It’s easy to understand the value of technical skills for any organization, and meaningfully calculate their expense and benefit. However, it can be more challenging to determine a monetary value in terms of soft skills or justify the cost of developing those skills within an organization. With the current economic challenges, companies are more determined than ever to track the impact of every dollar they spend. When training budgets are considered, it can be easy to put soft skills training aside because it can be challenging to calculate a real return on investment (ROI). However, the rapidly changing economic and social impact of COVID-19 has revealed the necessity of soft skills in the workplace now more than ever.
In a presentation at the 2020 SHRM Talent Conference, Susan Collins, Director of Talent Acquisition and Employer Branding at Talbots, shared that 97% of employers surveyed reported that soft skills were either as important as, or more important than hard skills in their organizations. It is also important to note that 46% of new employees fail within 18 months, mostly due to a lack of soft skills such as professionalism, or ability to get along with others. In another study by Boston University, Harvard University, and the Ross School of Business at the University of Michigan revealed that training in self-awareness and soft skills, like interpersonal communication and problem-solving, produces a 256% return on investment, based on an average rate of 12% higher team productivity and retention.
Key performance indicators(KPIs) are a good starting point for measuring the ROI of soft skills training. Using the KPI, identify what actions must happen to achieve each performance measure, and then for each of those actions, identify the competencies needed for a successful outcome. For example, if the KPI is a measure of customer retention, and the action required is to prevent customer loss, then a vital competency would be the ability to handle customer complaints effectively. Developing soft skills such as conflict management and negotiation in your team and then measuring improvement in that KPI would provide a number value to compare to the cost of training your leaders.
For the challenges of today, businesses will need teams that are not only technically skilled but are also emotionally intelligent. Both customers and employees have gone through economic upheavals, isolation, and increased anxiety, which all affect behavior and productivity. Today’s leaders need to be able to show compassion, manage remote teams, and have the ability to persevere in difficult times. With downsized staff and more complex problems to solve, organizations will need their managers to know how to think strategically, communicate effectively, and influence and motivate others. These so-called soft skills are essential to a business’s survival, and developing them in leaders can boost work productivity and decrease employee turnover, which in turn increases profits and decreases expenses. It is essential to consider the long term benefits of improving teamwork, critical thinking skills, and clear communication on every aspect of business when determining ROI for investing in a program to develop these vital soft skills in your team.