Time to Take Charge of the ROI on eLearning and Leadership Development


Time to Take Charge of the ROI on eLearning and Leadership Development

The Worst Mistakes C-Level Officers Make in Developing Capable Employees through eLearning


If you are the CEO, CFO, COO, or in any way impacted by eLearning, I suggest that you take the time to read this whitepaper. You have permission to forward it through to your leadership personnel.


I have been thinking about writing this whitepaper for some time, but until today there was no pressing need. Unfortunately,I am trying to give advice to a fairly new executive coaching client who is in trouble over their internal eLearning platform’s ongoing issues. He is going to be pulled on the carpet by his CEO on Monday morning. Over the past years, I have manydiscussions with fellow CEOs about scope creep, cost escalation, and other problems associated with why eLearning isn’t living up to its ‘hype’, so today I set some time aside to respond to the issuesI believe that many of you are facing similar problems, or will in the future. So, here are my thoughts on typical mistakes (all of which had warning signs) that occuras more and more companies transition to eLearning. 


I received permission to tell you the story that prompted this whitepaper: Dave told me his HR VP presented the case that eLearning would save the company hundreds of thousands of dollars in training and development costs. Three years later, Dave was going over the budget and needed to trim $500K. Digging deeper, Dave saw that the IT Department was asking for permission to add four people including two LMS specialists. Not knowing what the terminology meant and what these LMS specialists would be doing, he called his IT VP to chat about freezing the headcount and he wanted answers about why the database upgrade was running behind schedule. What he found out didn’t make him happy! His IT Lead responded that the current IT folks were not specialists in eLearning. A primary reason why the database project was running late was that the HR Department’s eLearning priorities were taking too much of his IT personnel’s time. He explained that his IT personnel were spending more and more time dealing with the eLearning issues and upgrades. He wanted to bring in personnel dedicated to building out the eLearning capabilities that the HR Department required.


Warning Sign#1: COST CREEP

What appears to be cost-effective (to develop internally) might not be so over the long haul. The ROI on eLearning has to be a fundamental driver.


Dave asked his IT Lead for a rough guesstimate about how much time and energy the eLearning was sapping from the IT Department per month in terms of man hours and resources. Immediately, the IT VP said that he figured about four fulltimeemployees were spending the majority of their time on the eLearning build out and handling internal usage issues. Rough guestimate was $400K. The next call was to the HR VP. Dave asked for a guesstimate of the headcount assigned to eLearning and the costs of running and managing the eLearning initiative. He discovered that the HR and Training Department had hiredtwo eLearning course developers at $128K eacha curriculum admin $50K, and two multimedia designers at $45K each and 2 IT producer/coders $180K eachTOTAL first guesstimate of cost between the IT AND HR Departments +$750,000.


This eLearning platform was costing nearly four times what they used to spend on their entire training budget! The promise of cost savings simply wasn’t there. The original cost estimate to build the eLearning internally was $200K/year – about the same as their classroom training budget. Just typing this number seems silly – but somebody believed it! They got approval. In the meantime, Indaba’s original quote of just over $300K had gone down by more than 50%. Because of continuedeconomies of scale – significantly more clients using the same courses means Indaba Global can provide eLearning courses at a better price. It’s our core business. The entire eLearning suitePLUS the DISCflex™ assessment tool and suite of sessions(hundreds of hours of high-def video, audio, whitepapers, activities, etc.) costs only $15/employee per month. Dave has750 employees: 750x$180 = $135,000$65,000 less than their original training budget!


The Solution:

One remedy is to outsource eLearning to companies that specialize in this. They have the economies of scale that your organization simply will never have. From our estimate, it takes about $150K to produce a solid hour of professional eLearning – one that students like, is well researched, and is professionally produced. Does your company have that amount of cash on hand to develop eLearning modules? I know that some people won’t like this and they’ll argue that they can produce a course for far less money. I can’t dispute the fact that people put out eLearning materials far cheaper all the time. But this costing is holding true for courses that score well - with a 90% and above approval rating from the employees. Spend less and the approval ratings tank. It is what it is. I have the data. We’ve tried to bring the costs down and paid the price in student dissatisfaction. Needless to say, we reworked the courses and in the end it cost us far more! Most companies don’t have the cash to rework eLearning. The employees have to go through courses others have already rated poorly.


Warning Sign #2: RESOURCE CREEP

Slowly but surely, without anyone taking much notice, the eLearning Initiative infiltrated the organization’s core business effectiveness by sapping resources. Because the demands were hidden in things like customer service requests, IT department’s time, and administrative support, no one fully realized the enormity or the true impact of an in-house eLearning platform.


Dave brought both VPs into his office and explained business priorities. He told both leaders that because the IT department’sbest people were focused on something that was not the organization’s core business, a customer was angry because the database upgrades they expected were not completed on time. The customer could potentially cancel, ask for concessions, or not renew next year - all of which were highly undesirable. The root cause – eLearning resource creep.


The solution:

Treat eLearning as a program and assign a competent program manager. Without one (and a finance person), I can assure you that you will not be able to get a handle on the true costs of your eLearning initiative.



Employees make choices in how to spend one of your organization’s most critical resources – the employee’s time.Failure to provide guidance in how to make these minute-by-minute, hour-by-hour decisions is a leadership failing. Ideally,the C-suite officers (hopefully the CEO!) will provide the reasons why they think continuous learning and continuous improvement are important, and will provide messages stating their expectations that sound something like this:


“I want our employees to learn something job related every week. Ideally I would like employees to budget at least 1-2% of their valuable time on eLearning – this equates to about 24-48 minutes per week. Much like wanting their favorite TV shows – this should be an ongoing priority for every one of our employees. Further, half of that budgeted time should be on hard skills (expertise and compliance training) and half should be on soft skills (communication, leadership, influence, decision making, etc.). By combining performance-based skills with enhanced behavior-based skills, communication, and other soft skills, we will thrive as an organization.” 


Make no mistake about it – if you are not clear on your expectations, the decisions made about what to learn, when to learn, and the linkages to business imperatives will flounder. This is a leadership responsibility of the highest magnitude.Beware: In eLearning, compliance training often takes precedence over training that serves business imperatives – which include building management and leadership bench strength or focusing on skillenhancement.


Here’s what Dave discovered: Because Dave’s HR Department had so many things it wanted employees to know, it concentrated on testing whether all employees could recite information about policies and procedures, rather than testing if they could find the information and use that knowledge when the situation arose. The legal department jumped on the bandwagon and they loaded up mandatory eLearning, too. Same for operations, program management, and others. For example, the HR Department required all managers to learn how to terminate employees by taking a 3 hour eLearning course, even if the employee had no immediate plans to fire or downsize a single employee.


Let’s be logical about knowledge retention. Even if you know that you have to terminate an employee, you could go through the materials just prior to the event and understandably you would pay more attention – because you would NEED that information and know you will have to USE that knowledge immediately. If you took a course six months prior, chances are the information retained will dissipate, much like wisps of fog.


The solution:

Take control of what your employees must learn and when they must learn itAsk fundamental questions before scheduling any eLearning: What do you need to accomplish? What do they need to learn? When do they need to acquire the information? Then back the lessons in accordingly. It really isn’t rocket science. There are certain skills (hard and soft) that can easily be identified at an organizational level for all employees (i.e. how to make decisions, how to handle change effectively) and others that are more tailored at the individual team (effective team communication) or employee level (roles and responsibilities of a team leader).


Plus, increasingly, employee’s independent decision making on what to learn is being taken away. If you want your folks to learn more, give them more control about ‘electives’. Track eLearning satisfaction for every module and have someone from outside the program team make recommendations for changes to your eLearning approach. Be thoughtful about who should take the required set of courses, too. Hold designers accountable for delivering eLearning courses that get high marks from students in these areas: relevance to business goals, ease of learning, ease of implementation, time to acquire information, knowledge retention, etc.


Third Warning Sign: SCOPE CREEP

The original goal of the eLearning initiative was leadership training. But three years later, the reality was that employees didn’t have time to take the Management and Leadership courses because they were jammed with compliance eLearning requirements. As with any business initiative, it has to solve the problem that it was designed to address. Holding decision makers accountable for this is smart business.


To add insult to injury, the Training Department had significantly reduced all other forms of training because their budgets were drained by the company’s decision to build an internal eLearning solutionRemember this: eLearning isn’t the only way to learn. Thinking back, Dave remembered that several key employees who had left the organization and joined his competitor, stated that one of the reasons they left was a lack of leadership and management training – the reason the eLearning started! One highly skilled program manager told Dave that he was forced to spend 25 hours completing the same course every year. He said that with 30 years of experience running a +$500M revenue generating program, didn’t it make sense that he could be exempt? He asked if he could swap out the Program Management course for an Influence and Communication Course that he had seen and presented the reasons why he needed this knowledge more to better communicate with his customer and his team. His request was refused, so he plowed through the mandatory Program Management eLearning, learned very little that was relevant to his job or the business goals, and became increasingly frustrated! Where was the ROI in that approach?


The solution:

Tailor the eLearning to the job requirements and to the business imperatives in terms of performance and behavior. If your system is as sophisticated as ours, ask your folks how to tailor customized eLearning for every employee. This is something our surveys find employees – especially highly paid employees – prefer. 

Keep this in mind: Be prepared to spend more money than you thought on rework. This usually doesn’t appear on the project plan, but it’s a reality of the eLearning business. Another factor that most people don’t consider is that information constantlychanges, so be prepared to rework every single course every three years at a minimum. For an IT course, this time line is compressed even further. We have found that people who create the courses treat their modules like prized possessions. They are often not open to constructive feedback and are especially less willing to make changes in an environment where they are being rated by those they consider non-experts (I.e. eLearning students versus designers). Hold the design team accountable for how much rework is required according to employee eLearnersatisfaction surveys.




A business must make choices about where it spends money tomake money. 


After further cost analysis, Dave showed his leaders that the business had spent much more money on the eLearning initiative than originally budgeted. Unfortunately, because of resource creep, those dollars were hidden. The eLearning initiative slowly eroded each department’s effectiveness. Dave pointed out the difference between the original eLearning estimates and current costs. He stated that the additional money could have been better spent on the core business. At the very least, he expected his leaders to explain the rationale behind theinitial decision -- to build the eLearning platform internally versus going with a company that specialized in eLearning(make versus buy). Logically, the eLearning company quote was 25% higher than the costs the HR Department said it needed so if this were a fact it made sense. But the assumptions were nonsense. The training department didn’t have a clue about the true costs of developing eLearning – it wasn’t their area of expertise.  This was a leadership failure that most certainly resulted in lost revenue and therefore, lost opportunities for the organization as a whole. 


The solution:

Track all eLearning costs – including IT and Training Departments, as well as any associated costs like administrative, help desk, and customer service resources.


Fifth Warning Sign: POOR QUALITY CREEP

People like TV but they switch off bad TV programming. Dave hosted a brown bag informal talk and posted that he wanted to ask a few employees how they liked the company’s eLearning. He expected 4 or 5 people. 20 jammed the conference room. He got an earful! Apparently, his folks thought the courses were not hitting the mark. The complaints: “Too elementary,” “Time waster – could have provided information in a 1/10th of thetime,” “Not relevant,” “Forced to redo the same course every year. Needless to say not good! 


Here is a comment from a student: 


Video, making movies (for that is what they are in the end) is a professional skill that's not taken seriously by our e-learning folks. I can’t be the only one who sees that they are not skilled enough to do this! It’s just like years ago when we decided that although our in-house trainer was great for compliance training, he admitted he wasn’t competent in leadership development. A huge problem: The scripts are given to in-house writers with little or no knowledge of the script writing process or the subject matter. Plus not one of them has ever been a successful subject matter expert, manager, or leader. They just don’t know enough about how business works! And, increasingly, the producers don’t seem to care who is either in front or behind the cameras and microphones. I get the growing feeling that it is just the self-delusional view that because they put it out, it’s good enough for us to watch. Please, please have a look at this and make some serious changes!”


The solution:

Hire professionals who know what they are doing and if you are building this internally, ask your employees what they need to learn to better carry out their job responsibilities. eLearning can be just as effective in upgrading hard skills (task oriented or compliance based knowledge) or soft skills (communication, leadership, management, etc.). The key is making sure those skills are relevant.






Even if you have all the money in the world to throw at eLearning, you simply cannot bring the courses onboard fastenough for your business requirements if you build them in-house. By the time the course goes live, it’s original purpose andrelevance is most likely changed, or the time-sensitive need isgone, or much worse, it has severely impacted the business goals.


The solution:

Use generic eLearning materials and ‘layer on’ your tailored or customized needs. This addresses costs and timeliness issues.Believe it or not – this approach is often highly desirable but most eLearning developers don’t use it because they want to write and design everything – not very cost effective or efficient!


Helen Davis




Copyright © Indaba Global, Inc. 2012. All global rights reserved. Photocopying or copying by other means expressly forbidden without prior approval. No portion of this document may be paraphrased or distributed without the prior written approval of Indaba Global, Inc. or its officers. www.indaba1.com

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