they consider when contemplating the need for online training along with the value of using a familiar work tool (such as a personal computer, mobile phone or tablet computer) as a teaching tool. This is seen as increasingly important, particularly when training remote workers, field-based crews, contractors and volunteers.
Other benefits cited include:
• increased job satisfaction
• increased organisational commitment and morale
• improved teamwork
• improved customer service
• reduced customer complaints, and
• reduced internal conflicts
The effectiveness of any educational program will determine the ultimate ROI. There is no point in focusing on the amount of money saved by a proposed eLearning solution if that solution does not produce real learning in the form of changed behaviour, level of knowledge or personal growth of the learners. This is not a function of instruction being online or in a classroom, but is purely a result of successful learning strategies.
For further information contact Catalyst eLearning on (02) 4926 4401, email or visit
Stephen Philips Stephen Philips
is the General Manager for Catalyst eLearning with extensive senior-executive experience in public and private sectors. He well understands how eLearning contributes to sustained business improvement in demanding stakeholder environments.