return on investment and people development tom smith
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Return on Investment and People Development
Tom Smith
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About Lane4“The aim of this establishment is to create an environment where champions are inevitable”
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“Like other leaders, many HR executives hold flawed and incomplete beliefs. They fall prey to second-rate evidence, logic and advice which produce suspect practices, and in the end, damages performance and people”
Pfeffer and Sutton (2006)
Hard Facts, Dangerous Half-Truths and Total Nonsense
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The Value of Top Talent
LowPerformers
SuperiorPerformers
1SD
Good
Low Complexity Jobs 19%Moderately Complex Jobs 32%Highly Complex Jobs 48%Sales 48-120%
Hunter, J.E., Schmidt, F.L. and Judiesch, M.K. (1990) Individual differences in output variability as a function of job complexity. Journal of Applied Psychology, 75; 28-42
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The Risk of Workforce Disengagement
13%20% 29% 27%
11%
“The Disaffected” “The Agnostics” “The True Believers”
Leaning towards disengagement
NeutralLeaning towards
engagement
The Danger of Non-EngagementPoor performers who frequently put in minimal effort – the “disaffected” – exhibit strong emotional and rational non-commitment to day-to-day work, the manager, team and organisation.
A Risk and an OpportunityThe “agnostics” exhibit only moderate commitment to their work, teams and organisations. The “agnostics” are capable of moving into either the “disaffected” or the “true believers” categories; many in fact already lean towards one of the other
Source: Corporate Leadership Council Research (2004)
The Reward of EngagementHigh performers with low retention risk – the “true believers” – exhibit very strong emotional and rational commitment to their day-to-day work, teams, managers and organisations
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What strikes you about the two studies?
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Barrier Mean Score
Difficult to calculate ‘true’ financial ROI 4.98
Insufficient resources available 4.77
More useful / relevant criteria 4.41
Time consuming 4.19
Don’t believe possible to calculate ‘true’ ROI level 3.78
There is no requirement 3.23
Barriers to using ‘hard data’ to measuring HR / L&D activities
Less to do with any disinterest in measuring bottom line impact, more to do with the difficulty of doing so…
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Difficulty measuring
ROI
HR manage transactions
Lack of commercial
impact
Simple measures of behaviour
Indirect measure of
impact
ROI Vicious Circle
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How do you currently measure the impact of what you do in HR?
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Level 4:Organisational
Performance
Level 4:Organisational
Performance
Level 3;Behavioural Change
Level 3;Behavioural Change
Level 2:Learning
Level 2:Learning
Level 1:Reaction
Level 1:Reaction
Kirkpatrick’s Model of Training Evaluation
Kirkpatrick (1959)
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‘’Hold HR accountable: do not accept measures of activity - things like positions filled, training hours delivered and appraisals completed on time. Require measures of accomplishment that reflect business success: sales or revenue, profits, productivity, customer retention and so on’’
Kaufman (2006)
‘’How to Fix HR’’ Harvard Business Review
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Change the questions we ask….
Today’s Questions• What does the
employee survey suggest we do?
• What works at GE?• What does the business
need?• How much does it cost?• What other data do we
have?
New Questions• What do the employee
behaviours suggest we do?
• What works here?• How does what our
business needs fit into the overall system?
• What do patterns over time tell us?
• What data do we need?
Based on Nalbantian et al, 2004
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ROI - Leadership Development Examples
We specialise in those industries with the key traits of professional sports – constant pressure and the need to deliver immediate and tangible results We specialise in those industries with the key traits of professional sports – constant pressure and the need to deliver immediate and tangible results • Working with Royal Mail top 90 senior managers
• 18 month programme aimed at reducing bureaucracy and managing transitions
• 25% improvement in management confidence to effect change
• “Making Sainsbury’s Great Again” Leadership programme for top 1000 business leaders
• Internal capability building of 50 accredited coaches
• Staff perceptions of the new leadership behaviours up 11% to 76%
• Development of Top 150 in CCE over 5 year period
• Aimed at improving organisational confidence• 60% reduction in voluntary attrition and
improved engagement
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ROI - Leadership Development Examples
• 4x2 day workshop in High Performing Leaders Programme
• Significant improvement in 180 leadership scores (pre vs post)
• EES scores highest in participating businesses
• Development of UK Dealerships Management teams
• Aimed at improving sales and after sales service ratings
• Difference in participating vs non-participating dealerships
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Discuss examples of ROI work within your organisations…..
What will you do differently next time?
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Conclusions
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Conclusions
• Measurement of ROI needs to change from retrospective and separate to proactive and integrated
• HR initiatives should be integrated into the business as a whole with shared accountability for the results
• Measurement of ROI should be used as a feature of feedback loop to ensure that HR initiatives continually and positively impact the organisation
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www.lane4performance.com
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