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Todi presentation 2012 measuring roi talent development preso kim


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Todi presentation 2012 measuring roi talent development preso kim

  1. 1. Measuring the ROI of TalentDevelopmentKim Richards, VP Organization DevelopmentLPL FinancialJosh Davis, Consultant, Linkage Inc.
  2. 2. The Model for Strategic Organization ImpactTMWhy we are here:• To outline the LPL • To highlight how to tie Financial journey to talent development to align OD/Talent business metrics Management with Business Priorities • To showcase the findings from a study of• To explore the evolution 20+ companies on and role of LPL talent development Financial’s Talent effectiveness Council in shifting and shaping a Talent Development Culture• To show how LPL uniquely quantified culture to demonstrate the effect on both engagement & performance
  4. 4. • Largest independent broker/dealer in the country• Headquartered in Boston, Charlotte, and San Diego• 12,962 affiliated financial advisors Our Commitment Creed nationwide• 4th in industry ranking customers are the most important people to our company • Our by number of financial advisors customers are not an interruption of our work; they are • Our• 679 financial institutions servedof it… the purpose• ,465 institutional Our customers share our commitment to excellence and • clearing and technology subscribers encourage us to innovate• 2,720 employees • We are 100% committed to our customers’ growth,• $354.1 billion in advisory and about their success, and exceedingly proud to be passionate brokerage assets their partner• $110.8 billion in advisory assets rely on us to help them prosper… • Our customers under management• 2011 annual revenues of $3.48 billion• 4.2 million funded accounts
  5. 5. Talent Management Journey Reinvest & Realize Integrate & Dividends 2012-2013 Compound the • Build skill Invest & Lay the Investment • Define Leadership Foundation 2011-2012 and create Talent 2010-2011 • Foster Mindset • Assess Current Development • Evaluate progress State culture & reevaluate • Create Vision & • Build & strengthen strategy Strategy practices • Raise the Bar • Build TM • Establish baseline • Innovate Framework • Scope, scale & link • Align to Business practices Strategy • Launch Foundation practices
  6. 6. Invest & Lay the Foundation The Business Context for Talent Management at LPL Our Business Challenges & Key People Opportunities Points • Growth • Sustain LPL • Employees drive • Complexity Core Values our business; • Accelerate performance & • Market engagement is Headwinds pace & critical to growth • Industry change; & retention in Regulation continual tough economic improvement times • Shareholders & Analysts • Create scale & • Every LOB cross- stated functional need/desire for synergies key Talent • Attract, Management engage, retain practices talent • Business wants more capacity & • Build skill, strategic business guidance & acumen and partnership for leadership People bench Strategies
  7. 7. Invest & Lay the Foundation: Talent CouncilCreate an environment & Align business planning culture to support & objectives with talent achievement of the 5 management activities to Year Strategic Plan ensure exceptional through employees, business performance & leaders & teams customer service Increase the internal talent Increase engagement, pool of future leaders and retain critical talent and contributors, creating aimprove performance by pipeline of ready talent supporting our ready to execute business employees’ growth & strategy, assume greater development levels of responsibility and achieve business objectives
  8. 8. Invest & Lay the Foundation: People Framework Get the Right Talent Onboard Align & Manage & Plan Our Pay for Corporate Performance DNA Move the Grow & Talent Develop Talent Success Measures
  9. 9. ROLD – LPL Culture Senior Leaders indicated: Need to Strengths Develop • Leadership ability is vital to current and future success • Lack confidence that current workforce has right mix of skills • Not enough leaders in the pipeline to meet future demands • Do not believe we have reputation for exceptional leadership
  10. 10. Impact on Business Results Learning & EquityDevelopment (revenue, relationship, Culture reputation, etc.) EmployeeDevelopment Engagement JobExperiences & Perfor- Commitment mance to LPLSenior LeaderCommitment to Business Teaching Unit Generally, the more Perfor- The more engaged mance employees perceive LPL to employees are, the engage in Leadership stronger job performance activities, the more engaged & and more “equity” they committed they are to LPL. have.
  11. 11. Building Capability & Capacity From To Functional Silos Enterprise Thinking Subject Matter Experts & Deep & Broad Business Acumen Specialization (General Managers) Managing & Controlling Work Leading & Empowering People Diversity of perspective & One way, the “right” way approach Make no mistakes Learn. Grow. Innovate.
  12. 12. Impact on Culture • Talent What? • Talent • Managers Management is manage work key strategy • “Nobody cares 2011 • Manager-led about my development development” • 160 in Voluntary • HR is operations • Talent Who? Competitive focused E.D.G.E. • Managers vs. leaders • New CHCO • “I don’t have reports to CEO; time for part of EMC 2010 development” • HR adopts 2012 People Framework & restructures
  13. 13. LPL 2012 Corporate Goals Focus on“One of the most critical Employeesfactors in helping usachieve our mission andgrowth objectives isleadership ..Mark Casady,CEO (April 2012)„Talent Management is a #1 priority.” Mark Casady, CEO (VP+ Management Forum inApril 2012)
  14. 14. Measuring the Bottom- line Results ofLeadership Development
  15. 15. • Agenda: • How to measure impact in your own organization • Key findings from a study of talent development effectiveness
  16. 16. Linkage Leadership Impact StudyROLD (Return on Leadership Development) measures the impactof leadership development initiatives. To date over 20 companieshave engaged in this process.Participants Included: • American Airlines • LPL Financial • Baxter • Mattel • Biocon • McKesson • General Motors • Meridian Health • Genpact • St. Jude • Grainger • Toyota • John Deere • Turkcell • Karl Storz • Turk Telekom • Lockheed Martin • WestJet Airlines
  17. 17. Types of Leadership Development InitiativesEvaluated • Action learning • Job rotation • “Classroom” programs • Mentoring • Elite university • National programs for programs women • High potential programs • Networking systems • Hybrid programs and events • Individual and peer • 360 Feedback coaching • International assignments
  18. 18. Assessment and Levels of Evaluation Training Need • A specific knowledge, skill, or process that a participant must learn to perform successfully. Performance Need • Behaviors that must be performed by participants in order to achieve business needs. Business Need • Strategic goals of an organization, business unit, or department that are expressed in operational terms.
  19. 19. Five Levels of Training Evaluation Level 1 Reaction Level 2 Learning Level 3 Behavior / Application / Performance Level 4 Results- Business Impact Level 5 Return on Investment (ROI)Kirkpatrick, 1959JJ Phillips, 1996
  20. 20. Examining Effectiveness of Leadership DevelopmentSystems: ROLD Model Strategy Innovation – Effectiveness – Measurement of the Measurement of innovative nature of the quality of the methods used in leadership leadership development and development and the the impact it is impact leadership having on business development is having results. on company innovation. Productivity – Efficiency – Measurement of the Measurement of companys leadership the real cost of pipeline and bench leadership strengths. development.
  21. 21. Impact Measures • Individual: • Group • Employee Engagement • Business Unit (3 sub-scales) Performance (past 12 • Organizational months) Commitment (intended • Organization turnover) • Organizational Culture • Job Performance (13 • Learning Culture dimensions) • Organizational Strategy • Revenue Goal • Program Specific Achievement (past 12 months) • Competencies • Equity (ratings and $ • Communication Skills estimate of financial • Coaching/Mentoring impact of leader on the Skills organization over past 12 • Global Leadership Skills months)
  22. 22. Tying Objectives to Business ImpactMeasures Example: Large financial services company based in NYC Leadership Business Impact Development (Level Four) Objectives Measures • Retain, develop and engage Employee Engagement the most promising future leaders Organizational Commitment Retention Rate • Enhance commercial/financial and Revenue Goal Achievement leadership impact Cost Savings Business Unit Performance • Establish networks with peers and with senior leaders Relationship Impact
  23. 23. Leadership Evaluation Process • Survey Executives • Organizational Strategy • How aligned is the program with organizational strategy? • Executive perspective on effectiveness • How effective do they feel the program(s) are? • Are the programs effectively providing a skilled workforce for the future? • Pipeline/Talent Management • How strong is the leadership bench? • Innovation • How innovative are the methods, and how effective is the program effecting organizational capacity for innovation?
  24. 24. Leadership Evaluation Process • Survey leaders who participated in the program as well as a comparison group of similar leaders who have not • Why? • What are equitable groups? • Tenure • Level • Roles/responsibilities • Make direct comparison to determine impact
  25. 25. Example: A business process and technology management company Benefit - Cost x 100 ROI % Cost Program: 18 month job rotation program for high potential managers Impact measure: Individual equity (sum of rainmaking, relationship, reputation, innovation, savings for each individual manager ) Benefit: Difference in individual equity between high potential managers who participated in the program and those who did not = $21,000 multiplied by 150 managers $3,150,000 - $1,363,000 x 100 = 131% $1,363,000
  26. 26. Sources of Data To Measure Level 5 Results • Available Organizational Data to Serve as Additional Effectiveness Measures • Performance Appraisal Ratings • Goal Achievement Ratings • Promotion Rates • High Potential, Succession, or Promotablity Ratings • Retention Rates • Leadership Census Information for Pipeline Analysis • # of Current Leaders at Each Level • Average Retention Rate of Leaders at Each Level • Typical # of Years at Each Level Before Promotion • # of Current Leaders by Years of Experience at Each Level
  27. 27. Return on Investment (ROI) Benefit - Cost x 100 = ROI % Cost
  28. 28. Determining Cost • Fully loaded cost
  29. 29. Determining Benefits
  30. 30. Tool 1: Begin with Business Strategy • What is the most important component of your company’s current business strategy? • Increase productivity • Increase sales growth • Improve customer satisfaction • Improve products, services, processes, systems, and/or operations • What else do you know about your company or business unit strategy? • How does the strategy drive your training objectives?
  31. 31. Impact Mapping to Determine Measures Leadership Behaviors Business Impact Development (Level Three) (Level Four) Objectives
  32. 32. Case Study 1Company: Diversified Financial Services Company known for stability and customer serviceClientele: 10.4 Million Customers 72.3 Billion of Assets Under ManagementBusiness Issue:The company’s Information Technology (IT) Organization consists of 1600employees located in a small Midwestern city. The organization has set astrategic objective to develop and implement programs to attract and retain topemployees. In addition, customers are requiring that IT leaders become morebusiness focused in order to proactively meet their growing needs.
  33. 33. Case Study 1: Impact Map Leadership Behaviors Business Impact Development (Level Three) (Level Four) Objectives• Attract and Retain • Employee Survey • Number of Job Employees Candidates• Improve IT Leaders’ • 360 Feedback • Turnover Rate Ability to Partner With The Business • Customer Satisfaction Survey• Improve Management Skills
  34. 34. Business Impact (“Level Four”) Data Purpose: To determine the impact on the organization of participants’ application of training on the job. Data: Level Four data can be anything that benefits the organization. Data is collected in terms of the change in individual/organizational output or performance. Hard Data is easiest to convert into monetary values. • Outputs (e.g., items sold) • Time (e.g., break-in time for new employees) • Cost (e.g., budget variances, cost savings) • Quality (e.g., # of tasks completed properly)
  35. 35. Level Four Data (continued)Soft Data is harder to convert into monetary value.• Work Habits (e.g., absenteeism)• Customer Service (e.g., customer satisfaction)• Work Climate (e.g., job satisfaction, employee turnover)• Development/Advancement (e.g., performance appraisal ratings, # of promotions, increases in job effectiveness)• Job Attitude (e.g., organizational commitment)• Initiative (e.g., implementation of new ideas)
  36. 36. Tool 2: Discovering Data • To what extent is data available in your organization? • Why types of relevant data could you access for measurement purposes? • Examples: • Previous performance • Turnover • Organizational surveys • Financial performance
  37. 37. Tool 3: Creating New DataDefinition of MeasurementA set of observations that reduce uncertainty where the resultis expressed as a quantity.Types of Measurement • Quantitative - numerical • Qualitative - verbal
  38. 38. Hubbard’s Clarification Chain 1. If it matters at all, it is detectable/observable. 2. If it is detectable, it can be detected as an amount (or range of possible amounts). 3. If it can be detected as a range of possible amounts, it can be measured.
  39. 39. Creating New Measures• Which types of existing data map back to your training objectives?• How about new measures you could introduce?
  40. 40. Tool 4: Estimating the Value of a Leader How would you rate yourself on the following? • Rainmaking Equity – the extent to which an individual and/or the team he or she manages brings in revenue, brings in business, or raises money • Innovation Equity – the extent to which the individual and /or the team he or she manages develops intellectual capital or technology that brings revenue into the company • Reputation Equity – the extent to which revenue is brought into the company as a result of the reputation of this individual and/or team he or she manages • Relationship Equity – the extent to which revenue is brought into the company as a result of the impact of this individual on others • Savings Equity – the extent to which money is saved in the company as a result of this individual and/or the team he or
  41. 41. Tool 5: Converting Data to DollarsIn reviewing your Level 4 business impact measures,which of them can be converted to $ values? Training and Conversion to Development Level 4 Data $ Objectives
  42. 42. Converting Benefits Data into Monetary Value • Converting output to contribution - using standard value (profit/savings) • Converting the cost of quality - using standard value of quality • Converting employee’s time - using standard values of compensation • Using historical costs/savings • Using internal and external experts • Using data from external databases/studies • Linking with other measures • Using participants’ estimates • Using supervisors’ and managers’ estimates • Using training/performance improvement staff estimate
  43. 43. Calculating ROI Benefit - Cost ROI % = x 100 Cost
  44. 44. Calculating ROIExample: A business process and technology management company based in India Benefit - Cost x 100 = ROI % Cost Program: 18 month job rotation program for high potential managers Impact measure: Individual equity (sum of rainmaking, relationship, reputation, innovation, savings for each individual manager ) Benefit: Difference in individual equity between high potential managers who participated in the program and those who did not = $21,000 multiplied by 150 managers
  45. 45. Tool 6: Making Metrics Work• Who are the participants in the training and development?• Is there a comparison group of similar leaders who did not (or will not) participate in the training and development? • If “Yes,” you can create a comparison group design• Are there some participants who have not yet begun the training and development? • If “Yes,” you can create a pre-test/post-test design• If you answered “no” to the two questions above • You will have to get creative and consider a correlation design
  46. 46. Example Correlation Study • Measured leaders: • Level of exposure • Degree of experience • Beliefs, views, and perceived impact of FSL (competencies) • Assessed extent to which exposure, experience and perceived impact affected job performance and business results • Correlation does not equal causation!
  47. 47. Correlational Impact Business Impact at Individual Level Leader Leader Leaders Managers Exposure To Experience Perceived Rating Of Competencies Level With Impact of Leaders Competency Competency Competency Level Job Performance (as measured by their managers) Employee Engagement (extent to which an employee is fully involved in, and enthusiastic about their work) Organizational Commitment (Individuals psychological attachment to organization) Rainmaking Equity (ability of individual/and or team to bring in revenue, bring in business or raise money) Innovation Equity (ability of the individual an/or the team he or she manages to develop intellectual capital or technology that brings revenue into the company) Reputation Equity (extent to which revenue is brought into the company as a result of the reputation of this individual and. or the team he or she manages) Relationship Equity (extent to which revenue is brought into the company as a result of the impact of this individual on others) Savings Equity (extent to which money is saved in the company as a result of this individual and/or the team he or she manages)
  48. 48. Leadership Impact Findings
  49. 49. Finding # 1Across all companies, bench strength isthe biggest concern of seniorexecutives Linkage Return on Leadership Development (2011)
  50. 50. Senior Executive Assessment: Bottom Five Items Linkage Return on Leadership Development (2011)
  51. 51. Finding # 2Senior executives feel that the largestgap in leadership development is in theextent to which it contributes tocorporate innovation. Linkage Return on Leadership Development (2011)
  52. 52. Current vs. Ideal State of Leadership Development As Reported by Senior ExecutivesOther elements we asked about were:Extent to which leadership development-Removes a major risk from our strategy-Provides a major opportunity for growth of our company-Improves leader capabilities, performance, andengagement-Takes advantage of innovative delivery mechanisms-Improves the ethics and moral character of leaders Linkage Return on Leadership Development (2011)
  53. 53. Current vs. Ideal State of Leadership Development AsReported by Senior Executives Linkage Return on Leadership Development (2011)
  54. 54. Finding # 3A “culture of learning” positivelyimpacts engagement and performance. Linkage Return on Leadership Development (2011)
  55. 55. Case Study: Measuring The Impact of LeadershipDevelopment On Learning Culture The VP of Leadership Development at LPL was interested in helping the organization develop a learning culture. As part of ROLD, we created a customized Learning Culture Scale to assess the current state. Example Items: • We have a culture of continuous learning and development. • We are given time to reflect on our experiences. • Coaching is a part of the daily interaction between employees and managers. • People give open and honest feedback to each other. • We learn from our mistakes.
  56. 56. The Impact of Learning Culture Leadership Leadership Overall LPL Development Program Development (n=107) (n=24) Comparison Assessment Item (n=83) Mean SD Mean SD Mean SD Learning Culture 3.28 (.58) 3.02 (.79) 3.08 (.75)
  57. 57. The Impact of Learning Culture
  58. 58. Finding # 4: Leaders Preferred Method ofLeadership Development Delivery Method Percent of Leaders Endorsing Coaching/mentoring 74% Classes with your Senior Executives as instructors 49% Career planning 43% 360-degree feedback 41% Action learning teams 32% Informal/social learning 31% e-learning 25% Social networking 22% Online business simulations 18% Discussion boards 17% Wikis 4% Electronic games 4% Blogs 4% Linkage Return on Leadership Development (2011)
  59. 59. Rule of FiveThere is a 93% chance that the median of apopulation is between the smallest and largestvalues in any random sample of five from thatpopulation.Any data is better than no data! Hubbard, 2007
  60. 60. Closing Thoughts…….. What gets measured improves!
  61. 61. Resources • How to Measure Anything: Finding the Value of “Intangibles” in Business (2010)– Douglas W. Hubbard • Investing In People: Financial Impact of Human Resource Initiatives (2011) Wayne Casio & John Bourdreau • The Leadership Scorecard (2004) – Jack Phillips & Lynn Schmidt • The ROI Field Book: Strategies for Implementing ROI in HR and Training (2007) – Patricia Phillips, Jack Phillips, Ron Stone, & Holly Burkett • The ROI of Human Capital (2000)– Jac Fitz-enz