- The ROI on traditional forms of employee training are questionable
- Investing in self-propelled development could help you see better returns
- Managers are key to your company's employee development strategy
A large company could save $60.3 million annually if its managers move their teams to the top quartile of engagement
With that in mind, consider this: The average large American business spent $17.7 million on training in 2019.
Recouping $60.3 million on a $17.7 million investment would give you about a 3.5-to-1 return on the dollar.
That's a substantial ROI -- but most managers aren't yielding anything like that from their training.
Slightly more than one-third of managers told Gallup they strongly agree they've had opportunities to learn and grow this year, even though two-thirds have been in a professional development program. And 36% don't fully believe they have the skills they need to do their best work.
That $60.3 million in potential savings isn't the result of training, though. It comes from engagement. Business units in the top quartile of employee engagement show a difference of 41% in quality defects, 10% in customer loyalty, 14% in productivity, 18% in sales productivity, and 23% in profitability over business units in the bottom quartile according to Gallup's most recent employee engagement meta-analysis, along with other KPIs like safety and retention.
Numbers like those create their own momentum. They change a company's reality. But to get those results, a team has to be both engaged and very well-coached.
Managers are responsible for engagement -- 70% of it, in fact -- and performance coaching.
To engage and coach employees, managers need development. Not just training. And managers who are developed the right way are then able to develop employees the right way. And they can save companies $60.3 million by building an employee development machine.
To build the machine, start with your managers.
The most efficient way -- in results, dollars and time -- to build that machine is to develop managers as coaches, not bosses.
In those conversations, Gallup research shows, coaches are far more likely to ask questions than give orders. And the questions asked are powerful.
For instance, the best managers Gallup has studied tend to ask questions like:
- What do you think is expected of you for each project?
- What helped enable your contribution during this project?
- How can I help you align your work with your goals and aspirations?
- Do you see a future with our organization?
- How can I support you in forging a flexible, personalized career path?
- How can I coach you to support your career development?
Questions like those align employees with the business' requirements according to the worker's role, engagement needs and strengths.
As a result of a coach's everyday, purposeful conversations, employees become able to answer such questions themselves. This is how employees get better every day. This is how employees develop. This is how the development machine builds itself.
Not coincidentally, the best way to attract top talent is by providing opportunities to learn and grow. The main reason employees quit is a lack of opportunity for development and advancement.
Focus on ongoing development versus a one-time training event.
Managers can't learn how to have all of the right conversations and develop others by taking a course every year or so. That would be training.
Development, on the other hand, is an ongoing process that enables managers to do a lot of things at once: build on their strengths and those of others, make good decisions, motivate performance, build relationships, assert themselves, and create a sense of responsibility that empowers employees' best work.
And development needs to meet managers' needs the minute they arise. Business is changing quickly, and managers must be able to move just as fast. The shift from boss to coach is the first move -- the foundational one -- because it provides managers with a new mindset and approach to development while also enabling them to ask the right questions, conduct richer conversations, and coach employees' development.
Companies demand a lot from managers today but the ones who can continually develop their employees are the ones who get results like that 10% difference in customer loyalty, 18% in sales, 23% in profit, and all the other KPIs that have the potential to add up to $60.3 million in savings.
The kind of managers that allow you to get vastly better ROIs from development than most companies do.
The kind of professional development you provide will ultimately determine the kind of development machine you build -- and if your dollars are an expenditure or an investment.
Your manager development dollars shouldn't go down the drain. Capitalize on your learning efforts:
- Invest in the learning and strengths development of your managers -- it spurs organic growth and the benefits extend past just a day or two.
- Learn about The Manager Experience: Pros, Cons and Development Opportunities with Gallup's extensive online resource.
- Read our bestselling compilation of research and advice on the practice of management needed for today's workplace -- It's the Manager.