Articulating the return on investment (ROI) of Management Training is highly challenging.

Unlike training the tactical side of the responsibilities, gauging the effectiveness of soft skills training for leadership and effective management practices is harder to nail down.

New organizational managers’ output of their People Skills isn’t as obvious regarding business outcomes and has few measurable results. Because of this, it isn’t easy to demonstrate the absolute value of investing in your emerging and new managers.

However, my personal experience is that even small improvements in hiring, onboarding, and management skills allowing them to have a path to obtain the required tools and knowledge can result in significant ROI for the business. In this blog, we’ll walk through some data and statistics that quantify the return of a handful of Management Skills and propose a framework to help you broadly articulate the ROI of Management and Leadership training.

Let’s identify the True Challenges and Motivation.

Poor leadership can cost companies thousands to millions per year, depending on the organization’s size. Businesses in the United States are losing trillions of dollars annually due to voluntary turnover and the inability to hire qualified talent due to a poor brand reputation.

Nearly half of U.S. job seekers would entirely rule out taking a job with a company that exhibited the top negative employer brand factors.

  • Dysfunctional teams
  • Poor leadership
  • No matter what rate of pay they were offered.
  • Even a pay raise of 30% would only tempt 28% of job seekers to accept employment with a poorly rated organization that lacks leadership skills in the management ranks.

If you have ever wondered why you are not getting your fair share of highly qualified applicants for your posted positions, this is a likely cause. Suppose one of your primary sources of new applicants is not coming from your current employee base from referrals. In that case, you may have an issue with the quality of your management team’s ability to lead and engage.

What about the employees you already have hired?

How does a lack of qualified management and leadership affect them?

  • Only 2 in 10 employees strongly agreed that their performance is managed in a way that motivates them to do outstanding work.
  • Over half of exiting employees said that in the three months before they left, neither their manager nor any other leader spoke with them about their job satisfaction or future within the organization.
  • Poor leadership is the single most significant cause of employee disengagement and absenteeism.
  • Statistics show that 57% of staff leave a company because of their boss.

This is all Fixable!

Hiring Great People

It is shocking how many hiring managers make hiring decisions without never having received training on the skills of interviewing and selection for talent. Yet this is arguably where most of your turnover and ineffective employees come from. In my observations, this key and essential process has been self-taught in most cases, and they have not taught themselves very well.

An excellent hire has a higher maximum output from the beginning and the added network effect of attracting and elevating other top performers. Turnover starts with a poor hiring decision!

My mantra always goes, “No Matter What Business You’re in, You’re in the People Business.” The people a company hires are the most valuable asset they have. The bulk of your success will come from their efforts. Why not get this critical skill taught to managers?

On the flip side, your organization’s biggest headaches and fires come from problems or difficult team members. There is much to learn to be highly effective as a hiring professional.

The Impact of Ineffective People Practices On Your Team

Onboarding & Setting New Employees Up for Success

The mistake most often made in onboarding new employees is that the management team has no onboarding process! A good onboarding program accomplishes two goals:

  • It decreases the time it takes an employee to become a fully contributing member
  • It significantly increases the likelihood that the employee will stay with the company long-term.
    NOTE: Although hiring comes before onboarding chronologically, the full impact of great hiring practices isn’t realized until after a new hire starts.

For Example:

  • Google began onboarding new hires using a short checklist sent to managers the week before the new hire started. The result was 25% less time to get full productivity (one month). (Work Rules, Laszlo Bock, p. 295)
  • Organizations with a robust onboarding process improve new hire retention by 82% and productivity by over 70%. (The True Cost of a Bad Hire, Brandon Hall Group)

This onboarding process is a manager onboarding, not an HR onboarding process.

They are very different with diverse missions. The first few days of a successful management onboarding process are intended to build a solid relationship between new hires and managers. It is also vital for socialization and setting expectations from the beginning. The new employee will feel more connected to their boss and their fellow team members early. One best practice is having a “Mentor” program or “Buddy” for your new hires, which is proven to increase productivity and engagement much more quickly.

Our Setting New Employees Up For Success Online Training Coarse covers this in detail and provides a World-Class Onboarding Checklist for your company to begin using.

Management & Development

Excellent management and leadership training practices increase the value an employee brings to the organization over time. Companies that employ managers with solid management skills saw a 48% increase in profitability. (State of the American Manager, Gallup)

A lousy manager barking orders, having poor communication skills, and being difficult for no reason, are more common than not. Employers often miss witnessing these “Trial and Error” behaviors with a newly promoted manager. If these new managers had a better way, they likely would be utilizing it.

However, without a better approach, they often go with what “feels” right—often leading to poor leadership approaches, which lead to higher turnover and bad reputations. This is where providing new managers with the proper training is so important.

Your employees need guidance, training, and support, but unsurprisingly, that is often not a new manager’s priority. 67% of Millennials believe it is management’s job to provide accelerated development opportunities to encourage them to stay. (Why and How People Change Jobs, LinkedIn)

If you’re a manager, you may be unaware of the poor working conditions you create with a lack of employee development practices, recognition, and engagement.

This is where a small investment in improving their Knowledge, Skills and providing Essential Tools to new managers has such a high ROI. They learn the correct way from the beginning of their new role. Excellent management and development practices that involve coaching and training can improve an employee’s performance by 20% in a year.

Management & Culture

Strong management practices and positive culture correlate with retention and job satisfaction. 50% of employees left a job because of their manager, according to a survey measuring the engagement of 27 million employees. (State of the American Manager, Gallup)

People Join Companies, but they Leave Managers!

36% of people switching jobs left because they were “unsatisfied with the work environment/culture” of their previous employer. (Why and How People Change Jobs, LinkedIn)

An organization’s culture shapes your work enjoyment, work relationships, and work processes. You see this culture through its manifestations by team members in your workplace. In many ways, your Organization’s Culture is the personality of your organization expressed by team members through:

  • Language
  • Decision making
  • Openness with other team members
  • Stories and legends
  • Daily work practices

A good Organization’s Culture encourages everything and everyone in it to fulfill their desires around the tasks they complete for their jobs. This workplace has high morale and motivation—and thus increased productivity. A good culture builds a more engaged and productive workplace, balancing what we do and how we do it. It is a positive factor in bringing about a more significant impact on team members in the organization.

A good Organization’s Culture is also a magnet for attracting good people to work for the organization. Your managers need their direct reports to embrace the Organizational Culture to grow and scale your company to its maximum potential.

Summing It Up

As a business owner or executive, you must make hard choices about where to invest. And so, I developed the Results-Driven Management Training model as a high ROI investment you should make in your managers. Especially the new managers!

I sincerely hope businesses use this information through that lens and realize that investing in your talent isn’t just the right thing to do; it’s the smart thing to do. Life is better when work is more engaging, rewarding, and fun; it just so happens that we can also make a case for that philosophy from an ROI perspective.

Vaughn is the co-founder of Results-Driven Leadership. He is a leadership development expert, podcaster, and author. His methods are brought from his real-world experience working on the front lines and living the role of a high-impact leader and manager. His coaching and training programs offer no theory, just common-sense advice and direction. He is a former executive with CarMax, the world’s largest and most respected company in the auto industry, and is a Fortune 100 Best Places to Work.

Vaughn’s mission is to improve the impact of executives and other managers by increasing their knowledge, skills, and abilities.

His motto is “No matter what business you’re in, you’re in the people business.”