Question:

I have been reading Rita Smith’s new book, Strategic Learning Alignment. She makes the point that learning organizations need to make a business case for learning. What about learning transfer? Is it possible to make a business case for investing time and resources in learning transfer?

It is, and you should.

We agree whole-heartedly with Smith when she writes: “The only reason that learning functions exist is to drive business outcomes” (p. 10). Training and development drives business outcomes by equipping people with new skills and knowledge, that when applied to their work improve performance, resulting in better service, higher revenues, improved quality and so forth, which collectively produce a competitive advantage for the organization (Figure 1 below shows the path by which learning creates value).

It is clear from the sequence of events that realizing the business benefits depends on BOTH high-quality training to impart vital skills and knowledge AND on the transfer of those skills to the work of the individual and firm. When there is no transfer, there are no benefits.

Unfortunately, transfer is the weak link in most corporate training initiatives. For example, ESI recently polled 3,200 learning professionals about the effectiveness of learning transfer. The majority felt it was less than 50%, many much lower. In other words, in their organizations, more than half the training effort is wasted for lack of transfer to the job.

This, improving learning transfer, represents a huge opportunity for training and development to increase the value it delivers. That is why a recent research report by Bersin & Associates stated: “Based on our research, we expect learning transfer support to be a major differentiator for high-impact learning organizations in the next 10 years.”

The Payoff

Improving learning transfer makes sound economic sense. Here is an example based on not atypical numbers: XYZ company runs a program for 100 participants that costs $1,000 each. When they evaluate the results three months later, they find that only 20% of the participants applied what they learned; but those that did generated, on average, an additional $6,000 each for the company in new revenue and cost savings. So, the ROI is good: 20% on this investment of $100,000 (Table 1).

Table 1: ROI Analysis for Program A

The learning team, however, is convinced they can do better. So, they invest some of their time and resources in a learning transfer support system and materials. The effort increases the cost per participant by $200 each or 20%. On analysis three months later, they find they have only increased the transfer rate from 20% to 30%. So, the question from a business leader’s point of view is: Was spending the extra money worth it?

Now let’s look at the analysis for Program A+ (the same program + support for learning transfer) in Table 2.

Table 2: ROI Analysis for Program A+

The results are quite startling. Increasing the cost of the program 20% by investing in learning transfer increases the ROI two-and-a-half times! Note that the value per participant who used their learning did not change; it shouldn’t since the course was exactly the same. All that changed was the percent of people who diligently applied what they learned.

We often hear learning professionals say that they have no additional budget for supporting learning transfer. If that is true, then an alternative that should be evaluated is: What would happen if you trained fewer employees and used the cost savings to support learning transfer? Would that produce better results than continuing to train so many with such a low yield?

Let’s do the math. If we use the preceding example of Program A+ (with support) but instead of adding budget for learning transfer, we reduce the number of participants trained so that we stay within the $100,000 allocated, then the results would look like this:

Table 3: ROI Analysis for Program A+ with Fewer Participants

Surprisingly, this approach produces both a higher total dollar return as well as a higher percent ROI than the base case (the program with no transfer support). In other words, you can often create greater value by training fewer people and investing the savings to make sure that those you do train put their learning to work.

What accounts then for the huge increase in value realized? It is because the current level of transfer is so low. In most programs, 75% or more of the potential value goes unrealized (Figure 2 below). We only need to capture a small portion of the unrealized value to dramatically improve the overall outcome.

Don’t take our word for it. Prove it to yourself by plugging numbers for your own training program into our free online Impact Calculator.

The bottom line is this: There is a strong business case for investing some of next year’s budget and time in support for learning transfer. The investment will be repaid many times over in superior results. Indeed, if business managers appreciated how much value was being “left on the table,” they would want to know why you aren’t investing in learning transfer.

Want to learn more?

Attend ASTD’s Learning Transfer Conference in November, where you will have the opportunity to do a deep dive into creating a healthy transfer climate and exchange best practices with learning professionals around the country. To learn more about using the learning transfer management system ResultsEngine®, click here.