How to calculate ROI with KlickData Learning Management System
As a manager that has not yet understand the long term benefits of letting the staff have access to an online Academy within the Company or Organisation with all the soft and long term benefits: the question is often put in a straight forward and blunt way:
How do we get our investment in the KLMS back over one year?
Apart from encouraging the staff in education and use KLMS as a tool for Surveys about the organization's needs for change and adjustment of its services, the calculation in numbers might look like this:
The alternative cost for on-site training with one on one and classroom training.
Depending on ambition: let us estimate that you run an organization with 500 employees. Let's pretend that the staff at all levels requires training on the current state and local regulations that might change from now and then. The current standard of practice in doing things inside the organization needs training and change of routines. The need for promoting staff to new levels in the organization requires manager skills. New areas of the business need new hiring. New products need to demonstrate, and the USP (Unique Selling Points) needs to be in focus for a group of people in one of the daughter companies or business partners. New distribution contracts signed creates the need for training on new products in areas where no business before has been conducted. Newly hired staff needs onboard training, and this is also in need of adjustments. The list goes on and on and on. For all companies.
It's straightforward to understand that the old approach of one-on-one training is no longer applicable if you aim to educate most efficiently and with the highest profitably in mind.
So let's say you estimate a 30-hour average training on all the staff.
This means that the 500 staff will require 15,000 hours of training. (30*500)
The one-on-one approach means the 15,000 hours is taken from the person who would teach as well as 15,000 hours. This person who train one on one then gets a loss of his productive work and reduce customer focus. So if this person is on average on a 30 USD/ hour (or within a range of 2-50 USD/ hour), the numbers are to be calculated. In the example of an average salary of 30 USD/ hour, the training for the inhouse teacher is 30*15,000 =450,000 USD in the alternative cost for the training. = depending on the level of Salaries around the World: the range is 30,000 to 750,000 USD per year. No matter where: The ROI for calculating the investment in an LMS is rather simple.
Example of average payroll for an average Office Worker:
South India: 2 USD/ hour
Egypt: 9 USD USD/ hour
USA average: 15 USD/ hour
New York: 17 USD/ hour
Kuwait: 29 USD/ hour
Sweden: 31 USD/ hour
The training one on one makes the teacher or instructor as well as the staff member involved in every hour of training which makes the alternative cost with 100% on-site ono-on-one training double: With the example of 30 USD/ hour and 30 hours of training for a company with 500 staff: this will lead to 30,000 hrs and a total of 900,000 USD in labor cost.
Of course, you can argue that group training reduces this amount making one teacher train and inform many others: Like one on 20 (students or) staff members in a classroom. Consider adding to this the transportation cost, accommodation cost if creating a conference, facilities to be rented if not inhouse, etc. The numbers add up if you like to be more specific on your companies alternative cost of keeping to on-site training and leave the education of staff without online training and a Learning Management System like the KLMS from Klick Data.
The advantages do not stop at alternative costs and efficiency in making the Online training available. The content in need to be learned by the individuals in the organization is most suitable if it is given the opportunity to be repeated. On-Site training does not allow much repetition. While online training does this very well. You can repeat the material until you have got it at the speed you like. And from the company perspective: Training can be advised to be taken on a bus home from work or at home for the staff if not specified as a specific day like every other Thursday afternoon as an example.
From the private point of view of the employee: Companies that offer online training have an advantage as an attractive employer: The training on an individual level makes the staff aware that the company can provide "a better version of myself". I can work at company X to educate myself to the next level of my career. Both inside the organization but also make myself attractive for other companies having taken courses with validated certifications. See Employer Branding article.
Let us get back to the spreadsheet calculation of the investment coming back within a year of signing a Site License contract with Klick Data:
Let's say you invest in training and this training increases productivity. To be very low in our assumption: Let's say 30 hours of training a year increase the production of staff with 3%. Depending on the cost of labor, the increase will then make 3% more value for each hour that the individual member of the teamwork. If the average salary is 20 USD, the 3% increase will generate a 0,60 USD more value for each dollar spent. This, of course, is low calculated because no company will hire a person generating the same amount of value as the labor cost. But to make this example free of exaggeration, let's say the value produced per hour of the individual is 20 USD and a 3% increase raises this output with 0.60 USD. Over the period of a year with 160 hours per month and 11 months per year in work and one month of holiday: 1760 hours * 0.60 USD result in a productivity output of 1152 USD.
In this example: If a Learning Management System, like KLMS, cost less than 1152 USD/ year and the LMS is used 30 hours per individual and gives him or her the adequate training that would increase his and her skillset with 3% in output: everything less than 1152 USD/ user would be a profit for the company on the bottom line. With 500 people in the organization, the generated value in this example would be 576.000 USD. Since all companies have their own internal measurements, productivity, outputs, general salaries average and all these numbers are not to be disclosed for the public: The calculation of the ROI for a Klick Data KLMS will be easily calculated by an internal estimation.
We have however in an attempt to understand the parameters created a site for your own estimation. Without making any numbers saved its easier to get an estimate on the importance of the strategic value of this decision and how to move forward with the Learning Management System and the importance it has. Please use http://klick.site/NK3_sliders.html
We will use more blog articles here to help you understand the grave importance to move to Online Training and the steps in need of this to be taken in order to get the staff work. Because training is a really great area of grey fields that needs to be taking seriously and not be used as a hidden benefit of "being away from work" as many conferences are organized with little to none use for the company other than making the staff happy (short term). Many companies can accept to get a good ROI by simply investing in an LMS and stop sending people to conferences in the expenses saved. This is not optimal in no way, but it illustrates the quick ROI you can get by investing in a KLMS.