Measuring the ROI of Your HRD Programs
First in a Series by Chad Checketts
Yes, the government has finally said the "R" word
... the first sign the recession is almost over. Most businesses
have endured downsizing in an effort to prop up profitability.
Now, as the wheels begin again to slowly gain momentum, some
of the pressure seems to be easing.
During this downturn, Human Resource Development expenditures
decreased in many organizations. Yet, surprisingly, a savvy handful
actually increased HRD activities and associated expenditures.
The reason? They recognize a major purpose of employee development
is to modify behaviors in support of profitability. And they
have found a way to prove how the best HRD programs generate
a return on investment and impact profitability.
Especially when you are expected to do more with less, you can
make that "less" be more productive. The goal of every
HRD activity should be to give bottom-line results, thus fortifying
our value to any organization.
Changing the Paradigm
Unlike the "perk" it was once perceived to be, leadership
and employee development today are seen by many more organizations
as contributors to profitability. Making them part of the solution to
economic slow times can and should make HRD bulletproof during
recessions.
To do this, the outdated paradigm of considering employee education
as a reactive support function must be changed. And those of
us in the field can help shift the focus to solidify the perception
of HRD as a business asset by effectively aligning it against
bottom-line issues and concerns, like any other business asset.
Those organizations that view employee development, not as a
luxury, but as a means to transfer necessary knowledge and initiate
change, have the best chance of weathering downturns.
Designing Your Employee Development for Measurable Results
When you begin planning for measurement, the first step is to
establish objectives. Asking all the questions up front will
assure your programs deliver the results you need.
- What should we measure and how can we design simple systems
to aid in demonstrating those results?
- How can we quantify results that are meaningful to management
and show real business impacts?
- Where and how should we market results?
- How can we enhance broad ownership of the employee development
imperative?
As with any business project, measuring your ROI must be broken
down into manageable segments. Your answers to the following
questions will go a long way toward building a solid foundation
for measuring the return on HRD expenditures in your organization.
Focus
Is employee education sufficiently focused on bottom-line issues?
Have we aligned ourselves with relevant business problems and
demonstrated our abilities to focus resources and effort against
them? Does the organization recognize our focus and have they
had sufficient input to own this focus? What kind of results
does management expect? What kind of results do we produce?
Analytical Rigor
Is the proof of results that management needs too difficult
to measure or demonstrate? Are the systems most frequently used
in business (accounting, return on capital, etc) compatible with
results we produce? Is the rigor required to measure HRD output
more costly than the benefits it is meant to demonstrate? Do
we currently have HRD impact measurements in place? What kinds
of things do we measure?
Ownership
Do we produce results that are easily communicated in terms
of dollars and cents, the language of management? Is it easy
to quantify our results in terms readily accepted and understood
by others in management? Have we included the right individuals
in our assessments and plans to ensure ownership at appropriate
levels? Are "soft" issues sufficiently quantified and
linked to bottom-line impacts?
Marketing
Do we know who the audience is for results communications? Have
we spent so much time delivering that we don't have sufficient
time to effectively market our successes or impacts? To whom
do we report results? How often do we report results? What are
the most effective methods of demonstrating these impacts?
Over the next 2 issues of The Quest Leadership Edge,
we will investigate very specific things you can do to enhance
Focus, Analytical Rigor, Ownership and Marketing of your HRD
impacts. In addition, we'll be happy to have your questions and
input.
Please email us at info@questcorp.com for more information, or if you have
questions or comments on this topic.
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