Talking about the essence of measuring the ROI of competency-based learning, companies do it to ensure that the training and professional development activities are cost-effective, goal-oriented, and productive.

That said, here’s a burning question, how can one properly measure and analyze the ROI of competency-based learning?

In this article, we will talk about the ways you can properly measure and analyze the ROI of your employee competency-based learning.

Measure the ROI of competency-based learning

Review the competency model

The competency-based model must be designed in a way to align with specific skills, knowledge, abilities, and behaviors, required by the company to effectively operate and remain in the competition.

While many organizations often add excessive competencies in their competency models, it is worth noting that too much of that at a time isn’t good.

Also, focusing on the skills that pivot the company forward is vital when looking to get the most out of the program.

Must have competencies

For you to get the best out of your competency-based training, it’s essential that you emphasize on the most needed skill development.

To many competencies incorporated in one program is not good, especially when you’re looking to get the most out of the training program.

Define the metrics you will use to measure ROI

To effectively measure the ROI of competency-based learning programs, you need to measure the assessment of previous performance – at the starting time of the project.

Next, compare the results of the analysis to that of the multiple assessments, after the training finishes. So, the program should be created with the end result in mind.

Here are some of the common metrics used in the evaluation of competency-based learning:

• Changes in performance rating before and after the program.
• Employees retention rate and
• Promotion percentage.
• Productivity rate before and after the program
• Error rate (reduce error rate infer better performance)
• Customers review trend over time
• Net Profit margin before and after the training.

Assessments

Assessments should be done before and after the competency program. So, you need to design and implement the assessment in a way that will help to evaluate the effectiveness of the program.

Talking of effective skill developments, it should include a combination of assessment methods, such as the following:

Objective score assessments

At the end of each learning module, an objective score assessment should be included. Assessments, like quizzes, matching questions, and puzzles will help the retention rate of employees.

Performance-based assessment

Skills demonstration, essay and reports, project work, and general performance are effective in measuring the ROI of competency-based learning. Although they are time-consuming and often tedious to do, they are efficient.

Real-world observations

Real-world observation is the best way to effectively assess the competency-based learning of employees. These are conducted by the company and its supervisors to assess the real-world scenarios.

Pre and post assessments

Pre-assessment forms are the basis of which a new assessment is measured. The same metrics used in measuring the pre-assessment should be used in measuring the post-assessment of all worker’s competencies.

360-Degree feedback

Reports from co-workers, associates, superiors, and sometimes clients provide insights on employee’s performance.

Apart from that, it also helps the company to determine the behavioral changes of employees as a result of competency-based learning.

Measure ROI and adjust the program to boost it

To evaluate the ROI of competency-based learning, here are some of the factors to consider below:

• Isolate the effect of training
• Gauge training effectiveness and job impacts
• Measure business results
• Calculate the cost
• Calculate the ROI of competency-based learning

How to calculate the ROI of competency-based learning.

Here’s the formula for calculating the ROI of competency-based learning below:

ROI = net profit / total investment × 100%

Or

ROI = (Benefit – Cost) / cost × 100%

Although determining the cost and benefits may be daunting, knowing the formula to calculate the ROI of competency-based learning and development is quite easy.

Cost of training

Since the cost of training employees varies, it is good for the company to take an accurate record of the training expenses. As such, you must consider the following when checking for the costs of training:

• Third-party expert fees
• Course training design
• Cost of Course materials
• workbooks
• Classroom and facilities rental rental
• Cost of Equipment
• Loss of productivity cost (including employee time off the job)
• Video-conferencing cost
• Specialized computer cost
• Administration costs

To evaluate the cost of training an employee for the year, calculate all training expenses, and divide it by the total number of employees that participated in the training.

Training Cost Per Employee = Total Training Expenses / Total Number of Trained Employees

Benefits of the training

Training does not generate direct money for the company, one major challenge in calculating the ROI is how to effectively determine the monetary benefits from a course training.

To determine the benefits of training, one should consider:

• Evaluate the potential savings generated
• Compare the costs of training to savings
• Evaluate the productivity of the company