Why Your ROE is More Important Than ROI

As a company, it only makes sense to evaluate the effectiveness of your learning and development (L&D) program. After all, it is a significant investment, so making sure you are getting a suitable return is a logical move.

However, when it comes to analyzing an L&D program’s results, using a Return on Investment (ROI) calculation is not always wise. It is hard to quantify increases in productivity and the value of enhanced skill sets in certain departments with dollar amounts, making this approach somewhat lacking.

Luckily, there is an alternative that provides your organization with additional value. Return on Expectations (ROE) can help you assess the value created by your L&D program. As a result, ROE is typically more important than ROI in these scenarios. Here’s why.

Examining Qualitative Benefits

While training is often intended to impact a company’s bottom line, the results are not easy to measure monetarily. Usually, training is meant to increase a person’s skill level or create behavioral change, and neither of those things comes with a clear dollar sign-oriented metric.

ROI is often about the financial side of an investment. However, ROE goes a step further, assessing the quantitative and qualitative effect of training.

Determining ROE requires leaders to define their priority expectations. They need to convert their expectations into something that is genuinely observable, such as improved customer service scores, higher sales numbers, fewer skill gaps, or increased production capacity. This then creates the metrics that need to be tracked, allowing stakeholders to understand how training created change in the workplace in a meaningful way.

Focusing on Common Goals

Since ROE is expectation-oriented, it creates an opportunity to align training efforts with big-picture goals. The approach helps unite leaders, stakeholders, and employees under one banner, ensuring their activities support core objectives beyond the financial.

This approach also creates additional meaning for workers. While staff members typically want their organization to succeed financially, they are less invested in the dollars and cents often associated with ROI. If they do not directly benefit from a shift in the bottom line, ROI isn’t as motivating.

Since ROE is about more than money, you can use the goals to enhance engagement. Employees are more invested in areas like customer satisfaction and the ability to develop new skills that can help them excel and advance. This gets everyone excited about what the training can do, increasing the odds that your team will dedicate themselves fully to the learning process and subsequent success.

Are You Searching for L&D Professionals Who Can Improve Your Learning Program?

If you are looking for L&D experts who can improve the ROE on your training investment, the team at Clarity Consultants can help you find your perfect candidates. At Clarity Consultants, we have over a quarter-century of experience in the L&D field, giving you the ability to gain access to the top talent you need to thrive. Contact us to find out more about our unique services and see how our L&D expertise can benefit you.

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For over 30 years, we’ve managed projects touching every element of learning and talent development.