If we view talent development as a true strategic lever, that means we must begin with the business in mind, said ROI Institute CEO Patti Phillips in her Monday afternoon session during the Association for Talent Development’s Virtual Conference: Unleash Potential.
In “Show Me the Money! Designing Programs That Deliver Positive Returns in Investment,” Phillips not only shared how to measure impact and calculate ROI but also offered sound guidance as to which programs to evaluate on those levels. Mandatory programs that are compliance driven, for example, may not be a suitable to analyze for ROI because they often don’t cost much and are required.
Phillips said the program’s scope should determine whether the program is worthy of impact or ROI measurement. “They are the larger investments, those investments that are the real change initiatives,” she explained. “The changes that we are putting into place impact measures of output quality, cost, time, customer satisfaction, job satisfaction, work habits, and innovations.”
To tee off the discussion, Phillips broke down, step by step in layman’s terms, each level of the Phillips Five-Level Model. Her review included a history lesson that detailed when the cost-benefit element was added to the framework, which is essential to resource allocation, she noted. Taking it a step further, she explained why each level matters and discussed key considerations talent development professionals should make at every stage of evaluation.
In her review of the evaluation framework, Phillips highlighted these points:
- Level 0 (Inputs) data does not represent results but rather the activities that drive results.
- Level 1 (Reaction & Planned Action) data assesses participants’ willingness to do what TD professionals want them to do.
- Level 2 (Learning) data indicates the extent to which people can do what TD professionals want them to do.
- Level 3 (Application & Implementation) data reveals the extent to which people are doing what TD professionals want them to do.
- Level 4 (Impact) data measures the program’s impact and answers fundamental questions such as “So what?” “How do you know?” and “What caused it?”
- Level 5 (ROI) data is determined by annualizing the value of the improvement, converting it to money, and comparing that value with the program’s costs.
Phillips’ discussion also included a review of the Alignment Model. The model promotes a business-first way of thinking for the talent development professional. Based on the premise that talent development’s role in the organization is to drive the business, Phillips encouraged audience members to always think business first.
“In the ideal world, if we are going to treat talent development programs as true business investments, we shouldn’t even come up with a program until we’re clear on why we need it in the first place,” Phillips pointed out.
Similar to her review of the evaluation framework, Phillips discussed each step of the Alignment Model. Asking the right questions stood out as a key takeaway from this portion of her talk. In fact, the model’s first step clarifies whether the problem or opportunity is worth pursuing. She illuminated how talent development professionals can use the Alignment Model to guide a conversation with a decision maker who is requesting development or rollout of a new training.
Ultimately, TD professionals can use ROI to demonstrate the monetary value of any program, project, or initiative at any organization; however, only a small portion of programs are candidates for such measurement, Phillips maintains. When done correctly, she said measurement of impact and ROI enables TD professionals to connect the dots and tell the complete story of their programs’ success. Through this interactive and engaging session, Phillips equipped attendees with the tools to be “difference makers” at their organizations.
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