The Infinite ROI of Talent Development

by | Feb 3, 2016 | Approachable Leadership

“Training pays.”

Seth Godin says this in his recent article on “the infinite return on investment” of talent development and training. He provides this example:

Imagine a customer service rep. Fully costed out, it might cost $5 for this person to service a single customer by phone. An untrained rep doesn’t understand the product, or how to engage, or hasn’t been brought up to speed on your systems. As a result, the value delivered in the call is precisely zero (in fact it’s negative, because you’ve disappointed your customer). On the other hand, the trained rep easily delivers $30 of brand value to the customer, at a cost, as stated, of $5. So, instead of zero value, there’s a profit to the brand of $25. A comparative ROI of infinity. And of course, the untrained person doesn’t fall into this trap once. Instead, it happens over and over, many times a day.

I believe this comparative ROI is exponentially greater when you talk about leadership talent development (I know, I know, you can’t have an ROI better than infinity, but I went to law school so cut me some slack). The customer service agent most often handles a customer experience just once or at most a few times in their life cycle. A leader handles the employment experience over and over again with each individual they lead. Being a little better leader pays off again and again. Why then, do we choose to invest so little (if anything) in the talent development of our leaders? I hear a lot of answers. Most common is the expense. Not just the cost of training (hard costs and lost time), but those dollars are competing with a lot of other business needs. Others complain they’ve been burned doing training that didn’t “stick” with supervisors. Some fear that once you train someone they might walk out the door, causing you to lose the whole investment. Godin’s response is the same as mine: consider the alternative. “What’s the danger of NOT training the people who stay?” You must invest in your leaders if you want your organization to grow, if you want to provide quality employment experience (not to mention a quality customer service experience). Do you want to be successful and, yes, profitable? You better be developing your leaders.

The ROI of Talent Development

The question isn’t whether to invest in developing leaders. The question is how to ensure that investment gets the highest return possible, and that it stays in the company. We humbly submit that your best bet is investing in developing approachable leaders.

Recent research has shown that employees of approachable leaders are 72% less likely to quit their jobs.

Seth Godin and us aren’t the only ones who know the value of training. The Association for Talent Development’s annual State of the Industry Report shows that the number of organizations investing in talent development has increased two years in a row. Here are a few other statistics from the hundreds of companies that contributed to the report:

  • $1,229 – the average direct learning expenditure per employee annually;
  • 32 – the average hours each employee spent in training annually;
  • 13% – the portion of all training that was spent on Management and Supervisors;

Let’s say you are a 200 employee location with 20 supervisors. This means if you want to be average you will spend around $32,000 per year developing those leaders (you are spending that much, right?)  This ATD report also explains that 25% of companies outsource their talent development, and most of those ask a live facilitator/consultant come in to do the training. Here is some good news. Four days of delivering our Approachable Leadership Learning System (the Workshop plus follow-up modules) is a significantly lower investment than the average company described above. Not only that, the training sticks. It is practical and simple to understand and apply. It gets proven results (if you haven’t already, grab our eBook on The ROI of Approachable Leaders to see all the numbers). I recognize that with $30 per barrel of oil a lot of companies are cutting everywhere they can. But just last week I trained the Approachable Leadership workshop to groups of leaders at two different companies. Each has faced huge cutbacks due to the historic drop in energy prices. These companies are doubling down on their leaders during the down time and I guarantee they will be miles ahead of those who are trying to cut their way to success. I am obviously an avid supporter of training and talent development, and I am biased about ours. There are a lot of great leadership development options out there. The key point is to explore the options and then invest in the one that is right for your company. But whatever you do, make the investment. The ROI might not be infinite, but it is huge. What has your experience been with developing leaders? Do you have any stories of small leader investments that paid off big dividends? What are some of the things you have tried to make sure that training sticks and has a solid return? Please share your experiences with us on Twitter or LinkedIn. Be sure to #ApproachableLeadership

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