The Quickest, Most Powerful Way To Justify Custom Elearning Development

The Quickest, Most Powerful Way To Justify Custom Elearning Development

Justifying the return on investment (ROI) for an online training solution is a relatively simple task for most organizations. If your company is moving your training off of the powerpoint and out of the classroom to custom interactive content delivered on a desktop or mobile platform, here’s a quick and easy way to calculate the approximate difference to your bottom line:

 

Start with

Average daily cost per employee  (travel, meals, accommodation)

Add

Average cost per employee for course materials

Multiply the result by

Average number of employees in a class

Add

Training Instructor daily cost (booking fees, travel costs)

Multiply the result by

Average class length (in days including travel days)

Multiply the result by

Number of classes per year

Your Total

Compare the result against the cost of online training software that will deliver training to your staff at their desk, smartphone or tablet.

Of course there are other cost considerations. Custom elearning development is significant because of the time and the talent required to build it. However, the payback in employee productivity gains and performance improvement easily justifies this cost in the first place. The end result will justify the means.

The larger the organization, the greater the return on each training investment dollar.

For the small to medium-sized organization, under 5000 employees, the business case may require additional sources of cost reduction. Here are 2 additional areas, often overlooked, that will can be helpful during your benefits and risks analysis.

Reduction in staff turnover.

Hiring a new employee is an expensive proposition involving the hiring manager, HR advisers, perhaps staffing agencies,  and training to bring the new hire up to speed (yes, elearning will help there as well!)

The Kelly Global Workforce Index (April 2013) surveyed 120,000 employees around the globe and found that 68% of respondents in North America identified the potential for promotion with their current employer as the primary reason to seek training and that a little less than half felt their company did not provide sufficient training opportunities. Reading between the lines,  if you’re not training your employees, their future employer will.

Figure out the cost of hiring a new employee, look at your current rate of turnover, and make an assumption on how many employees you will keep.

Cross utilization of employees.

If your business is impacted by seasonality — a sudden and protracted upswing in business tied to a time of year or event — the demand for and cost of additional staff can be sizeable.

Commercial airlines, for example, see spikes in business through both the summer and winter holiday periods. The increased traffic stretched airport staff to the limit. The solution was to cross train employees in other departments who were temporarily reassigned during peak season to assist in the airports. Online training made this possible because a four week airport training course was reduced to three days and could be taken based on the availability of the employee  — not the classroom or trainer.

In the final analysis, you almost have to work at NOT obtaining a sufficient ROI to justify your online training project. Should you have any additional questions about developing an online training business case, contact us as we would love to work with you.

Failing to put the proper measures in place can result in an online training program that can fail. Learn about what you can do by downloading our free ebook How To Avoid Elearning Failures.

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