We asked Nik Kinley, Director & Head of Talent Strategy, YSC, to provide some feedback on the real ROI of development within an organization’s budget. Below are his thoughts.
Once a year, every year, year, firms face the same challenge: Choosing priorities and creating budgets for developing employees. There is some core, basic training that needs to be done. There is coaching, executive education and other activities for leaders. And there is often a sum set aside for identifying and developing potential future leaders.
For the most part, the challenge comes down to what to prioritize and how to do as much as you can with the resources you have. Researchers, however, have discovered something radical: That development budgets would be better used, and deliver more return for the investment, if less of them were spent on actually developing people. This may sound strange, but it promises to fundamentally reshape how firms approach learning and development.
Struggling for impact
There is no doubt that in places there is some highly effective development work going on. But across the board, the general effectiveness of most developmental activities is pretty low. People may enjoy them and feel that they have gained, but in the long run behaviour does not tend to change and performance does not tend to improve. The statistics are on this unequivocal, too. Even the most optimistic estimates of how much learning from training is transferred into real performance improvement back in the workplace do not go beyond 34 percent. Only 19 percent of HR professionals believing that that the coaching going on in their business is effective. And less than 10% of leaders believe that development activities lead to lasting change.
What makes these statistics really sobering is when we remember just how much is spent on all this activity. The training market alone was estimated to be worth over $135 billion in 2013. So even if we take the most optimistic success rates of 34 percent, that still means $88 billion invested with not much to show for it – every year. And that does not include the coaching and broader development market.
Cause for Hope
Yet over the past few years the reason why success rates are so low has become clearer. Increasing evidence has emerged pointing at one factor more than any other as the key issue: Context – or what happens outside the training or coaching room. In fact, researchers have shown that contextual factors are actually more important in ensuring development activities work than the quality of the training, workshop or coaching itself. So if you want to develop someone, change their behaviour, or improve their skill at something, then you need make sure that the environment and situations in which they operate supports their development. If it does not, then there is little chance that any development activities will pay-off.
So what counts as a supportive environment? The key element is individuals’ line managers, and whether they get involved in their people’s development, and encourage and coach them. Other elements that been shown to improve the success rates of development activities include better and more behavioural action plans, the use of rewards, and creating accountability for development.
The technical word to describe elements like these that can support development is scaffolding. And despite all the evidence showing that they are the single most important factor in determining the success of development activities, most organizations pay little – if any – attention to them. This is a large part of why development activities can struggle so much to have real world impact. And it is why rectifying the issue, and paying more attention to scaffolding, is the single biggest opportunity most organizations have today to improve the impact of development activities.
What Organizations Need to Do
So what has all this got to do with how organisations spend their development budgets? Well imagine a firm has £1000 per person to spend on development. Rather than just spending all of it on the individual, organisations would be better off spending £700-800 on development activities for the individual, and £200-300 on putting scaffolding in place to support these activities. Or imagine a development programme where the budget is £1 million. Rather than spending all of it on designing the content and delivering the workshop events, firms would get a better return on the investment if they spent just £700,000-£800,000 on the workshops, and the remainder on putting scaffolding in place.
Consider coaching. Typically, when external coaching is provided for individuals, line managers’ involvement is limited. They attend the first session to agree objectives, and the last to hear what progress has been made. Yet with some simple scaffolding it is possible to involve them far more, and without taking up lots of their time. The easiest way is to schedule a 5-10 minute call between coaches and managers at the end of each coaching session. Coaches can relay the key actions the coachee has committed to during the session, and suggest ways in which the manager can support the coachee. These mini-sessions act as a kind of coaching for the manager in how they can better support their people’s development. The process adds very little to overall cost, but it brings managers far more into the coaching process. And importantly, research shows that it significantly improves the proportion of coachees showing genuine behaviour change.
Scaffolding then, does not need to be complex, time-consuming or expensive, yet can significantly improve the impact of development activities. It is time to fundamentally re-think how we spend development budgets.
 Saks, Alan M. and Belcourt, M. (2006). An investigation of training activities and transfer of training in organisations. Human Resource Management, 45 (4), 629-648.
 Kinley, N. & Ben-Hur, S. (2015) Changing Employee Behavior. London: PalgraveMacMillan
 O’Leonard, K. (2013). The Corporate Learning Factbook 2013. New York: Bersin & Associates.
 Rouiller, J. Z., & Goldstein, I. L. (1993). The relationship between organizational transfer climate and positive transfer of training. Human Resource Development Quarterly, 4(4), 377-390.
Tracey, J.B., Tannenbaum, S.I., & Kavanagh, M.J. (1995). Applying trained skills on the job: The importance of the work environment. Journal Of Applied Psychology, 80(2), 239.