Return On Investment

Measuring the Return on Investment of any soft skills training programme is notoriously tricky. By their very nature, the skills learnt are not mechanically applicable or easy to objectively observe, they often rely on intangible qualities such as a sharpened instinct or a heightened ability to communicate effectively.

These skills are frequently termed ‘people skills’; and people are not formulaic. Not all trainees begin from the same starting point; every individual has different obstacles to overcome when broadening their soft skills palate.

The positive impact of soft skills training sometimes does not emerge until sometime after the course, relying on that ‘penny drop’ moment to occur for the trainee, when suddenly it all makes sense in practice in the workplace.

Organisations must look at several factors before deciding whether to provide soft skills training:

  • The cost in salaries of the people attending the training
  • The cost of the training being provided
  • The amount of lost production of the attendees
  • And the most important question, are we getting a satisfactory ROI?

For technical training such as learning to operate, run, and maintain a machine, the ROI is easier to calculate. How much profit was being made when the machine wasn’t producing goods compared to how much profit is being made with the machine producing goods.

Soft skills or people skills training assessment for ROI isn’t quite as straight forward. To calculate the ROI factors need to be considered that aren’t so easy to place a monetary value on, such as:

  • Lost revenues from dissatisfied customers
  • Low productivity due to low staff morale
  • Duplication of work due to poor communication
  • Staff leaving
  • Staff hiring
  • Training of new staff
  • Lost customers and contacts when someone leaves
  • Lost knowledge when someone leaves
  • Coverage of duties whilst replacement found
  • Disruption
  • Involuntary terminations and subsequent direct and indirect costs
  • Lost management man hours dealing with staff issues and underperformance
  • Wasted advertising and marketing
  • Absenteeism due to sickness and stress
  • Productivity ramp up of new staff and reaching the ‘break even’ point
  • And many more

The fact is the lack of people skills can cost an organisation a tremendous amount of profit in a myriad of ways.

The cost of acquiring and hiring a new employee ranges between 1.5x and 3x the employee’s full salary (including NI and PAYE) and is rising.

The key to having the greatest return on investment is having a highly skilled and committed group of people who know what to do, how to do it, and they want to do it well.

Anyone can force people to work given the power of authority; however, the most successful companies have a culture and environment where people WANT to be highly productive and successful.

So how do you measure ROI for soft skills training? How do you know that the investment is worth it? It is recommended that after the appropriate training the following is reviewed:

  • Has customer feedback become more positive and more frequent?
  • Has staff morale increased?
  • Have employee complaints decreased significantly?
  • Has production increased (without overtime)?
  • Has absenteeism decreased?
  • Have leader and employee relationships improved and interpersonal stresses been removed?
  • Has position turnover declined?
  • Has the work environment become more positive, team oriented, and mission focused (don’t ask, walk around unexpectedly and observe)?

Research shows most organisations that have problems with production and performance suffer from people issues not process issues. Changing processes, adding rules, making demands does not fix people issues.

People work for people not for policies

Getting the right people, providing the right skills, creating a unified sense of purpose, completely defining and enforcing the required professional standards, and setting the example define the true path to maximising an organisation’s Return on Investment. Get good people, provide the training and reap the rewards!

Find out more.

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