The purpose of L&D is to improve competence. Improved competence results in better performance, which is measured by the annual appraisal. Yet, L&D is not extracting data from it to prove its worth.
L&D is struggling to show ROI because ROI is understood as money. It is wrong.
ROI in L&D = Competence
L&D is not about putting in money in order to get more money out. The money part is in the implementation of learned competencies, which L&D has almost zero control over.
Maybe it is time that we:
- Reevaluated what ROI means in L&D because it is not money
- Understand that L&D's purpose is competency development therefore, their ROI is "hidden" in your annual appraisal data
- If organisations want to turn competence into money, they need to ensure that competence can be applied
- Allowed L&D to design assessments that demonstrate acquired competencies through application and in line with organisations' needs.
Example: Send your leader for a workshop in revenue management. The course will assess the acquired knowledge and skills. But when that leader is back to work, assign them a longer-term project (using their newly acquired competence) that will financially benefit the company.
If the person cannot deliver, they developed an insufficient level of competence, or the environment is not suitable for such learning implementation in both cases, you have wasted your money. That's ROI minus.
L&D, your ROI is in the annual appraisal don't let anyone tell you that it is in money. If the L&D program generated money, it is because competence was applied & demonstrated at the departmental level, managed and led by line managers or leaders, which you have little influence over.
You have done your job as long as people are competent in your organisation, even if they cannot utilise their competence, so figure out how to assess for that.
However, the question is: How competent are they? Past, present or future?