Return on Investment and
People Development
Tom Smith
About Lane4
“The aim of this establishment is to create an
environment where champions are inevitable”
“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
The Value of Top Talent
1SD
Low
Performers
Superior
Performers
Good
Low Complexity Jobs
Moderately Complex Jobs
Highly Complex Jobs
Sales
19%
32%
48%
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
The Risk of Workforce
Disengagement
The Danger of NonEngagement
Poor performers who frequently
put in minimal effort – the
“disaffected” – exhibit strong
emotional and rational noncommitment to day-to-day work,
the manager, team and
organisation.
A Risk and an Opportunity
The “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
“The True Believers”
“The Agnostics”
“The Disaffected”
20%
29%
The Reward of Engagement
High 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
27%
11%
13%
Leaning towards
disengagement
Neutral
Leaning towards
engagement
Source: Corporate Leadership Council Research (2004)
What strikes you about the
two studies?
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…
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
Indirect
measure of
impact
Simple
measures of
behaviour
Lack of
commercial
impact
ROI Vicious
Circle
Difficulty
measuring
ROI
HR manage
transactions
How do you currently
measure the impact of
what you do in HR?
Kirkpatrick’s Model of Training
Evaluation
Level 4:
Organisational
Performance
Level 3;
Behavioural Change
Level 2:
Learning
Level 1:
Reaction
Kirkpatrick (1959)
‘’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
Change the questions we ask….
Today’s Questions
New 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?
• 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
ROI - Leadership Development
Examples
We specialise in those industries with the key traits of professional sports –
• Working
with to
Royal
Mail
top 90 senior
managers
constant pressure
and the need
deliver
immediate
and tangible
results
• 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
ROI - Leadership Development
Examples
• Development of UK Dealerships Management teams
• Aimed at improving sales and after sales service ratings
• Difference in participating vs non-participating
dealerships
• 4x2 day workshop in High Performing Leaders
Programme
• Significant improvement in 180 leadership scores (pre vs
post)
• EES scores highest in participating businesses
 Discuss examples of
ROI work within your
organisations…..
 What will you do
differently next time?
Conclusions
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
www.lane4performance.com