By understanding where human capital investments are working — and where they are not — you can make targeted adjustments that improve impact over time. Suppose you knew that your leadership development program was working for boomers but not millennials — would you change anything? If your sales training was working in the U.S. but not in Europe, would you change anything? Of course you would. That is the power of optimization. But how do you get to optimization?
Business impact and its corresponding ROI are historical findings, showing what has already happened. Optimization estimates how to take steps to predictively improve future outcomes, which means making changes that are certain to have greater impact. Most organizations, if they measure impact at all, use estimating techniques to calculate impact. The most common technique used is survey-based methodology, asking participants how much improvement they believe was based upon a certain intervention.
Getting to optimization requires that an investment be isolated statistically from all the other variables that also may have had a contribution to the impact. Isolating the investment allows you to understand where the investment is working, and where not, against the multitude of individual demographics (age, gender, job title, etc.) and organizational demographics (location, business unit, etc.). With this precise knowledge you can keep deploying the investment to those people and places where you are seeing the impact, and adjust your investment to those people who are not responding to your expectations.
The vast majority of human capital investments take time to deploy to entire targeted populations because of budget constraints or classroom space. We measured the first year of a three-year leadership development deployment, and by understanding where the first year’s investment was working and not working, improvements were made in the second year’s deployment that increased the overall business impact. Applying predictive analytics to this client’s big data made this possible.
ROI provides a valuable measure of success, but take this extra step further! Get to optimization. Strive to predict the future. Once you do, you will never rely on opinion-based decisions again.
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