by Karen Catlin
Founders for growth stage startup and executives in a larger company know that the war for technical talent is intense. They also understand that they need to differentiate themselves is to show that they care about their employees, career growth, and development. They want to provide training workshops, mentoring opportunities, and other skill development options.
Employees also suggest such programs, but too often don’t know how to answer the following questions posed by management:
- How will these offerings make a difference?
- What return will the company get on their investment?
As a consultant for companies who want to hire and retain female technical talent, I often hear these questions. While it may seem challenging to measure the return on investment of a career development workshop, a group mentoring program, or a coaching package, I’ve found some straightforward approaches to take. It’s not as hard at it looks! My methodology is based on skills I learned as an executive in the software industry, where we used metrics to measure the impact of just about everything we did.
Identify the business problem that you want to hire a consultant to solve. For example, many of the companies I advise want to retain their female technical talent, reducing the turnover or “regretted losses” of this highly-sought after demographic.
Simplify the problem. Instead of measuring the full impact of the program, recast it in simpler terms. E.g., What is the ROI for this program if it helps retain just one female engineer?
Measure the cost. While retaining an employee doesn’t have specific costs, replacing an employee does. To measure that cost, I searched for information from highly rated research groups. I found estimates reporting that it costs from 50% to 250% of a person’s salary to replace them (source: Catalyst). I decided to be conservative and go with the lower number. Based on my experience managing software development teams in Silicon Valley, I decided to use $120,000 as an average salary for my calculation. So, 50% of $120,000 = $60,000, or the average cost to replace a software engineer.
Calculate the ROI of the program you want. Simply divide the cost of the problem by the cost of the program. If the fee for the project is $10,000, the ROI would be $60,000/$10,000, or 6:1.
Compare the ROI to other initiatives. Ask management about the ROI they’ve seen for other career development programs. Or, find published examples for other companies. Assuming the ROI being offered to you is comparable or better, this data will showcase the impact the program can have for your organization. For example, I found that Sodexo measured reduced turnover and increased productivity to assess their mentoring program. In 2007, they reported a 2:1 ROI. (Source: Catalyst). If I can provide mentoring with a 6:1 ROI, my program will benefit you well by comparison
Have you seen other ways to measure ROI for career development programs? Please leave a comment. I’d love to hear from you.
After a successful career in the software industry, Karen Catlin now focuses on developing powerful women leaders. She draws from her experience as an executive to coach individuals, lead workshops, and advise companies on hiring and retaining female talent. Karen also writes “Use Your Inside Voice,” a blog about the intersection of parenting and leadership.
In her prior role, Karen was a vice president in the CTO’s office at Adobe Systems. She co-founded the “Adobe & Women” initiative, focused on attracting, retaining, and providing career development opportunities for women at Adobe. Karen joined Adobe as part of the 2005 acquisition of Macromedia. While at Macromedia, she held a variety of management positions across engineering, including establishing the program management discipline for the company. Earlier in her career Karen worked for GO Corporation, Hitachi Europe Limited, and Brown University.
Karen holds a B.S. in Computer Science from Brown University.
In her spare time, Karen enjoys being outdoors, playing tennis, and designing hand-knit accessories. She resides in San Mateo, CA with her husband and their two teenagers.