Leading Results director Doreen Yarnold says development in people is only ever a cost if organisations do not orchestrate their development programmes with ROI in mind.
Controlling costs is a critical part of good commercial practice for all businesses no matter how large or small.
Yes of course it is, I hear you say.
Organisations and their boards spend many hours each year discussing and deciding upon capital investments that will support their operations to meet growing demands.
A new system, or new software updates, new plant and machinery, new facilities and outlets and the like, these types of investment are all worthy considerations that hold a permanent and ongoing place at the boardroom table, and rightly so.
It is a strange phenomenom that so many organisations do not view human capital investment in the same way.
In fact, they do not view staff and team development as an investment at all, they view it as a cost. The lost production when individuals are redirected to undertake development activities is calculated in those exact terms: i.e. lost production of that person’s time whilst ‘off the job’.
For most organisations, people are by far the biggest resource they have, and of course this also mean they are the biggest cost.
At Leading Results, we are true advocates of getting the headcount right to meet business needs. A healthy balance that allows the business enough fat to grow but not so much that the costs of employment eat too far into profits.
We see various situations when we are working with businesses.
Some companies don’t have enough people, which puts an enormous strain on those who are there doing their best to keep it together. And don’t even mention the option of development or training for anyone because there just isn’t the capacity to accommodate it!
This leads to tired, stressed and often burned out people who eventually vote with their feet and leave for pastures new.
Then there are those who have the right number of people but never or rarely invest in development of those people and those same people become stale, less competent, and not as engaged as they could or should be.
Development in your people is never a cost if it is considered and planned in the right way.
The key question to ask when regarding development is: Will this development deliver a Return on Investment (ROI). The answer to this question should inform your decisions. How you answer that question though is not something that should be taken lightly.
Some key questions to consider in arriving at an eventual answer are:
- Have you assessed your management team’s current skill levels?
- Does each manager and staff member have specific objectives. Not just KPI objectives but behavioural ones too?
- Do you provide managers and staff with the means of achieving those objectives, i.e. the right tools for the job and the knowledge and skills to enable them to do their job to a high standard?
- If you invested in training how would you measure what ROI you would want it to deliver?
Taking the time to consider these questions and working through them one by one will enable you to make better quality decisions regarding investing in your managers and employees alike.
Most of the Leadership Programmes we run for our clients have business improvement projects that run alongside the leadership development training we provide. These projects have to improve the business in some significant way. There is a calculable ROI that is clear and specific for each person within their area of responsibility.
We do not allow ‘soft’ business improvements which do not directly link to hard business outputs. It is fine and admirable for them to achieve the ‘soft’ elements within their project but they must have that important link, as it is this that drives the ROI.
We teach them the important principles of driving results through their people. Gaining buy-in, increasing engagement, holding people accountable for the job that they do. As well as leading their teams so that respect, trust and credibility are earned along their journey.
Development is only ever a cost if organisations do not orchestrate and engineer their development programmes with ROI in mind.
If you knew up front that a programme would cost you, for example £10,000 per cohort, but would provide an £80,000 ROI per cohort, why wouldn’t any commercially savvy executive make that investment?
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