Investing in Employee Development for Bottom-line Impact

A recent Harvard Business Review study revealed that almost 40% of a company’s strategy can be diluted due to poor execution[1]. Additionally, estimates attribute up to 70% of a company’s operating expense to labor costs and yet only 38% of employees are reportedly engaged. With this much at stake, the importance of development activities and alignment of organizational goals with strategy is paramount. In spite of the apparent need for investment in employee development, what remains a challenge for many organizations is the determination of, or perhaps acceptance of, returns associated with investments in development activities.


Coming from a position with direct financial responsibility with a laser focus on clearly measurable ROI to a coaching and development role, I have observed that the focus is often on process rather than results. It’s understandable that CEO’s and leaders with P&L responsibility struggle with justifications in which clearly stated expectations for outcomes are absent or fuzzy.


Most leaders accept that employee development has value, but determining how much and what programs, requires some effort. To assist in establishing value of development activities, the investment required, as well as the methodology to employ, considering the following three areas proves useful:

  • Business Need

  • Development Requirements

  • Desired Business Result

Defining the Business Need

Defining the business need should begin with clarity around the organization’s goals and what skills, competencies or behavioral changes are necessary to meet those goals. While on the surface this may sound simplistic, assumption is the enemy here. A thorough identification and assessment of what skill sets reside within the targeted group or employee is required to reduce risk and improve organizational engagement toward stated goals. This can often be accomplished through the mining of information available in the HRIS/LMS system, utilization of assessments, and the application of knowledge transfer mapping strategies.


Defining Development Requirements

Once the business need is clearly defined and competencies identified, a plan outlining methodologies and deliverables can be designed to address the development requirements or gaps. Key questions that should be addressed include:

How will the change in required skills, competencies, behaviors be achieved? Options may include traditional training, coaching, mentoring, or blended approaches. When are the assimilation of these skill sets required? How will the outcomes be measured?

Development of human capital is a complex endeavor, with differing needs among employees. While training offers an organization the opportunity to “roll out” learning to multiple assets at one time, each employee will assimilate skills based upon their personal experience and capabilities as well as work/assignment opportunities. Another consideration often overlooked, is that the more senior the level of responsibility, the greater the requirement placed upon emotional intelligence in addition to “technical” competencies. These realities expose the limits of traditional training in improving leadership competency. Coaching and mentoring provide the opportunity to raise self awareness and encourage individual accountability