Talent development programs are intended to improve business outcomes by providing employees with new knowledge and skills that will increase productivity or decrease risk. If employees take training that they cannot or will not use on the job, dollars that could be invested elsewhere are wasted; This is called Scrap Learning. In this post, we will define Scrap Learning and show how it’s calculated and monetized, so you can use this measure to identify and reduce wasted development program dollars at your company.
What is Scrap Learning?
Scrap learning is a term used in the context of employee training to describe the amount of learning content that has been delivered but will not be applied by the learner on the job. Essentially, Scrap Learning represents wasted training time and dollars.
Scrap Learning is a standard measure of training effectiveness and is expressed as a percentage. It serves as a leading indicator of application and value that can be monetized. The Scrap Learning rate can be calculated by asking learners what percentage of the course material they plan to apply back on the job, then subtracting that from 100%.
For example, if learners indicate that they will use 60% of the content they learned in a training class on the job, the Scrap Learning rate for that class is 40% (100%-60%). If the training class costs the organization $10,000 to deliver, $4,000 of that cost is considered waste. L&D organizations that consistently track Scrap Learning can take efforts to decrease it and reduce this waste, optimizing the impact of dollars spent on learning.
Why is Scrap Learning Important?
Scrap Learning is important due to its scope and the risks that unchecked Scrap Rates pose to the health of the organization and the reputation of the L&D department. A 2014 study conducted by CEB found that the typical Scrap Learning rate was 45%, and studies by Rob Brinkerhoff and others have found Scrap Rates of 80% or more. Imagine investing $10 in the stock market and only getting $2 back; you would feel like that’s a bad investment, right?
In a corporate training environment, some Scrap Learning is inevitable; there is no way to individually tailor every learning experience to every employee so that they use 100% of the content they learn from every class they take. However, Scrap Learning can be managed and improved through sound measurement, analysis, action planning, and continuous improvement practices.
How to Calculate the Cost of Scrap Learning in Your Organization
What does Scrap Learning cost your organization? Calculating the cost of Scrap Learning is easy if you have access to the proper data.
To get a general idea of the cost of Scrap Learning to your organization, start by calculating it at the organizational level. You need to know two things:
- The total cost of all development programs conducted during a period, such as a year. This should include administrative, development, delivery, technology, travel, etc.
- The Scrap Learning rate during the same period
How to calculate the cost of Scrap Learning:
Multiply the total cost by the Scrap Learning rate. For example:
- Total cost of all programs (annual): $2,000,000
- Average Scrap Learning rate for the year: 45%
- 2,000,000 X .45 = $900,000
The cost of Scrap Learning to your L&D organization is $900,000 for the year.
Now consider what will happen if you take action to reduce the Scrap Learning rate. Using the example above, if costs remain the same next year and your organization improves (reduces) the overall Scrap Learning rate by 10% points to 35%, the cost of Scrap Learning to your L&D organization will be $700,000. That’s an improvement of $200,000 in value delivered against the L&D budget.
Based on ATD benchmarks on average training investment per learner reported in 2019, the average annual training spend was $1299 per learner. The average organization with 5,000 employees and a 45-80% Scrap Learning rate is losing the equivalent of $2.9 to $5.2 million to wasted training each year.
Two things to keep in mind when talking about savings from Scrap Reduction:
- The number as it is calculated above is conservative because the formula does not consider the cost of the employees’ time to attend training, which represents an opportunity cost to the company.
- It is assumed that the benefit from the Scrap Learning rate reduction will be reinvested into the L&D department, allowing you to do more with the same budget. In some cases, Scrap reduction plans will result in direct cost reduction by cutting programs or ending selected vendor contracts. Most typically, the benefit will be indirect, resulting from increased learner productivity and performance because they are applying more of what they learned on the job. As Scrap Learning rates go down, another measure, the Estimated Performance Improvement due to training (EPI), tends to increase.
The Scrap Learning rate for a specific program can be calculated if you can isolate the total cost of running the program in question and know the Scrap Learning rate for that program. You’ll have to make some assumptions, such as the percentage of overall administration costs allocated for the program. This is ok, just remember to document the assumptions and the methods you used to derive the numbers.
Due to the challenges related to calculating costs on a program by program basis, L&D organizations generally monetize Scrap Learning at the organization level, but track and monitor the Scrap Learning rate at the course or program level. Managers can then develop plans to reduce the Scrap Learning rate for specific programs. For example, identifying high-volume courses with high scrap and working to reduce the Scrap Rates of those programs will impact the organization’s overall average.
Once you know your Scrap Learning rate, how do you know whether it’s good or bad? Benchmarks provide helpful context. A typical Metrics That Matter (MTM) customer decreases their Scrap Rate by 12-15% points within the first year of using MTM and can benchmark their Scrap Rate against other similar organizations and course types.
Scrap Learning is a useful metric for L&D management and provides a simple metric to focus on for improvement. If you know your annual spend or last year’s average training investment per learner, you can easily calculate what Scrap Learning may be costing your organization. Measuring Scrap Learning will help your organization identify opportunities for improvement, demonstrate your commitment to delivering programs that impact business outcomes, and enhance your reputation for responsible stewardship of company resources.
Your organization can reduce Scrap Learning and increase your strategic impact with Metrics That Matter. Learn more here.
Corporate•Employee Journey Analytics•L&D effectiveness•Metrics That Matter•