Investing in your people: where’s the ROI?
In my ten years of providing training, coaching and consultancy, I’ve come to recognise that there’s a small part of every leader / manager that harbours a deep scepticism about the impact of organisational culture and learning and development (L&D) on the financial success of their firm.
Yet, however ingrained this attitude, all it usually takes is a quick look at the leading firms in the sector and beyond, to remind these hardened creatures that L&D as a weapon in the competitive armoury is more than ‘fluff’. In business, culture differentiates a firm, makes it competitive and drives its people. Investing in your people means investing in your customers and the winners know this.
Firms like Mischon de Reya, Hill Dickinson and DLA Piper are among those that see the benefits of this client-focussed culture and are investing time and energy in it. To use a phrase ‘they must be doing something right.’
While overcoming initial scepticism isn’t too much of a problem, the real challenge is road-mapping the links between L&D and return on investment. This is not because the links are tenuous, but because they require a carefully thought-through strategy; often a complex undertaking. And a written strategy that connects people, culture and profit may be the first thing to go in difficult financial times when the ‘quick fix’ appears more attractive.
One law firm taking the strategic approach is Asons Solicitors. This Bolton-based firm has grown from 30 to more than 100 staff in a year, passing its target turnover of £18 million for 2012-2013 after reaching a record £14 million fee income the year before. It seems the success lies in the firm’s ability to be crystal clear about client needs, its corporate objectives and how to help its staff achieve these. With recruitment targets of 150 new staff for the next two years, including fee-earners, administrative staff, legal secretaries and lawyers, it recognises the need to develop its positive culture, which in turn is helping attract the brightest staff. With an excellent staff retention rate and level of investment in training, the firm claims to be the first in the world to achieve the Investors in People Gold award for its staff development programmes and has retained Lexcel certification.
In a news item on the firm’s website, Maureen Ferguson, the firm’s industrial disease manager, said: “Despite this rapid growth, we will continue to focus on customer service and quality. We attract some of the brightest minds across the North West and our recruitment drive will look to find more of the same ensuring that we continue to raise the bar for customer service for law firms across the north.”
Asons’ rapid rise is perhaps unusual. Those in more established cultures, recruiting less frequently, need to look at culture through a slightly different lens. Here it’s about getting the very best out of what you already have. In a recent article in People Management, Bill Parsons, vice-president of the CIPD, deals with the complexity of linking L&D with profit. He says that investment in learning and development can be linked with the desired financial outputs, so long as the focus is not too narrow. He puts forward three main HR ingredients; economics, sociology and psychology.
Put simply, the motivated employee and organisation will benefit psychologically and sociologically from an investment in L&D. However, when it comes to linking expenditure in L&D (and therefore customer care) with an increase in share price or profitability, the argument isn’t quite so simple.
To deal with this, he talks about social capital. This is where the firm recognises that the networking and trust achieved during training have as much capital value as the increase in competence. Knowledge sharing and new products and businesses become the outputs in the medium to longer term.
Not a new concept either, when you consider what a child of a previous recession managed to achieve on a grand scale. Jack Welch, CEO of GE, acquired legendary status as a leader and role model for the world’s corporations. Under his leadership, managers were required to follow the GE ethic of constant change and striving to do better. While the corporation was streamlined, key staff were developed, with Welch running it ‘like a small dynamic business able to change as opportunities arose or when a business became unprofitable.’
The results speak for themselves: in 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion; in 2000, the year before he left, they were nearly $130 billion.
As a business leader once said, it adds little value if it wasn’t hard work to achieve. Food for thought when linking your L&D with ROI?
Simon Bernstein, MD, Empathy