Patricia Pulliam Phillips - Proving the Value of Soft Skills: Measuring Impact and Calculating ROI

2020 ASTD DBA the Association for Talent Development (ATD)

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Excerpt from The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How CollectiveWisdom Shapes Business, Economies, Societies and Nations by James Surowiecki, copyright 2004by James Surowiecki. Used by permission of Doubleday, an imprint of the Knopf DoubledayPublishing Group, a division of Penguin Random House. All rights reserved.

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Library of Congress Control Number: 2020939926

ISBN-10: 1-950496-63-5

ISBN-13: 978-1-950496-63-1

e-ISBN: 978-1-950496-64-8

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THE DILEMMA

When we speak at conferences or conduct workshops, we ask the audience whether the statement, Top executives view hard skills as more important than soft skills, is true or false. Although it varies, the average response is around 80 percent true.

If executives perceive an activity as a cost, then they will want to control it, eliminate it, pause it, or reduce it. However, if executives perceive the activity as an investment, they are more willing to protect it, enhance it, or increase it, which allows you to have more influence, enjoy better support, build better business partnerships, and, yes, protect the budget.

Ironically, most executives will admit that soft skills programs create the most admired, sustainable, and innovative organizationsthe great places to work. Soft skills are critical and often an executives top concern regarding the capability of their employees. But, as we write this book, we see soft skills programs facing many challenges. The problem is that most executives arent shown the value of the soft skills programs in the terms they appreciate and understand.

The challenge is to evaluate key soft skills programs at the impact and maybe even the ROI levels. Major programs in leadership development, communications, engagement, team building, empowerment, culture, and change management need this accountability. Some learning professionals are reluctant to go down this path because they are concerned that soft skills programs do not deliver a positive ROI. This misconception plays right into the hands of the executives who must control costs and are not sure of the value. However, you can show the ROI of these programs, and the odds are high that the value is greater for soft skills programs than for hard skills programs. We have seen this to be true in hundreds of studies in both areas in our database.

THE APPROACH

With resources being scarce, every expenditure needs to be evaluated to determine its value. Soft skills programs have grown more expensive, and the cost of travel and taking employees away from their jobs only adds to the total cost of the process. Consequently, program value should be clearly understood.

Concerning investment in soft skills programs, weve explored three basic bodies of work, as depicted in Figure P-1. At the base of the pyramid are logic and intuition. These are often referred to as the intangiblesnecessary soft skills that can be developed and even changed radically within organizations. Logically and intuitively, soft skills programs are an essential investment an organization to be successful. For example, executives at a large technology company invest in teambuilding because they want the work to be performed by teams.

Some executives want to see more, which leads to macro studies. These studies examine the relationship between variables; for example, the correlation between investing in people and subsequent outcomes in terms of profitability and productivity, customer satisfaction, and employee turnover. Studies involving soft skills programs typically show that investment in this area will probably reap benefits across the organization. For example, a home furnishing company invests in employee engagement because it correlates with sales growth, customer satisfaction, and retention.

FIGURE P-1. ANALYSIS OF SOFT SKILLS PROGRAM INVESTMENTS

Still, many executives want to know about the payoff of a specific internal program, even those initiated by them. They also want to know which methods are most effective and which model or theory works best, which means they need to conduct an evaluation on a program-by-program basis. This leads us to the third levelthe ROI analysis, which is a micro-level assessment. For example, a large banking organization is interested in the ROI of an enterprise manager program involving 20,000 participants.

This book does not focus on logic and intuition or macro analysis; other books do that quite well. What makes this book unique is that it details how to show the value of a soft skills program using a microanalysis approach. When every program is evaluated at some level, organizations can see a snapshot of the entire learning and talent development functions performance.

WHAT THIS BOOK PROVIDES

This book presents the ROI Methodology, which is the most-used evaluation system in the world. It is ideally suited for evaluating soft skills programs because it collects up to six types of data, representing five levels of outcomes, to show program success:

Level 1. Reaction to the soft skills program.

Level 2. Learning the skills and behaviors needed for success.

Level 3. Application of skills and competencies.

Level 4. Impact related to the application of soft skills competencies.

Level 5. Financial return on investment, showing cost versus benefits.

Intangible benefits connected to the program.

Intangibles are the impact measures not converted to money. In todays climate, the funders, supporters, and sponsors of major soft skills programs need business impact and ROI data, but they may also be interested in the intangibles.

Proving the Value of Soft Skills