Training Industry Magazine - November/December 2020 - 27

distinction applies across all industries
and business functions. For learning, the
delineation is between costing for the
training activity, an expense because of
its immediacy, and the "costs" to acquire
learning infrastructure, categorized
as an investment for the long-term
benefits it is expected to deliver for the
learning effort.
You don't have to know how to delineate
between each, but you should respect
why stakeholders do. It will allow you to
better define the value of your learning
efforts. If you are delivering training -
instructor-led, eLearning or otherwise
- it is probably a short-term expense.
If you require items, such as a learning
management system (LMS), chances are
it is an investment to support learning
over time.

The learning
function is no longer
just about training; it
is about competency
in business,
financial literacy
and operational
processes.

COST OF LEARNING
ACTIVITIES
Why is the actual training activity an
expense? For one, it is usually executed
within a set time period, then it is
complete. Moreover, there is no tangible
outcome from the activity itself.
The intangibility applies to similar
expenses, such as marketing. Like
learning, marketing is an expense for
the moment. For example, a Superbowl
advertisement is an expense, and there
is no tangible way to correlate it to
actual sales. It would be irresponsible to
state the ad was the sole reason for a
subsequent increase in sales. However,
tracking the ad, by applying a promo
code or digital cookies in an algorithm,
would help prove its impact.
Say you designed and deployed
an on-demand eLearning course
for manufacturing employees. They

complete it, and the production
manager sees a product output
increase in the following weeks. Would
it be responsible for learning to take full
credit? Are there other factors at play?
Like the Superbowl ad, it is probable the
eLearning contributed to the increase.
This is usually where L&D professionals
get into trouble - claiming full credit
with no tangible evidence. What if there
was a way to measure the positive
contribution training delivers?
Luckily, there is. However, it requires
an understanding of the operational
processes in question, the performance
expectations stakeholders must achieve
and the cost versus the benefit of
pursuing a learning intervention.
Learning professionals often develop
learning solutions prior to evaluating
and addressing the actual issue. This
leads to ineffective interventions and
further erodes value. You must first
understand the process to diagnose the
need. By evaluating and targeting the
issue, you may discover that training is
not the solution at all. Either way, you will
demonstrate value.
Learning value is about improving
performance and defending its cost.
Identifying performance expectations
allows learning leaders to identify
key performance indicators (KPIs).
KPIs are evidence of how well your
learning efforts contribute to improving
operational performance.
You cannot avoid the question of cost.
Acceptance or rejection lies in the value
learning will deliver - not the cost itself.
Stakeholders refer to this as a costbenefit analysis. Since the learning
activity is an event or occurrence, the
cost or expense must demonstrate
measurable value.
Many learning leaders fail to recognize
the complexity of delivering an effective
learning initiative. While most focus
on expected results, stakeholders
preoccupy themselves with cost
decisions and the sustainable value
the organization can expect. Learning
professionals will need to create
structure between cost estimates for
learning and costs for supporting longterm learning effectiveness.

COST OF SUPPORTING
LEARNING
Learning professionals believe that
purchasing learning infrastructure
technologies is simply about getting
stakeholder
approval.
However,
stakeholders
consider
learning
infrastructure support purchases an
organizational investment.
The word "investment" translates to
an indirect contributed value over
an extended period of time, typically
multiple years. An LMS request, for
example, is the same as purchasing
production equipment, a building or
data server. Its intent is to deliver return
through long-term operational value.
The response is more involved when
stakeholders ask, "What will this
cost?" Any capital investment directly
impacting cash flow requires financial
literacy and profitability analysis. No one
expects you to be a financial expert, but
stakeholders do expect you to enlist
support from those who are.
Estimating costs for a learning investment
requires accounts for the initial cost, as
well as ongoing costs over time. The
investment must demonstrate how it will
contribute to the organization's financial
growth. For learning investments, indirect
contribution is about improvements in
productivity, efficiency and performance,
and improvements are measurable to the
extent they correlate to financial results.
From a stakeholder perspective, consider
the benefits gained from having, let's
say, an LMS. Making the business case
for an asset purchase must show how it
will contribute to improving operations.
For the LMS, the business case is not
"managing employee learning." Instead,
the justification is, "helping track and
address employee knowledge skills
gaps and develop them to become more
productive and efficient in their roles.
This will translate into a cost savings
of X%." Suffice to say, your objective is
demonstrating cost-benefit value for the
LMS through results they expect.
Simply put, every investment or longterm asset a company acquires is
meant to contribute, direct or indirectly,
to improving cash flow. It must lead to
improved profitability since the asset costs

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Training Industry Magazine - November/December 2020

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