How do you prove that investing in people development will deliver a better business? Chris Paterson outlines how to show a direct connection between learning practices and performance.
If people are an organisation’s greatest asset – as is often claimed – why do we still struggle to put a value on training?
It’s not as though organisations lack data to analyse the return on investment in employee learning and development. It is rare to attend a training course without being asked to complete a feedback form. But is it the right information, collected at the right time and analysed in the right way?
Too few know whether their training improves employee retention, boosts profits and sales or leads to happier customers. That is not a sustainable position.
Organisations in every sector from oil and gas to financial services, face an intensifying war for talent. Meanwhile, companies are looking to reduce employee numbers while ensuring the right specialists are in place to drive value. Yet, company boards are asking HR departments to trim training budgets. This means that there is ever more downward pressure on HR training spend and increased demands to prove a return on investment.
With this in mind, the case for evidence-based analytics – directly linking people’s performance to real business results – seems clear.
Exposing hidden links
Big data and advanced analytics can reveal hidden correlations between employees, customers, revenue and strategic business outcomes. Patterns in data can also reveal how learning and development affect employee performance.
Data can also help organisations understand the impact of training on employee attrition. A tailored training course might improve employees’ happiness at work, which in turn could lead to higher productivity and improved retention. Equally, a well-crafted training programme can help to identify where an employee and employer are no longer matched.
Case study: Financial services
We recently used evidence-based analysis to assess the success of the sales force at a financial services client. It wasn’t clear how some employees were consistently meeting sales targets yet others were performing erratically.
The data revealed different selling styles and behaviours in building teams of sales people which explained the variety of performance in the team.
We could prove this by drawing on financial reports and detailed demographic breakdowns. Taking the data, we built a series of sales-person ‘archetypes’ to show how different salesmen and women behaved – and therefore what made some more successful than others.
From that we identified the skills gaps and training needed to lift the team’s performance. The approach seems to be working, with a 15% increase in revenue growth since our work was completed.
Getting the basics right
To get the most out of a data-based approach to learning and development, there are a few things organisations have to get right.First, you need to be clear about the ultimate objective. For example, is it to increase sales, improve productivity, change culture or retain employees? Second, you must rise to the data challenge. It can be a huge task collecting data from different systems across the organisation. In addition it must be in a format that is consistent and can be easily analysed. You will also need the right skills in place to analyse it effectively.
Third, rather than analyse all of your learning spend at once, break it down into smaller parts and focus on key roles. Measuring the impact of training in just one area will quickly demonstrate the insights you will uncover in others, providing a flavour of the interventions needed to improve every learning activity.
This approach was taken by a global mining group that required strategically-minded chief financial officers but also needed to shrink hiring costs. Using data from several sources, including the group’s talent tracking system, detailed gap analyses were undertaken on individuals.
We designed and proposed a work-based programme, with role rotation, to build capacity and ultimately reduce the use of recruitment agents from 60% of hires down to 30%. The tangible benefits identified included annual savings of $550,000, which provided the case for a wider corporate project.
As data-based analysis proves its power across organisations, in everything from product design to client management, boards will become increasingly reluctant to sign off training budgets with a quick wave of the pen. HR should start marshalling their evidence.
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Senior Manager, People Powered Performance