As organizations across industries invest in digital transformation, many are reskilling their workforce to empower them to use new technologies. Modern ERP systems and other enterprise software can significantly shift employee roles and responsibilities, making reskilling essential.
Whether you implement reskilling programs as part of an organizational change management plan or as a separate initiative, it’s important to know how to evaluate the return on investment (ROI). This can be a tall order due to data collection challenges and attribution complexities.
Fortunately, there are many methodologies for calculating the ROI of reskilling programs. Today, we’re sharing some general guidelines for measuring reskilling success and sustaining that success.
Change Management Case Study
The client recognized their need for more comprehensive change management, so they asked us to fill in the gaps. We developed a robust communication plan to supplement the vendor’s communication approach.
Why Calculating ROI Matters
Reskilling investment return is a critical metric for justifying training expenditures. It can also help you refine the reskilling initiative to optimize results.
Other benefits include:
- Enhanced Decision-Making: You can identify the most cost-effective training investments and prioritize them accordingly.
- Strategic Alignment: You can align training objectives with business goals.
- Resource Optimization: You can allocate human resources more efficiently to training programs that yield the highest impact on business outcomes.
For example, a manufacturing company recently hired us because they were struggling with poor system adoption. Implementing a comprehensive training strategy enabled the company to formalize organizational training and create a framework for continuous improvement.
(Learn about the continuous improvement cycle.)
Steps to Measure the ROI of Reskilling Programs
Step 1: Define Clear Objectives
Before implementing a reskilling program, it’s essential to establish clear, measurable objectives. These objectives should align with overall business goals and be specific enough to track progress accurately.
Objectives might include increasing employee productivity, improving customer satisfaction, or reducing operational costs.
Step 2: Identify Relevant Metrics
To evaluate the ROI of reskilling programs, we recommend identifying key performance indicators (KPIs) that reflect the impact of training on business outcomes.
Common metrics include productivity levels, quality of work, employee retention, and customer satisfaction.
Step 3: Calculate Costs
Accurate cost calculation is crucial for determining reskilling ROI.
Include both direct and indirect costs associated with the reskilling program, such as training materials, facilitator fees, and the value of the time employees spend in training. Also, consider the potential costs saved by avoiding skill shortages and high turnover rates.
Step 4: Measure Outcomes
This involves conducting pre- and post-training assessments to evaluate knowledge and skill levels. It also means analyzing changes in performance metrics over a defined period.
For example, increased productivity, higher retention rates, and improved quality of work, are strong indicators of reskilling success.
Step 5: Calculate ROI
The ROI of reskilling programs can be calculated by understanding the following figures:
- Net Benefit: The difference between the monetary value of the benefits gained and the total cost of the program.
- Total Cost: Sum of all costs associated with the reskilling program.
Strategic Recommendations for CEOs
According to the World Economic Forum, six in ten workers will require reskilling by 2027 due to the rapid pace of technological advancements.
If you’re planning to implement artificial intelligence or other emerging technologies, the following recommendations will help you upskill and reskill your workforce as necessary.
Invest in Continuous Learning
Reskilling should not be a one-time initiative but an ongoing process. Continuous learning programs help employees stay updated with the latest industry trends and technologies, ensuring sustained productivity and innovation.
Our business software consultants like to tell clients that “a little effort now saves a lot of effort later.” In other words, developing a training strategy for your current project (whether it be an ERP implementation, SCM implementation, or another type of software implementation), can create an organizational capability that you can apply to future projects.
Focus on Filling Skill Gaps
Identify and prioritize the skills that are most critical to your organization’s success. Developing targeted training programs to address these gaps can help you avoid skill shortages while driving business growth and innovation.
Foster a Culture of Learning
Create an organizational culture that values and encourages continuous learning. This culture supports the success of reskilling programs by fostering employee engagement and participation.
Ultimately, regularly providing professional development opportunities helps in retaining top talent and ensuring continuous improvement.
Learn More About Upskilling and Reskilling Programs
Evaluating reskilling program ROI is essential for ensuring these initiatives contribute directly to business outcomes. By following a structured approach, executives can make informed decisions about their reskilling investments.
Our organizational change management consultants understand the importance of skill development when it comes to implementing modern and emerging technologies. Contact us below to learn how to create effective learning experiences for your employees.
