Return on investment of L&D measures

Urs Merkel
October 20, 2024

Current status of learning and development measures in Germany

Learning and development (L&D) has become a central element of HR development in Germany in recent years, particularly in small and medium-sized enterprises (SMEs) and corporations. The pressure to assert themselves in a dynamic, digitalized working world has prompted companies to implement new learning approaches that are flexible, personalized and efficient. Companies that have already succeeded in the VUCA world have realized that Learning & Development is now the key to success in the BANI world (brittleness, anxiety, non-linearity and inconsistency). At the same time, there are still companies that are the first to cut costs in HR. This is because they still do not know their return on investment from learning & development measures. Which companies do you belong to?

Established L&D measures

A company's most important capital is the knowledge and efficient cooperation of the people in the company. Capital should earn good interest, which is why investing in education still pays the highest interest. After all, if people who are well trained in human, methodological and professional terms remain in a company, it is equipped for the present and the future. Established L&D measures, which I highlight in this article, reflect the most important trends and needs that companies are currently pursuing in Germany.

E-learning and blended learning are now an integral part of continuing education. The ability to impart knowledge regardless of time and place has revolutionized learning. Many companies combine online courses with face-to-face events in order to take advantage of both the flexibility of e-learning and the effectiveness of face-to-face training.

Microlearning is a response to the need for quick, focused learning units that can be easily integrated into everyday working life. This method is particularly popular as it allows specific skills to be taught in small, easily digestible chunks.

Personalized learning paths are becoming increasingly important as they enable companies to respond to the individual development needs of their employees. These personalized approaches promote employee loyalty and ensure that what has been learned is better applied in day-to-day work.

Human skills development is another area of focus. While technical skills are often well covered, companies are increasingly recognizing the importance of human skills such as teamwork, communication, decision making and problem solving. These skills are crucial to succeed in a highly collaborative and networked world of work.

Social learning and peer-to-peer learning reflect the trend towards collective knowledge sharing - learning through reflection. By using social platforms and internal networks, employees can learn from each other, share knowledge and thus strengthen innovation and cohesion within the company.

Mentoring and coaching are traditional but still extremely effective measures. They offer individual support and guidance and promote the personal and professional development of employees through targeted advice.

The focus of L&D strategies is on employee retention and talent development. Through targeted development programs, companies try to promote talent and retain it in the long term, which is of great importance in times of skills shortages.

Measures for establishment and ROI calculation

In order to successfully establish these L&D measures, companies must take targeted steps. The introduction of e-learning and blended learning first requires a careful selection of platforms and content. Companies must invest in the technical infrastructure and ensure that the content is adapted to the needs of the employees. The cost-benefit analysis is crucial here in order to determine the ROI. The investment costs for platforms, content and training must be compared with the expected increases in productivity and savings.

When implementing microlearning, companies should select tools that can provide short, concise content. It is important to monitor learning progress and ensure that employees are able to apply the content. The ROI calculation is based on the analysis of time savings and improved work performance.

The establishment of personalized learning paths requires close cooperation between HR, employees and managers. It is necessary to define clear development goals and develop suitable learning modules. The ROI can be determined here by analyzing career development, employee retention and the direct impact on corporate goals.

Soft skills training must be designed to be practical and relevant. Companies should bring in external experts or internal coaches to deliver these trainings. The ROI is measured by the improvement in team dynamics, communication and problem-solving skills.

The implementation of social learning and peer-to-peer learning requires the development or adaptation of internal communication platforms. Companies must promote a culture of knowledge sharing and create appropriate incentives. ROI can be determined by analyzing the innovation rate and cost savings from internally generated solutions.

Clear programs and structures are necessary for mentoring and coaching. Companies should select suitable mentors and ensure that the coaching processes are carried out systematically. The ROI here results from improved employee retention, faster induction of new employees and individual performance improvement.

The introduction of a learning management system requires careful selection of the software that meets the needs of the company. The implementation must be well planned and employees must be trained accordingly. The ROI is calculated by the increase in efficiency in learning management and the improved learning outcomes.

Finally, companies that focus on employee retention and talent development must create targeted development programs and career opportunities. These should be regularly reviewed and adapted to the needs of the market and employees. The ROI here results from the reduction in fluctuation costs and the increase in employee satisfaction.

Importance of ROI in human resource management

It is crucial for human resource management to know the ROI of L&D measures. This makes it possible to objectively evaluate the success and efficiency of the measures and make informed decisions about future investments. A positive ROI shows that the measures not only improve employees' skills, but also make a direct contribution to the company's success. Given limited resources and increasing demands, it is essential that companies regularly review and optimize the effectiveness of their L&D investments. In this way, they ensure that they not only continuously strengthen their employees, but also their competitiveness.

Urs Merkel
November 7, 2024