Achieving Leadership Development and ROI on Learning and

Achieving Leadership Development and ROI on Learning and Development Programmes: 

Achieving Leadership Development and ROI on Learning and Development Programmes John Aderibigbe Quarterly HR Roundtable 16 th June 2011 DU&T Consulting info@dutconsulting.com

Objectives: 

Objectives Create the right environment that fosters development of the leadership skills of employees Gain maximum Return on Training Investment Design the right leadership development framework for their establishments Be able to assess training service providers to determine which training will produce the best result Conduct training impact assesment vis-à-vis ROI

Leadership Development: 

Leadership Development Leadership development is an effort (hopefully, planned in nature) that enhances the learner's capacity to lead oneself, other individuals, groups and organizations. A critical skill for leaders is the ability to manage their own learning. Leadership development can be thought of as unwrapping the potential of individuals, teams and organizations to guide, direct and inspire.

Principles of Leadership Development Framework: 

Principles of Leadership Development Framework This leadership development framework rests on five principles: The Key Leadership Competencies (with an emphasis on People management) form the foundation of leadership development. Leadership competencies are developed primarily in the workplace and supported by the classroom. Organisations need leaders with a variety of skills and a shared set of core values. Individual employees, with support from their managers, have prime responsibility for their own leadership development. Leadership development is about equipping the organisations to deliver results for their clients while enriching individual careers.

Why a Framework?: 

Why a Framework? As change process continues, there is a pressing need to ensure that the values, skills and experience profile of the leadership cadre are appropriate for the challenges over the coming decades. Finally, we need a framework because the world is changing.  Technology, globalization, changing expectations of customers– these forces and factors are demanding new responses from organisations . Organisations must be able to manage and lead a more diverse workforce, doing different sorts of work, in new ways.

Premises: 

Premises The leadership development framework starts with the premise that most people can develop their leadership skills through experience and training. The framework assumes that the organisation is (or ought to be) a learning organization and that people learn best through doing. The framework also recognizes the importance of more formalized learning, training and skills development, to ensure management excellence overall, including building leadership capacity. Finally, the framework assumes that, in the Public Service, leadership development is based on the key leadership competencies (KLC's) already defined for the organisation

Responsibilities of Management: 

Responsibilities of Management Identifying organizational needs; Ensuring that leadership development activities are properly situated within business and human resources plans; Putting in place a process for talent management; Ensuring employees have access to self-learning resources, assessment tools and courses, as required; Making available mechanisms for coaching and or career counselling , as required.

Responsibilities of Managers: 

Responsibilities of Managers Managers are accountable in particular for: Supporting the development of the leadership capacity of their employees and their organization. Supporting the leadership development program of their organization by providing on-the-job challenges and appropriate training and learning opportunities.

Talent Management Framework: 

Talent Management Framework

Tools and Programs: 

Tools and Programs The most important tool for the development of future leaders is experience in the workplace that develops and tests the skills and character of the future leader. Workplace experience will be supplemented, as appropriate, with: Programs or orientation and basic skills development; Classroom and other learning opportunities; Mentoring, coaching and job shadowing.

Tools: 

Tools Research and demographic analysis capability to measure performance system-wide; Capacities for recruitment to assist departments that lack the capacity to conduct such campaigns on their own; Capacities for psychological and other testing to support HR planning, executive placement and mobility; Bridging programs to facilitate placement opportunities for leaders as they advance in their career; Tools for the recruitment, selection and development of leaders These tools and capacities will be constantly refined through feedback from participants and other measures to evaluate relevance and effectiveness.

Programmes: 

Programmes A wide range of leadership development programs are offered today at all levels from the recruitment of future leaders to training and development for very senior executives. At entry level, we find programs such as Management Trainee Program (MTP), specialist programs such as those for for Financial Officers and Internal Audit professionals , I.T professional, Marketers. At the middle management level, the Career Assignment Program (CAP). At the executive level, current programs include the Accelerated Executive Development Program the Advanced Leadership Program for senior executives

Process of using the tools: 

Process of using the tools The foundation for working with the Leadership Development Framework is an analysis of leader’s responses in completing the personality profiling test. This enables a profile to be drawn up which gives insight into the sense-making behind their actions, and so enables the central ‘action logics’ of their work and life to be identified. This analysis will be presented back as an Individual Development Profile (LDP). The Leadership LDP is a highly validated instrument.

Expected Results and Performance Measures: 

Expected Results and Performance Measures Adoption of this framework is expected to deliver measureable results in the short, medium and longer-term, at both a departmental and system-wide level. Management will be expected to set specific objectives for their leadership development activities, arrayed in terms of the short, medium and longer term.

Slide 15: 

Those objectives should be: Closely linked to integrated business and HR planning Measureable, particularly in terms of impact on programs and activities; Meaningful both to the senior management team and to individual employees; Regularly updated to reflect changing priorities, circumstances and needs.

Benefits and application: 

Benefits and application Engaging in conscious leadership development for yourself, your team or your organisation can be one of the most effective means of increasing performance. “If you want to make minor, incremental changes and improvement, work on practices, behaviour or attitude. But if you want to make significant, quantum improvement, work on paradigms… perception, assumption, theory, frame of reference or lens through which you view the world.” – Stephen Covey, The 8th Habit: From Effectiveness to Greatness

Benefits of engaging in transformational processes.: 

Benefits of engaging in transformational processes.

Why evaluate training?: 

Why evaluate training? To validate training as a business tool to improve productivity and performance . To justify the costs incurred in training . Only by thorough, quantitative analysis can training departments make the case necessary to resist cut in training budgets. To help improve the design of training . Without formal evaluation, the basis for changes in training design can only be subjective. To help in selecting training methods . By using comparative evaluation techniques, organisations can make rational decisions about the methods to employ.

Criteria for measuring training success: 

Criteria for measuring training success Numbers of participants . Direct cost : Direct costs are those costs that are incurred directly as a result of a training programme – external design and development, consultancy fees, travel expenses and so on. Indirect cost: salaries of in-house trainers and students,the costs of rooms and equipment. Efficiency: Efficiency is a measure of the amount of time it takes to complete a piece of training. Efficiency has a direct relation to cost – the more efficient a training method is, the less it will cost. Performance to schedule: Sometimes with a training programme, ‘time is of the essence’ – the training needs to be completed by a given date if a particular business objective is to be achieved. Income received: represent a cost to the organisation. The extent to which trainees mix: A justification often made for training is that it fosters relationship

Slide 20: 

Reactions Learning Behaviour change Performance change Return on investment as a measure

Evaluation Levels (modified from the Kirkpatrick 4-level model): 

Evaluation Levels (modified from the Kirkpatrick 4-level model) Evaluation Level Description Characteristics Level 1 “Did they like it?” Measuring Reaction and Identifying Planned Actions Measures participants’ reaction to the program, and outlines specific plans for implementation of learning to the job. Level 2 “Did they learn?” Measuring Cognitive Learning and Retention Measures skills, knowledge, or attitude changes as a result of the training. Level 3 “Do they use it?” Assessing Application of the program training on the job Measures actual changes in behaviour on the job, and specific applications of the training material. Level 4 “Did it impact the bottom line?” Identifying business results from the training Measures the business impact of the training. (eg measures changes in output, quality, costs, time, productivity or other business metrics) Level 5 “What is the return on learning investment?” Calculating Return on Investment Compares the monetary value of the results with the costs for the program.

Create an ROI Measurement Plan: 

Create an ROI Measurement Plan The Data Collection Plan State the objectives of the training / learning State the objectives of each phase of data collection at each evaluation Level The ROI Analysis Plan List Significant Data items (usually Level 4 or 3) to be collected Benefit Factors Cost Factors Methods to isolate effects of the learning/training from other influences Methods to convert data to numerical values

Forecasting and measuring costs: 

Forecasting and measuring costs Development costs Course materials Facilitator costs Stationery and printing costs Equipment costs Venue costs Travel costs Meals/refreshments costs Participants’ salaries and benefits Administrative costs Assessment costs Evaluation costs

Forecasting and measuring benefits: 

Forecasting and measuring benefits Labour savings to include reduced duplication of effort, less time spent correcting mistakes and faster access to information Productivity increases to include improved methodologies reducing the effort required, higher levels of skill leading to faster work and higher levels of motivation leading to increased effort Other cost savings to include fewer machine breakdowns, resulting in lower maintenance costs, lower staff turnover, reflected in lower recruitment and training costs and a reduction in bad debts Other income generation to include a higher success rate in winning competitive pitches, leading to increased sales, sales referrals made by non-sales staff and new product ideas leading to successful product launches

Collect Data: 

Collect Data As described above, data will have to be collected at various points in the training process, to be able to carry out effective ROI calculations. Identify the purposes of the evaluation- performance enhancement, business improvement or cost savings expectations. Select the evaluation instruments and methodology. Identify how the data will be collected and analysed. Establish the timing for the data collection.

Sources of data can include:: 

Sources of data can include: Testing and certification assessment records Participant feedback Instructor feedback Feedback from participants’ supervisors/managers Feedback from participants’ subordinates Team/group peer feedback Feedback from other internal or external groups (eg HR training departments)

Data Collection methods : 

Data Collection methods Questionnaires/Knowledge tests Surveys On the job Observation Interviews Focus groups Action plans (or Performance contracts) and Program assignments Performance data monitoring

Record the “hard” data: 

Record the “hard” data “Hard” data is objective and it is easy to measure and easy to assign a monetary value to it. The relevant “hard” data is identified in the target setting process. “Hard” data includes: Changes in work output Changes in time to complete work Changes in quality of work Changes in costs of producing work

Record the “soft” data: 

Record the “soft” data Changes in initiative Changes in work habits Changes in work climate Changes in feelings/attitudes Changes in capacity for using new skills Changes in desire for/openness to advancement/development Change sin staff retention Changes in absenteeism and time keeping Changes in customer satisfaction Changes in quality of teamwork Changes in conflicts, disciplinary action and grievances Changes in community image Changes in investor image

Isolate the effects of training: 

Isolate the effects of training Tools to isolate the effects of training can include: Control Groups Trend lines; pre and post training performance comparison. Draw a trend line, derived from previous performance data, and extend into the future; then compare this later with the actual data derived from the results of post-training evaluation. Mathematical forecasting. (e.g. sales increase due to training, and an increase in marketing expenditure). Participants’ estimates of the impact. Supervisors’ or managers’ assessments of the impact of training on measured performance improvement. Senior management estimates of the overall value of training programs on the business.

Convert data to monetary value: 

Convert data to monetary value In this stage it is important to estimate the financial value of the various changes resulting from the training, and to identify the total costs incurred in implementing the training program. Output data converted to profit contribution or cost savings Direct costs saved Increased volumes of output produced Timeliness of output Cost of quality calculated and quality improvements converted to cost savings or increased profitability Cost savings (salaries and overheads) in reductions in participants’ time in completing projects. Internal or external experts may be able to estimate the values of the performance improvements gained. Participants or their supervisors/mangers can estimate the cost savings or value of increased productivity

Calculate the ROI: 

Calculate the ROI ROI can be expressed in 3 different ways Benefit/Cost Ratio BCR = Program Benefits Program Costs BCR uses the total benefits and the total costs, and are expressed as a ratio (eg 10:1) For example: If you gain a benefit of $1M in 12 months, and the cost of training is $250K for the same period, the BCR is 4:1

ROI %: 

ROI % ROI = Net Program Benefits Program Costs x 100 In ROI, the costs are subtracted from the total benefits to produce net benefits, which are then divided by the costs. This shows the net benefits to the company after the costs are covered. For example: If you gain a benefit of $1M in 12 months, and the cost of training is $250K for the same period, the net benefit is $750K; divided by the costs of $250K (and multiplied by 100) this equates to a 300% ROI

Break-even time: 

Break-even time Break-even time = Investment Benefit x Period in months For example: If you gain a benefit of $1M in 12 months, and the cost of training is $250K for the same period, the break-even time is $250k divided by $1M, times 12 months = 3 months

Questions: 

Questions How do we attach value to behavioral changes as a result of training? How do you forecast the ROI on training which is still in the pipeline? What can organisations do to ensure that these ROI are regularly available.

Slide 36: 

What tools or capabilities would enable you identify leadership potentials. How can we integrate LDP in HR and succession planning? What are the challenges that may inhibit leadership development programmes in our organisation? Having identified potential leaders, what should be done with other employees?