The ROI of Ethics and Compliance Training

September 23, 2020
LRN Corporation

Measuring the ROI of ethics and compliance training programs has always been difficult for learning teams. Unlike investments in sales, marketing, IT, and logistics, the money a business spends on ethics and compliance training is hard to translate to a positive impact on the bottom line.

U.S. companies spent around $83 billion on employee training in 2019. Considering this number, and the fact that mid- to large-sized businesses spent anywhere from $3.7 to $13 million on their own training in 2016 alone, it’s safe to assume that ethics and compliance training is a big line item in the budgets of enterprises year after year, and worthy of careful measurement. Even so, figuring out the ROI puzzle has been daunting.

While evaluating these programs’ ROI effectiveness may be a challenge, there are many advantages to doing so. And it all comes down to using a better approach to measuring a program’s success.

ROX: The New ROI of Ethics and Compliance Training

In an article by digital communication and social media expert Jonas Bladt Hansen, the author makes a strong case for having companies measure return on experience (ROX) in addition to, or in place of, ROI. Quoting from the article directly, Mr. Hansen argues that “ROX measures … correlations that have decisive influence on the customer and employee experience – and which can ultimately have a positive effect on the bottom line”.

In simpler terms, while the financial advantages of ROX aren’t as obvious as they are with ROI, measuring your company’s ROX can still result in a positive financial impact. This is especially true when you consider the costs that surround common issues like company culture, behavior, employee retention, and other areas critical to a company’s success.

But with ROX, the question of how to find and measure qualitative data then turn that data into actionable items for learning teams remains. Fortunately, the solution to this problem is something your organization is already doing – or can implement quickly.

Measuring ROX in Your Training Program

Here are a few things to look at when measuring your company’s ROX and how it can ultimately have an impact on your bottom line.

Employee Turnover and Productivity

If your company has experienced high turnover or poor productivity, it’s probably a sign that employee morale is suffering. Ethics and compliance training programs affect company culture, making it all the more important for teams to look at whether these programs help employees enjoy their jobs and work more collaboratively, or don’t quite deliver.

Low employee morale comes at a high cost for businesses. In addition to the expense of hiring, onboarding, and training new employees, the losses a company experiences by having a disengaged workforce can be significant. In fact, a report by SHRM states that replacing a departing employee can cost companies anywhere from 60-90% of the employee’s annual salary, and that total costs of a single turnover can push it near 200%, which only drives home the importance of taking into account employee experience – both in training and when calculating ROI.

Knowledge, Skills, and Abilities (KSAs)

An employee’s knowledge, skills, and abilities (KSAs) are a key metric for HR and learning teams, helping to assess an employee’s qualities and how they relate to their position. The goal of ethics and compliance training is to raise KSAs through learner engagement, providing employees with new knowledge, skills, and abilities that translate into more productivity and better workplace behavior.

In terms of measuring ROX, learning teams have several options. Beyond using general or role-based competency and knowledge recall assessments, learning teams can incorporate integrity tests, situational judgment tests, and emotional intelligence tests to identify gaps in training programs and evaluate learner engagement. As KSAs improve, employee output generally improves as well, which can also have an added effect on creating a more positive – and ethical – company culture.

Company Culture and Values

Does your company offer a recognition program that sheds light on how well employees embody the organization’s mission and values? If not, you could be missing out on a key ROX metric that provides deeper insight into your company culture.

By developing lead measures of employee behavior, and providing incentives to employees that openly practice integrity-based and team-based skills at work, employee performance is maximized, company culture gets a natural lift, and your organization’s bottom line should experience the ROI results it’s looking for. And it can easily be measured by comparing the number of incentives given to employees, whether that’s month-over-month, or even year-over-year as the training and incentive programs mature. As numbers go up, you can be sure it’s paying off with a more positive and engaged workforce.

Interactive Services is a leader in helping organizations create more ethical cultures through our award-winning ethics and compliance training programs, which are designed to inspire employees to do the right thing, even when nobody’s watching. Discover how our training programs can help your business boost its ROX and ROI by signing up for our free 7-day trial!

About the Author

LRN Corporation

Ethics and compliance leader providing tools, education, and advisory services for global companies to inspire principled performance. LRN’s overall approach recognizes the inherent limitations of rules and regulations in influencing behaviors. In our view, focusing on actions that help build and maintain a values-based culture will mean more compliance and reduced costs as a result of tangible and sustainable behavioral change.

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