Return on Investment

By Kathryn Tyler Feb 1, 2011
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Many companies gauge the effectiveness of middle managers—and thus the effectiveness of middle managers’ training—based on turnover rates. However, in a soft labor market, turnover metrics may not be much help in determining managers’ effectiveness. Employee engagement surveys shed additional light on training effectiveness, as many employees may not physically leave the company but may check out mentally and emotionally. Tom Davenport, senior practitioner in the San Francisco office of Towers Watson, a global HR consulting firm, recommends that HR professionals survey employees to determine their engagement levels. Presumably, the more training managers receive, the higher their direct reports’ engagement levels should be. “Also, you want to measure managers on the financial performance of their units. It’s less about measuring the return on investment of one training program and more about how effectively, over time, my manager population is performing,” Davenport reflects.

Elkhart General Hospital’s HR professionals use employee engagement scores of middle managers and their direct reports, as well as financial metrics, to determine training effectiveness. A recent engagement survey indicated an improvement in managers’ engagement to 79 percent, a 15 percent increase over the results of a survey fielded before managers’ training, says Kurt Meyer, vice president of HR and support services. “Employee engagement improved, too,” he adds. In addition, the hospital’s revenue improved to $156,000 per employee in a year when managers anticipated that figure to be $148,000. The overall operating margin was up 2 percent over the previous year, and overall expenses have been cut $5 million in the last two years. “Having solid and productive managers is key,” he says.

The author is a freelance writer and former HR generalist and trainer in Wixom, Mich.

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