Jack and Patti Phillips published a wonderful article in T&D magazine's August 2009 edition called "Measuring What Matters: How CEOs View Learning Success". The article is a well-written analysis of a survey they conducted with Fortune 500 CEOs as well as the CEOs of some large private companies. Their research reveals some interesting information about how CEOs evaluate employee development.
Safety is more important than ROI
When asked how they approach their investment in training initiatives, the top response (39%) was a reliance on benchmarks such as training cost per employee. Another 20% invest only what's absolutely required for employees to do their jobs. Those are relatively safe bets. It's hard to take heat for doing what everyone else is doing (following benchmarks) or spending the minimum.
It's also uninspiring news. Only 18% of respondents said their top priority is seeing a return on their investment in employee training. The obvious conclusion is that when it comes to developing human capital, a majority of CEOs would rather avoid risk than invest in improving employee performance.
Shoulda, Woulda, Didn't
CEOs were asked how they measured their employee development initiatives. The top 3 responses have relatively nothing to do with strategic business drivers:
- Number of participants (94%)
- Cost per employee or cost per training hour (78%)
- Participant satisfaction with the training (53%)
CEOs were also asked to rank learning evaluation measures in order of importance. This list was very different than what they were actually doing.
- Impact on business results (only 8% measure this)
- Return on Investment from employee development expenditures (only 4% measure this)
- Awards won in recognition of employee development programs (40% measure this)
Who is accountable?
The survey also looked at CEO involvement in employee development. You can see from the above sections that CEOs are focusing on safety over impact although they agree that making an impact on the business is most important. So, why the disconnect? Is it because CEOs in large companies are too busy to directly oversee employee training? The survey revealed that CEOs are involved to a fairly high degree:
- 78% personally approve the training budget
- 73% review requests for major initiatives
- 61% review the results of training programs
This data seems to indicate that many CEOs in large corporations are not doing everything necessary to get the most out of their employees. I don't know the reasons why, but the data presented here suggests that in general, CEOs know what they ought to do, have the ability to do it, but for some reason they aren't.