Measuring and maximizing the outcomes of L&D has been a never-ending challenge for L&D professionals. This includes a very important aspect of presenting how their programs are driving tangible business values. But as the sense of whether or not learning programs are performing often depend on activity-based and qualitative metrics, the industry lacks a standardized method to determine L&D ROI.
Understanding Return on Investment (ROI)
Return on Investment (ROI) evaluates the efficiency of an investment and can be also used to compare the performances of different investments. ROI is a direct method to measure the amount of return on a particular investment, in proportion to the actual investment cost. Mathematically, ROI is expressed as a ratio of the difference between the current and actual value of the investment to the actual value of the investment and is represented by the formula:
ROI = (Current Value – Actual value of Investment) / Actual value of Investment
where Current Value is obtained from the sale of the investment of interest.
As ROI is measured as a percentage, it can be compared with returns from other investments, allowing the measurement of different investments against one another.
Moving away from measuring performance only
The focus on incremental, continuous and measurable improvement in job performance and productivity is a must but relying on them do not provide an understanding of employees’ capabilities and how they went about their responsibilities. As a result, the trends in measuring learning programs are moving away from measuring the quantity of training only.
A logical substitute for measuring L&D ROI is ensuring proficiency among employees. Psychometric assessments are leading indicators that help L&D officials understand the learning needs and redirect their efforts to continuously improve individual performances. The faster enterprises improve learner’s competencies and alter their behaviours at work, the more they can drive performance and prove the value of their L&D programs. The insights from these psychometric assessments are of great value post-training and help in evaluating the efficacy of the program. We can consider psychometric assessments, therefore, the new way to augment the ROI of L&D.
Designing Psychometric Based Learning & Development Programs
- Identify the performance gaps: The performance gaps within teams that affect the outcomes need to be identified before devising a program. For instance, you might want to understand why some developers are great at providing efficient solutions, but still lacking at what it takes to complete the development cycles.
- Identify a psychometric assessment: Select a series of tests that help you measure the key reasons for a performance gap. For example, tests that assess whether an employee can work in teams, is disciplined enough to manage the process from start to end or has some basic communication issues always prove to be helpful.
- Plan and execute a learning module: Any module designed thereafter should be targeted to eliminate the deficiencies observed during psychometric assessments.
- Provide feedback: Feedbacks are must and employees or learners should be intimidated about their strengths and weaknesses to foster insight and improvements at a personal level.
- Re-test: Once an improvement program concludes, the post-training assessment for the same traits should be organised to measure the effect of learning.
The biggest challenge that organizations face today is the presence of robust L&D teams that can foster innovation faster than their competitors. The key to this is to assess and address employee skill gaps and improve their proficiency. Psychometric assessments are a great tool to identify such opportunities and ‘potential’ leaders within an organization. Numerous of such tests help in identifying major leadership attributes, possible blind spots, prospects, and also help to map development strategies to fill the deficient attributes Ultimately, proficiency drives performance and productivity in any organisation.