Who Is Driving ROI in Organizations?

By Patti P. Phillips, Ph.D., and Jack J. Phillips, Ph.D.

When it comes to delivering serious results from learning and talent development, hope is not a strategy, luck is not a factor and doing nothing is not an option.

One important issue in the implementation of serious evaluations, including measuring ROI on major projects, is to understand who is actually driving the implementation of ROI in the organization. This issue is something we track through our database of ROI users.

When we conduct routine benchmarking, we ask the question, who is driving the requirement for ROI in your organization?

Figure 1 shows the data from our most recent benchmarking, collected from 246 organizations in the one-to-five-year implementation phase of the ROI Methodology. As you can see in this chart, the C-suite executives are still driving ROI.

In total, 57 percent of organizations indicated C-suite executives are requesting ROI, which is less than previous benchmarking. Only 38 percent of respondents indicated the request has come from project owners or the evaluation team up from previous reports. This is good news, but it still shows a concern.

Figure 1. Who is driving ROI Implementation in organizations?

The good news is that the percentage of those indicating executives were driving the implementation is down considerably. Two decades ago, almost all the implementation of ROI was driven by the senior executive suite. The concerning issue is that 57 percent is still being driven by the top executives.

What difference does it make? If you wait for an executive to ask for ROI or require ROI, three things happen that place you in a predicament: 

• Usually, the request has a short time frame. The executives usually want to see something quickly. The requests often come after a major project has been implemented, and perhaps you didn't plan to evaluate the program at the impact and ROI levels. That's a problem. You need time to implement this process and build the capability to make it work for you. You're unlikely to have it for a timely response.
• You're now defensive. You are defending what you have done, or you are defending a program that's been targeted for ROI evaluation. You need to be on the offensive, not defensive. Being on the offense means that you are driving the evaluation efforts. You are deciding, at your pace, what needs to be done. Ideally, you provide evaluations to executives and keep them satisfied without them raising the request for more. 

• ROI is now on someone else's agenda. You want to keep ROI on your agenda and drive ROI implementation yourself instead of someone else. If you wait for the executives to dictate the request, they will probably ask for ROI on more projects than it makes sense to do. You need to follow a rational and logical approach.

Our advice is simple: Don't wait for an executive to ask for ROI. Unfortunately, we see this issue mentioned quite often.

Sometimes CLOs will be interviewed about their talent development function, and they are asked about ROI. Many will say, “I'm not going down the ROI path until I'm asked to do so.” As you can see, that is not necessarily a good approach.

We are reminded of a scenario we recently experienced with a CLO who started ROI implementation and alerted the management team that they were going down this path. They invited us to speak to the top executives, and we did. Those executives told us that they were so glad to see this happening. They wished this had been done earlier. We indicated the team said they hadn't moved on this issue because you hadn't requested it. We asked, “Why didn't you request the ROI?” The executives said, “We thought if they could conduct ROI studies, they would be providing the data to us. We thought they didn't have the capability to do it, so our request might be impossible for them.” You can see the dilemma.

Remember, when it comes to delivering serious results from learning and talent development, hope is not a strategy, luck is not a factor and doing nothing is not an option. The need for accountability is changing. Change is inevitable, but progress is optional. It's up to you to make it work.

If you are serious about developing ROI capability, we suggest you develop it internally. Building capability with a team in the L&D function brings a synergy that focuses on your process, and the necessary changes in the entire system needed to support the evaluation process.

This article was originally published on August 31, 2023, on chieflearningofficer.com