04 June 2018

How Can You Measure the ROI of Soft Skills?

Soft Skills / Talent Development
ROI of soft skills



As organizations evolve and grow so do their control and measurement systems. Tracking the impact of every dollar spent has now become the norm in every company and every department. In the case of Corporate Learning, measuring the return on investment (ROI) of any training initiative is high on the agenda for HR and Learning professionals. With the growing skills shortage and fight for talent, soft skills training now occupies a major share of purse so the need to measure the ROI of soft skills is now more pressing than ever.

Soft skills = foundation skills

Jeff Weiner, CEO of LinkedIn recently discussed the key findings from their new research looking at skills shortages across the US employment market.

He highlighted that “human beings are somewhat underrated” with communications skills facing the largest scarcity.

LinkedIn identified a lack of expertise in interpersonal skills across the American job market.

So why is there so much focus on the ROI of soft skills when there is such a clear and existing demand for those very skills in many organizations?

soft skills
Soft Skills Development
Building the critical skills needed to succeed in the modern workplace
soft skills
Soft Skills Development
Building the critical skills needed to succeed in the modern workplace

Perhaps it’s because soft skills face the same perception as IT skills did 30 years ago.

In 1988 ‘IT’ wasn’t even part of the vernacular and apart from the odd formal lesson in ‘basic´ programming, most computer activities were confined to “geeky” computer clubs.

IT was a niche skill that no-one got too excited about.

30 years on – many schools expect students to work on iPads and many primary school children are taught basic programming skills.

The last few decades have seen a drastic shift in attitudes toward IT skills and IT competency is now a prerequisite for most jobs.

How times and attitudes change.

Soft skills impact the bottom line

It’s easy to understand how important technical skills are, but soft skills like time management, communication, decision-making, and teamwork, are nonetheless equally important.

Soft skills training offers an array of benefits:

  • Improved productivity
  • Improved retention rates
  • Improved teamwork and customer service
  • Lower absenteeism
  • Better workplace communication and a higher level of employee engagement

These factors can be easily measured in improved bottom lines

If in doubt…Google it

In 2013, Google decided to test its hiring hypothesis by analyzing 15 years’ worth of hiring, firing, and promotion data.

This project led to the surprising discovery that hard skills come in last among the top seven qualities of Google’s top employees.

The top 7 characteristics of a successful Google employee are in fact:

  1. Being a good coach
  2. Communicating and listening well
  3. Possessing insights into others (including others different values and points of view)
  4. Having empathy toward and being supportive of one’s colleagues
  5. Being a good critical thinker and problem solver
  6. Being able to make connections across complex ideas
  7. STEM expertise

If nearly all of the top characteristics of success at Google are soft skills, then there is a strong argument for investment in those skills being not just a sound investment, but a vital one.

soft skills
Soft Skills Development
Building the critical skills needed to succeed in the modern workplace
soft skills
Soft Skills Development
Building the critical skills needed to succeed in the modern workplace

Still unconvinced? Try some solid analysis

According to Donald Taylor, Strategic Alliances Director at management software company InfoBasis, “When calculating the ROI on any training, results need to focus on core areas such as productivity, morale and staff turnover, which are of clear value to the organization.”

However, to make sure that the measurement works Taylor believes that,

“It’s crucial that alignment to business needs is done up front with training, so that when you are asked retrospectively whether there has been value added, you have clear answers”.

Tony Dunk, Principal at change management consultancy CDA, sees Key Performance Indicators (KPIs) as a good starting point for measuring the ROI of soft skills;

“Starting with the KPI, identify the key activities that have to happen for successful achievement of the measure and for each activity, identify the competency requirements, especially those with most leverage over the outcome.”

For example, the KPI might be a customer retention measure, aimed at reducing customer losses by effectively dealing with complaints.

Give your employees some soft skills training on conflict resolution to help to deal with angry customers and you can measure the customer losses both before and after the training. You can then quantify the improvement and set it against the cost of the training.

There you go – an actual ROI calculation method to keep in your back pocket for the next time that you’re asked to justify your training budget.

Further reading

Reflections on measuring the ROI of soft skills

Whether it’s measuring a salesperson’s conversion rate after a negotiating skills course, calculating how much less time a manager needs to spend checking their employees’ reports; or training your Board to present with confidence and watching investor confidence rise, there are a number of ways to measure the ROI of soft skills.

The way we look at the financial benefits of soft skills in 2018 may come to be seen as antiquated within the next decade. Like computers in the 80s, the impact that soft skills have on our personal and professional lives still isn’t a ubiquitous and commonly understood concept. This is perhaps why proof like ROI is still demanded. The ROI of soft skills is often questioned but can easily be proved.

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