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Perspectives on cost & effectiveness in online training

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by Clive Shepherd
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Managing a training department can be a difficult balancing act. You are expected to provide the volume of services required by the organisation to meet identified learning needs, to deliver those services effectively and to deliver them at an appropriate cost. All at the same time. In this article, Clive Shepherd shows how, by employing online learning appropriately, you can maintain this balance while forging ahead and providing a better service - delivering more learning, better learning and cheaper learning.

Contents
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Three ways to improve cost-effectiveness
Cheaper learning
Better learning
More learning
Drama in Berlin

Three ways to improve cost effectiveness
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Like any other manager, the person responsible for training in an organisation is always looking to improve cost-effectiveness. There are essentially three strategies that the training manager has to choose from, without allowing an imbalance to occur:

  • reduce costs (while maintaining current levels of effectiveness and volume)
  • improve effectiveness (while maintaining current levels of cost and volume)
  • increase volumes (while maintaining current levels of cost and effectiveness)

With any of these strategies, you can, effectively, 'have your cake and eat it' - you make gains without associated losses. There are many tactics that the training manager can employ to realise these strategies, but only one option that has the potential to crack all three nuts:

  • cheaper learning (reducing cost)
  • better learning (improving effectiveness)
  • more learning (increasing volume)

Used well, just maybe online learning can provide us with the best of all worlds. Used inappropriately, the same option has the potential to achieve negative results in each aspect of cost-effectiveness. Let's look more closely at the opportunities and dangers in each case: 
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Cheaper learning
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How should costs be measured?
It's impossible to make a fair comparison of costs if you are selective about the costs you count. To see whether online learning can save you money, you must account for costs at all stages in the project lifecycle:

  • analysis
  • design and development
  • promotion
  • administration
  • delivery
  • evaluation

It's also important to take account of indirect costs, which are nearly always the largest factor:

  • internal salaries and benefits of trainers, administrators, etc.
  • the use of internal facilities
  • student time and expenses in travel and training
  • the opportunity cost of student time

How can online learning help to save costs?
There is a number of ways in which online learning could save costs:

  • by reducing the time it takes to learn

The Hudson Institute of Indianapolis reviewed 20 years of research on CBT and found an average 40% time reduction.
In studies of six major companies, the Interactive Multimedia Association identified that training comprehension was 38-70% faster.

  • by reducing travel and accommodation costs
  • by reducing delivery costs

As an example, British Telecom claimed recently that it had already saved 1m through the deployment of online learning, even though it is only 1/7th through its roll-out.

In what situations would online learning not save costs?
Will online learning always save you money? Not in these situations:

  • where the design and development costs are too high for the size of the audience

Online learning will typically be more expensive to develop than classroom training but cheaper to deliver. To end up with cost savings, you must have a sufficiently large audience to share the costs of development. Of course, if you are using off-the-shelf online learning materials, the dynamics are different - you will not have to pay for development, but will have to pay for delivery in proportion to the size of the population.

  • if you provided highly individualised and intensive online tutoring

The low delivery costs of online learning arise where the principle approach is self-study. If you provide extensive tutorial support, the delivery costs rise accordingly and could even exceed those of classroom training.

The effect of cheaper learning
Let's see how, in a hypothetical case, reduced costs will affect your overall return from training. Here costs are reduced by 20%:

 

Before

After

Volume

500

500

Cost

500,000

400,000

Benefits

600,000

600,000

Return

100,000

200,000

Notice how savings in costs don't necessarily have to be achieved by cutting quality or reducing volume. As an example, Abbey National, a UK bank, justified a major investment in technology-based training by the cost-savings alone. Their aim never was to improve effectiveness or increase numbers. 
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Better learningspacer
How can effectiveness be measured?
Kirkpatrick (1975) identified four levels at which the effectiveness of training could be measured:

  • the reactions of learners to the training they have received
  • the extent to which learning occurred in line with the objectives for the training
  • the extent to which what was learned was applied back on the job
  • the difference that the application of new learning made to business results

Whilst all of these are important, the higher levels are what count most, although a great deal more work is required to gather valid and reliable results.

In what ways can online learning help to improve effectiveness?
The analysis by Thomas Russell, of North Carolina State University, of 248 different research reports, summaries, and papers relating to the effectiveness of different media consistently showed 'no significant difference'. It appeared that the quality of the design and implementation was more important than the medium.

However, the findings of the Hudson Institute were that students learn 30% more from computer-based instruction. The Interactive Multimedia Asssociation study showed learning gains 56% greater and content retention 25-50% higher.

How is that these gains in effectiveness can occur? It appears to be a combination of four factors:

  • individualisation
  • immediate constructive feedback
  • active learner involvement
  • an appeal to multiple senses

In what situations would online learning not improve effectiveness?
There are dangers when online learning is applied indiscriminately. In any of the following situations, online learning may result in less effective learning:

  • where the method is mismatched to the stage in the learning process, e.g. online learning may be alright for presenting the topic but not for practising it
  • where the method is mismatched to the learning style of the audience
  • where the method is mismatched to the type of learning, e.g. using online learning for psychomotor skills, such as riding a bike
  • where the method does not provide the right mix of media for the topic, e.g. to teach language skills may require audio; to teach face-to-face selling skills may require video

The effect of better learning
Coming back to our hypothetical model, here are the effects of 20% increased effectiveness on our returns. Again, there is no reason why improved effectiveness should also result in higher cost or reduced volume.

 

Before

After

Volume

500

500

Cost

500,000

500,000

Benefits

600,000

720,000

Return

100,000

220,000

Contents

More learning
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Why is volume important?
There are times when it would be extremely beneficial to increase the volume of training that you deliver:

  • when a large number of people has to be trained in a short time

This situation can occur when there is a major business change, such as the introduction of a new system. There is unlikely to be sufficient capacity in terms of trainers or facilities to train the whole population in the time available. If online learning materials are prepared in advance, they can then be delivered to virtually any size of audience simultaneously.

  • when there are many unmet training needs

It is not uncommon for a large proportion of identified needs to go unmet, particularly those that are in the minority.

  • when you want to reach new audiences

Perhaps you are looking to increase the reach of your training services. For example, Seb Scholler, of Sheffield College, saw online learning as a way of reaching out to new and untapped markets, not necessarily within the normal catchment area of the college.

In what ways can online learning increase the amount of training that takes place?
The main way that online learning can help to increase the volume of training is by improved accessibility - providing what is wanted, when and where it is wanted. With traditional training, you go to where the place where the training is conducted at a time to suit the trainer. With online delivery, you can choose to learn at home, at your desk, in a learning centre, or just about anywhere you happen to be travelling on business.

A study conducted on behalf of the UK Department for Education and Employment by Epic Group plc, in the Spring of 1999, showed that the number one driver for introducing online learning was accessibility. Incidentally, the same study also showed that, within five years, online learning would account for over 20% of all training, while the classroom would drop from over 50% to 30%.

In what situations could online learning actually reduce the volume of training?
There may be circumstances when online learning could actually reduce the volume of training:

  • where development times are over long and the need for training has passed
  • when the programme is poorly implemented and take up is low

The DfEE study (see above) showed how important it was to have the support of senior management and to properly manage the attitudes of trainers and trainees.

The effect of more learning
And finally, it's possible to increase the volume of training by making it more accessible to learners - and this doesn't have to reflect on cost or quality. Let's take one more look at our hypothetical example. Here the volume of training has increased by 20%:

 

Before

After

Volume

500

600

Cost

500,000

500,000

Benefits

600,000

720,000

Return

100,000

220,000

So, with the help of online learning, training can be made more cost-effective without making sacrifices. What's more it can contribute in all possible ways:

  • reducing cost
  • improving effectiveness
  • increasing volume

However, as we have seen, online learning is not a panacea and, where used injudiciously, it can actually harm the cost-effectiveness of our training. Care must be taken to add online learning to the mix of methods at our disposal and to use it only when it provides the best chance of achieving the results we require.
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Drama in Berlin
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This paper was to be presented at Online Educa in Berlin, November 1999. Due to an unforgivable mix-up about the departure airport (no names, no pack drill) and the even less forgivable inefficiencies of British Airports Authority, the author arrived in time only to make his apologies and was forced to spend two wonderful days in Berlin sightseeing without the satisfaction of having first done any work. It's a tough life. 
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