Mindset shift. Behavioral change. Judging by the language of Ted Talks and panel discussions, the idea of the organizational leader as a kind of social scientist is in vogue these days. What are change management or digital transformations, after all, but large-scale experiments, with companies as de facto laboratories?
But for shareholders and others watching the balance sheet, the bottom-line impact of all those tweaks might seem hard to objectively measure — and concretely understanding the associated ROI of the original investments, harder still.
But we're here to help you out. By zooming in on two areas — learning and development (L&D) initiatives, and human resources (HR) data — we'll show you why workforce investments don't have to become black boxes for strategic leaders who want intel on ROI. Plus, along with common challenges, we'll break down everything you need to know to fix them.
L&D and ROI
Companies are pouring more and more money into learning and development (L&D) initiatives, and with good reason. For one, ongoing learning is incredibly important to the overwhelming majority of employees, as Randstad's research has conclusively shown — so much so, in fact, that it can even move the needle on key talent metrics like time to hire, retention, turnover and more. For organizational leaders looking to keep tabs on the ROI of their L&D initiatives, these talent-related KPIs are the impact areas where they should center their analysis.
Of course, L&D is important for another, bigger-picture reason, too, as most forward-thinking companies today are well aware. That is, as the World Economic Forum (WEF) recently predicted, more than half (54%) of the workforce globally will require "significant upskilling or reskilling" in the next five years. And by investing in L&D initiatives today, the thinking goes, you're also investing in a more competitive workforce tomorrow.
That's the idea, at any rate. But for organizational leaders, evaluating (it might be more accurate to say "predicting") the ROI of such an investment isn't easy. Absent any hard numbers, it's largely a speculative — and, for that reason, no doubt exasperating — pursuit.
Trying to understand the ROI of L&D initiatives in the gestalt — that is, in terms of upskilling or reskilling — is like trying to get a fixed read on the pulse of Schrödinger’s Cat. So don't do it. Instead, frame the ROI of your L&D efforts in terms of the near- and mid-term talent outcomes that matter most to your business.
HR data and ROI
Right now, even though you have some great data at your fingertips, you may not be leveraging it to your greatest advantage. Take your payroll data, for example. Modern payroll systems can offer business leaders a treasure trove of insights. However, there's one caveat: You can't keep this data siloed.
Why? Because by connecting the dots between disparate data points — say, salary levels and retention rates over time — you can start to put together some pretty interesting, and directly actionable, benchmarks. Over time, you might be able to proactively anticipate when an employee is in danger of leaving, and potentially even the minimal salary increase that will be required to keep them on board.
When insights like these can be gleaned solely from the numbers, you should have an easy time articulating the value of workforce tweaks in terms of ROI. The trouble is, of course, that between having the data available, and actually using it to drive outcomes, there lies a world of difference.
The latest and most advanced workforce management software can power the growth of your company, arming key decision-makers with a treasure trove of insights that they can use to shape the business strategy. But the journey to "data maturity" doesn’t happen overnight — and that’s where staffing firms can deliver tremendous value. Today’s top staffing firms not only give you access to best-in-class talent but can work closely with your organization, help make sense of existing workforce data and help drive your growth. From process re-engineering to performance improvement, the potential upshot goes way beyond reporting on ROI. That’s an opportunity that’s difficult to ignore, because the reality is, right now, you're probably sleeping on some pretty valuable data.
L&D initiatives and HR data remain workforce investments that stump many leaders when it comes to reckoning ROI. Why am I having so much trouble analyzing and understanding the results of the tweaks I've made to my workforce? How do I measure results? Within organizations today, that's become something of a familiar refrain.
But it doesn't have to be — at least, provided you start with the concrete steps outlined in this article, and take the approaches we recommend. Doing so should make it a whole lot easier for you to not only evaluate your workforce investments, but communicate them in the only language that's truly universal in business: ROI.
To get more insight, guidance and best-in-class workforce management practices, head over to the comprehensive workforce management learning center from the talent experts at Randstad today.