How to Capture and Demonstrate the Value of your People Investments

14th February 2020

Business spend billions of dollars globally on training and development.

And yet, according to 40% of global leaders and executives surveyed by Deloitte (2016), this investment often nets little or no return to the business. 

As HR professionals ultimately accountable for people and training investments, how do you ensure return on training spend? More importantly, how do you demonstrate to your board, with confidence and evidence, that your decision to send 20 managers to leadership training will result in an improvement on the bottom line?

We operate in an environment that holds us accountable over financial expenses and people investments. However, measuring and demonstrating return on training is notoriously under done.

If you’re looking to make a business case to secure next year’s training budget, these evaluation principles, based on clear evidence and science, will help you start to measure and demonstrate the value of your training programs to key decision makers or clients.

Define Success by Outcomes that Matter

We know that having leaders skilled in coaching or relationship building will dramatically improve engagement based on last year’s engagement survey results.

But do we know much an improvement in engagement will impact the bottom line?

What if we could tell your board or key decision makers that employee engagement increased as a direct result of your training program. What if you could tell them “for every $1 we invested in leadership training; we saw a $3 increase in sales revenue in the following quarter.”

Suddenly, the case for approving and increasing your training budget becomes much more compelling.

Measure Behaviour Change Pre and Post Training

It’s great to know that your team loved the venue, afternoon tea, or the presenter.

But it’s even better to know they made a meaningful behavioural change as a direct result of attending training.

Gone are the days of measuring training success based on “happy sheets”. Instead, identify outcomes that are aligned with key performance indicators and measure the behaviours that support them. 

Ask colleagues to rate the behaviours they’ve observed before and after the training program ends. How often did your team leader spend time teaching and coaching? 

Did behaviour (as observed by the participant’s colleagues or direct reports) change after the training program? Did this change in behaviour persist 6 months later? If so, how much did behaviour change?

By identifying and then measuring behaviours before and after the training, we begin to set an objective foundation for understanding training and people impact. Taking this further with predictive analytics, we can then begin to estimate the business impact on key performance metrics.

Capture Training Impact beyond Financial ROI

When we train people in new skills, the clearest message to justify the investment is how much productivity increased or how much costs reduced.

But, as HR professionals, we know that this does not actually reveal the full benefit of people investment to the business.

People become more engaged, happier, committed, and more productive in the long term when we invest in training. It sends a signal to staff that you value them, their skills, and their career and they respond in kind by applying their newly learned skills into their work. Training opportunities can create loyalty and become a key force for retaining talent.

Did your Sales and Marketing team become more engaged, committed, or satisfied after they underwent training? Did we see an increase in team retention or a reduction in the number of sick days in the next quarter after the training?  

Capture changes in the engagement factors you measure in your annual engagement survey and link these back to the training opportunities provided to staff. Whilst this might not draw a direct line back to financial ROI, further analysis could start to explore the impact on other key business and people metrics.

We operate in an environment that holds us accountable over financial expenses and people investments.”

Use Evidence Based Evaluation Measures

When evaluating training outcomes, it’s important to ensure how and what you’re measuring is valid and reliable.

In other words, we need to know that the evaluation questions we’re asking will accurately and consistently measure what we’re interested in.

If we’re interested in training and measuring coaching, how do we know our evaluation questions accurately capture coaching behaviour?  Does telling people what to do count as coaching behaviour?

How do we know that investing in employee engagement will actually result in an increase in sales performance? 

With an overabundance of off the shelf survey questions on the market, it’s easy to overlook the value of decades of peer-reviewed research validation and evidence. However, using valid and reliable questions specifically designed by experts will ensure that your training evaluation results in meaningful conclusions and a solid business case for the next round of funding.

If in Doubt, Ask an Evaluation and People Expert

Businesses spend millions on engaging financial experts to model and predict return on major financial investments. And they do this with good reason.

If we could accurately predict a return on our investments, or the level of expected success (or failure), we can begin to make more objective decisions on where and how much to invest.

CEOs and key decision makers manage risk by asking questions such as: What is the rate of return if we invested in new manufacturing equipment? What return can we expect if we entered a new market?  

They balance this risk with confidence through decisions based on clear evidence, analytics, and accurate financial modelling. Equally, when considering people investments, key decision makers need to ask: “how much return are we likely to expect if we invested in training our people?” 

An expert in analytics and learning and development evaluation can help give you and your board the confidence that your people investments result in measurable return.  Whether it’s financial or intangible, defining success by outcomes that matter and applying an evidence-based evaluation framework will highlight the return on your training spend and help secure your next training budget.

What’s Next?

With over an estimated $366 billion dollar global spend on leadership development (Forbes, 2019), HR and leadership development practitioners now more than ever need to build rigorous needs analysis and evaluation capability to measure and demonstrate tangible return to the business.

At Measured Leadership Qualities (MLQplus) we hold the fundamental belief that science and evidence is critical to accurately capture, evaluate, and predict return on training investment.

Our accredited partners, coaches, and HR leaders leverage 35 years of science and evidence to measure and evaluate the return on globally recognised leadership development programs. Connect with us to measure and evaluate the impact of your training programs today.

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