Moving Beyond ROI: How Can We Measure the Real Impact of People Development?

ROI Strategy

By Juliane Sterzl

Working environments remain in a state of flux for many organisations. Hybrid working and digital transformation are the two main challenges for businesses as they adapt to new ways of working, regardless of industry. Add to this a difficult economic context, and organisations find themselves in a challenging situation when it comes to people development.

Within this context, businesses are looking for high returns on every aspect of their operation. People development is no different to any other business activity, likely to be experiencing even greater scrutiny from senior executives as they embark upon cost-cutting measures. HR leaders must equally scrutinise their strategies, in order to gain the highest possible efficiency for the lowest possible cost. 

Investment in people development during economic downturn

As businesses look to make cutbacks, many departments within organisations will undoubtedly experience budget cuts in the months to come. Companies are having to do more with less whilst riding the waves of economic uncertainty, and its often internal resources such as HR which are first to be cut in times like these. HR leaders therefore need to be savvy, selecting tools and strategies that provide the most benefit to the workforce.

Now more than ever, HR leaders are required to make the case for the value of people development alongside other elements of their broader HR strategy. To do so, leaders can consider both the immediate economic value, and the longer-term organisational benefit. 

Achieving economic value from people development 

Measuring the business impact of any investment is critical for assessing the effectiveness of initiatives in both the short and long term. Senior leaders must make informed decisions about which programmes are worth maintaining, and which should be cut. HR leaders are often therefore asked to bring figures on the economic value of their strategies to the table when interacting with senior leadership. 

  • Consider people development partners that can prove their return on investment (ROI).

Assessing the return on investment (ROI) of people development is complex, as its impact is often very long-term, touching a range of aspects within a business. Luckily, there are people development providers out there that have engaged with external analysts, to assess the value of their offering. HR leaders should consider bringing these figures to conversations with senior leadership, as they offer important strategic insight.

  • Align people development with business objectives.

Beyond ROI, each individual organisation will have its own estimates and factors to consider when it comes to assessing the economic value of people development. For example, if an organisation is seeking to increase profits through sales, HR leaders should adapt their strategy to focus directly on developing the personal efficacy of their sales team. Conversations with senior leadership are always much smoother when HR programmes are aligned with business strategy.

Moving beyond ROI: The case for upskilling 

Organisations must nonetheless remember that economic return does not provide the full picture when it comes to the impact of people development programmes. A particularly pertinent example of the wide-reaching impact of people development is upskilling and reskilling, cited by business buyers as the number one strategy to support business change in a recent report. HR leaders must therefore be able to make the business case for upskilling, to reassure senior leaders that people development programmes are worthwhile.

  • Remember the skills shortage

It is crucial that senior leadership are aware of the current labour market context and how it relates to people development. The majority (87%) of employers are currently struggling to fill positions in their organisation, meaning that it is almost always going to be easier to reskill an organisation’s existing workforce than to hire externally. Making an investment in people now will result in a more effective and efficient workforce in the months to come.

The benefits of offering a high-quality employee experience

Employee experience should also be considered when measuring investments in people development, as, above all, these measures have people at their heart. Organisations are under pressure to be competitive on employee experience, especially as job moves hitting a record high earlier this year.

  •  Encourage employee retention

To put it simply, in today’s labour market, employees are liable to move elsewhere if the employee experience isn’t up to scratch. People development forms a central part of employee retention, as employees seek a wide range of benefits from their employer. If organisations have a strong learning and development offer, that is communicated to new and existing employees alike, retention becomes much easier.

  • Build a positive workplace environment

People development programmes tend to encourage a trickle-down effect within a business. If managers and senior leadership engage, and become better leaders, the workplace environment as a whole becomes more welcoming for all members of staff. It’s no secret that happy employees do better work, so employee experience also contributes to business success.

Building a people development strategy that responds to everyone’s needs

HR leaders have to perform a balancing act to execute people development strategies at present. On one hand, they must be able to demonstrate economic value to senior leaders, in order to ensure that budgets are not cut. On the other hand, they must provide programmes that are relevant, personalised, and effective for employees.

Finding an approach that suits both parties is tricky, but far from impossible, given the wide range of people development approaches on the market today. Thanks to advancements in digitisation, approaches like digital coaching have become more cost-effective and convenient than ever, as employees can focus on their professional development with a dedicated coach at a time and location which suits them. Such tools are incredibly useful for HR leaders looking to implement a people development programme that delivers success to everyone involved.

About the Author

Juliane SterzlJuliane Sterzl, Senior Vice President for the EMEA region at CoachHub is a seasoned leader in the technology space, having led teams at leading brands such as LinkedIn and Skillsoft. In her role at CoachHub she heads up expansion across EMEA, enabling organisations to create a personalised, measurable and scalable coaching programme for their entire workforce.

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