Demystifying L&D Benchmarking: A Guide to Measuring Success

When measuring learning effectiveness, or any business outcome, one of the top questions to ask is always, “What does success look like, and how will we know?” One of the reasons customers choose Explorance Metrics that Matter (MTM) as a solution partner is that we can answer both of those questions. How, may you ask? Read on and discover the importance and usage of learning and development (L&D) benchmarking.

What is L&D Benchmarking?

Simply put, benchmarking is a strategy and process that involves comparing an organization’s operations, processes, and products against those of other teams or companies to gain insights and identify areas for improvement. Your company is already doing this throughout the organization in various functions and manners. Examples may include:

• Revenue per employee
• Growth rate
• Cost per lead
• Order fulfillment efficiency
• Customer acquisition cost
• Time to hire

Any Key Performance Indicator (KPI) that your company chooses to measure, and monitor is eligible for a benchmark to compare how that metric stacks up against others in your industry or in a particular function. In the training industry there is the ATD State of Industry report that is published annually, illustrating metrics such as cost per learner, L&D practitioners per company employee, budget sizes and more. There is also the APEX award that ranks the top 100 L&D organizations against several categories and metrics, allowing companies to “benchmark” how their L&D groups stack up against others.

All Benchmarks Are Not Created Equal

While benchmarking is a valuable practice, it comes with its fair share of challenges, one of which is identifying the right benchmarks and, with that, knowing the sources and validity of the data. Choosing relevant benchmarks can be tricky. Organizations need to identify the right metrics and sources for comparison and ensuring accurate and reliable data is crucial for meaningful comparisons.

When looking to choose benchmarks, organizations need to answer questions such as:

• Where does the benchmark come from?
• How is the KPI or metric calculated, and is it an industry standard?
• Does the metric or benchmark make sense for your business?
• How many data points make up the benchmark? Is it one or two companies or a dozen?
• Is the comparison against a few hundred data points or thousands?
• How often are benchmarks updated?

A simplified process for identifying and choosing benchmarks could look like this:

1. Identify Metrics and Goals:
   • Determine what you want to measure (e.g., sales, customer satisfaction, instructor effectiveness, learning application).
   • Set clear goals for your metric. This could start out as an overall average over a period of time.
2. Select Benchmarking Source/Partners:
   • Choose organizations or processes to compare against.
   • Consider factors like industry, size, and performance.
3. Collect Comparative Data:
   • Obtain data from benchmarking partners (such as Explorance Metrics that Matter).
   • Compare performance metrics.
4. Gap Analysis and Improvement Planning:
   • Identify gaps between your performance and benchmarks.
   • Develop action plans to close those gaps.
5. Implement Changes:
   • Execute improvement initiatives based on benchmark findings.
   • Monitor progress.
6. Evaluate and Adjust:
   • Continuously assess results.
   • Adjust strategies as needed.

Using Benchmarks Effectively

Benchmarks are used to compare performance against similar groups, functions, and metrics to show where gaps might exist and where performance needs to improve. At Explorance, we call this “managing by exception.” By utilizing a benchmark as a performance goal, a company can immediately see how they are performing, show trends, and quickly identify where they might not be meeting or exceeding the benchmark. The gaps between your data and the benchmark are the exception and tell you where you might want to spend resources to improve. If there are several areas that have gaps, then you will need to prioritize based on the KPI, criticality to the business, cost, and effort to close the gap.

Quick tips for successful benchmarking include:

• Define Clear Objectives: Know what you want to achieve.
• Choose Relevant Metrics: Focus on what matters.
• Involve Stakeholders: Collaborate across teams.
• Regularly Update Benchmarks: Keep pace with changes.
• Learn from Leaders: Study industry best practices.

How Explorance Metrics that Matter can Help

Taking the quick tips above, here is how Explorance MTM can help you choose and use benchmarking to improve learning effectiveness in your organization:

• Define Clear Objectives: Know what you want to achieve with relevant metrics.
  • When it comes to benchmarking learning, Explorance Metrics That Matter’s Predictive Learning Impact Model™ establishes statistically significant key metrics aligned to learning effectiveness, application, and performance improvement, including NPS and our own proprietary Scrap Learning metric.
• Learn from Leaders: Study industry best practices.
  • Explorance Metrics That Matter has been benchmarking KPIs for over 15 years across dozens of industries, hundreds of organizations, and millions of data points. No other tool or company has our breadth and depth of benchmarking data or capabilities.
  • MTM has established benchmarks by industry, course type, and job role types and has a detailed catalogue available describing the various benchmark types and rigour that go into each. For example, a quick examination of our company-level benchmarks reveals the following:
    • At least five companies should be included in the benchmark.
    • Each company should have 3,600 evaluations within the past year as a minimum data collection standard (roughly 300 per month).
    • No single company should contribute more than 40% of the data to the benchmark. If the number of companies in the benchmark is between five and ten, no company shall contribute less than 10% of the data to the benchmark.

• Involve Stakeholders: Collaborate across teams.
  • Not all stakeholders will understand all benchmarks, especially business partners who may not speak the language of L&D. Explorance can help you communicate the benchmarks, explain how they are used and what they can illustrate, and gain buy-in to your benchmarking approach with stakeholders inside and outside of the learning function.
• Regularly Update Benchmarks: Keep pace with changes.
  • The Explorance Metrics That Matter benchmarks are updated every quarter and include twelve rolling quarters of data. Explorance constantly studies the benchmarks to communicate trends, changes, and impacts.
  • MTM users can dynamically switch, change, and apply different benchmarks and even use two benchmarks at the same time.

Key Takeaways:

In summary, benchmarking is a powerful tool for organizations seeking to improve their performance. By comparing your learning programs to other teams or companies, you can gain valuable insights and identify areas for enhancement. Here is what you can do:

1. Understand the Purpose: Fully grasp the purpose and use of benchmarking. Recognize that it is not just about comparing numbers; it is about achieving a competitive advantage by learning from best practices.
2. Differentiate from Competitor Research: Distinguish benchmarking from competitor research. While both have their place, benchmarking focuses on best practices and continuous improvement, whereas competitor research may be more limited in scope.
3. Choose Relevant Metrics: Select relevant metrics for comparison. Whether it is instructor effectiveness, learning application, or learner performance improvement, ensure that the benchmarks align with your industry or specific function.
4. Validate Data Sources: Be cautious about data sources. Not all benchmarks are created equal. Verify the validity and accuracy of the data you are using to make informed decisions.

Remember, successful benchmarking is not a one-time event—it is an ongoing process that can drive meaningful improvements in your organization. Choosing a partner like Explorance Metrics that Matter for your learning effectiveness benchmarks lets you worry less about what and how to benchmark and focus more on where you should be: analyzing data for insights and creating action plans for continuous improvement of your learning.

Download Explorance’s Predictive Learning Impact Model™ 2.0