Speaker 1: And today, what I want to talk to you about is really demystifying the return on investment when it comes to people development. Why? I'm so passionate about this, because I get asked this question all the time, April, what's the ROI on leadership training? My name is April Sobral. I am the founder of The Positivity Company, a professional development training company, and we focus on turning your managers into positive coaches that inspire greatness in their team so that you can get the results that you want. And, you know, if you're thinking about, you know, investing in your people, which, by the way, if you are, fantastic, but you're trying to quantify it and really trying to articulate maybe to a senior team, or even to yourself, what the return on this investment would be, I'm going to break this down for you today, because it's something that, honestly, we don't talk enough about. And there is an exact measurement that you should be checking on in your business that you can measure the impact of leadership development, professional training, coaching for your people. It's always a bit of a mystery, right? What is the return on investment? Because when you're thinking about return on investment, you know, when you think about like investing into real estate, there's a, you know, a percentage, probably 10% return on your money. If you're thinking about investing into stocks, Bitcoin, whatever it is, you're getting a return on your money. And so when you think about what's the return on investment in investing in people, it's a very hard thing to quantify for people. And it's one of those things that actually in businesses, when you can't figure this out, it will stop you and derail you from investing in your people, which is the worst thing that you can take off the table, by the way, is not investing in your team. Why? Because people leave organizations and companies that do not invest in their career development, as well as how they feel working for their boss. So, you know, investing in training and development for leaders is so important. And today, I'm going to break it down for you. I met a wonderful woman called Joanne Crawley, who wrote a book all about this idea of ROC. So instead of using ROI, right, return on investment on training and development for leaders, stop focusing on that and start focusing on your ROC. What is ROC? It is your return on compensation. I love this idea, because the return on compensation is literally what you're spending, right, on your people. And are you getting a return on the investment that you're spending on your people in terms of their salary? Salary compensation, we know, is the No. 1 spend that we can control. And it's usually the one thing that gets cut when sales are not great, training and investing in people, along with headcount, right. So we know that compensation is one of those high, high ones on the list that we can control. So what is return on compensation? And why does this matter? Well, if you've hired 5 managers, and they're all getting paid $100,000, so you're spending 500k on your managers, right, that's your, your compensation, that's what you're spending. And let's say these managers are only operating at around 80% of capacity, or even 60% of capacity. That means you have a deficit now, right. So $100,000, you have a deficit of 20 grand. And so now your people are not operating at full return on compensation. Now, why does this happen? Well, two reasons in my experience of training and developing managers is No. 1, they're not motivated and inspired, where they're working in the culture by their boss. And No. 2, because they don't have the skills and abilities to function at their best capacity. Here's what happens, though, when you have leaders in a business that are not operating on a full capacity. So let's say, you know, two of those 5 managers are operating at 70% of their capacity, that starts to roll down, that ripple starts to affect other people, and people underneath them in their team may only be operating around a 40%. Now, if you take that all the way down to the frontline employee, where do you think your frontline employee is operating at? Now, I get this question all the time, should we hire people at a higher salary, right, versus hiring somebody at 50 grand, maybe we'll hire somebody at 60 grand so that they can hit the ground running, and just come in and do the job. And we'll have a higher return on compensation because they're more skilled. And here's my answer to that question. It's irrelevant what you pay somebody's salary at. It's irrelevant what you pay somebody's salary at. But what is relevant is the return on compensation that you're getting for that salary. And every human that I know is impacted by their environment, by the person that they work for, by the skills and abilities that they have to perform in the job, and their intrinsic motivation. And so you may be paying somebody, let's say $10,000 more, and that may be a strategy to get somebody trained that knows how to do the job. But in my experience, that's never really paid off. What you would be better off doing is hiring that $50,000 person and putting that $10,000 of spend into that $50,000 person to get a higher return on compensation. Because when you give somebody the training, the development, the motivation, the inspiration to learn and to progress them through their career, they're going to start upping their game when it comes to where they're operating at. We know three things that every employee wants is, number one, to like the person that they work for, number two, to trust the person that they work for, and number three, to feel like they're getting career development, training and coaching from the person they work for. So I want you to stop and think about this for a moment and just stop focusing on ROI of training and start asking yourself, Am I getting a return on my compensation? And why should I care about this? This ripple effect is huge and has a huge effect on the bottom line. So I want to show you this diagram, because this is so important for you to start to understand the ripple effect of leadership. So if you see the dial above this leader's head, right, or we can go back to the other one, you'll see the dial above the leader's head, right? And they, why do they all have a dollar sign on them? Well, because you're paying all of these people to do this job. And if this leader in the middle is operating at 50%, it starts having a knock-on effect on everybody else around them. Now, you might say, Who's that person over there, April, on the right-hand side? This is probably your high performer, self-motivated. I know I was one of these, ready to learn, ready to go against the odds, super positive, nobody could keep me down. But I was motivated as well to provide for my kids. So I had an intrinsic motivation to be that person. And generally, these people don't exist. If you look at performance reviews and the measurements of what you've had in your organization, for the last couple of years, you'll probably see only around 3% of people hit this mark without a leader helping them get there. So let's go back over to the ripple effect of leadership. And I love this idea. As a leader in a business, they're having a ripple effect no matter what. And they're either having a neutral, negative or positive effect on a daily basis. And how does this translate into your KPIs, your results as a business? Well, you'll see here on this slide, it's very clearly laid out. And I think this is probably the, the best way I've ever seen it laid out. And thank you to Joanne Crawley for her inspiration. So every human being, every person, right, is up and down every day. It's how we feel when we get up in the morning, the knowledge we have, somebody said something to us, it's just this ripple of movement all the time, constantly. And when your leader is having a ripple out, one person, a ripple out into your organization, this is what they're, they're actually affecting. They're affecting the sense of belonging with your employees in the organization through the, you know, having an impact, positive or negatively, on the effort and motivation of their direct reports. They're having an effect on the skills and abilities of their direct reports. If they don't know how to train, if they don't know how to coach the people on their team to be able to do the job, guess what? They're impacting that. They're also having an effect on somebody's emotional wellbeing. Because I don't know about you, but if you've ever had a boss where you just didn't really appreciate their leadership style, or you didn't feel like you were learning something from them, and you're like, Why am I here? That starts to take a toll on you, because you start to feel unmotivated, you start to feel not purposeful, you start to worry about your job, right. And then also, this affects your commitment level. This leader affects the commitment level of your team, your direct, their direct reports to your employees. And so when people ask me, What's the cost of having a bad leader? How do you quantify that? Well, just look at the column in the middle. There is a cost to the wrong behaviors in your business. And the wrong behaviors are all linked to the direct reports who work for the leader. And some of those costs are things like poor decision quality, team performance, fear of failing, you know, not wanting to make a mistake, it's a mistake, because you're in fear of being reprimanded by your boss, because you don't have a good relationship with them, will affect the way that you show up to work every day, and affect the return on compensation for the company. Because if I'm in that mode, which I have experienced in my life, I'm fear of doing something wrong, I'm probably operating from a stressful anxiety place. And I'm not being productive, my performance isn't there, right, which impacts retention, morale, brand sentiment. And then guess what reviews on Glassdoor. And then guess what happens? You're not achieving your company objectives. You're not achieving your store sales, you're not, you know, acquiring new customers and retaining your customers, and your organization's just working in silos. So, you know, the next time you start thinking about what is the ROI of training and development, when you have to make a decision in your organization, whether you're going to move forwards with training and developing and investing in your leaders, I want you to start thinking about this idea of return on compensation. And then look at each person in your business as a steward of your money that you are giving them to do the job, and start linking it this way to everything that they do has an impact, whether it's neutral, negative or positive. And see that trickle and that ripple effect go out, because everything in your business is affected by a human. Everything, whether it's a decision on product, whether it's a decision on location, whether that's writing a check that has to be given, whether that's hiring the right person, whether that's caring about what they're doing, when they're doing it, when nobody else is looking, everything in your business is affected by a human. So stop asking, what is the return on investment when it comes to leadership, development and training, and start looking at each person on your team, as are you getting a return on compensation in their performance, based on the things that I just shared with you. And you will then start to make different decisions around how to invest in your money, invest your money in training and development with your people. And this is what we do. We actually help organisations increase their return on compensation through the positive effect, transformational leadership programmes. And you can learn more about that if you head to aprilsabral.com, send us a message, whatever, and hit subscribe to this channel, share it with somebody, we're going to be releasing some amazing content and really helping you unlock that return on compensation, that positive inspiration, so that you can start to, you know, really shift the dial on your results and meet those company objectives for 2024.