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Track Financial Workforce Performance to Show Learning's Value

June 28, 2020
Jun 28, 2020 7:00 PM

Learning and Development teams should give serious consideration to tracking a financial ratio for workforce performance defined as revenue/labor expense.  This is a financial measure that financial people will value as an indicator of workforce productivity.  A higher value shows the organization is generating more outputs from its labor inputs.  As this number grows it shows the inputs are doing more to produce value.  This is what learning and development does, create high performing workforces.

When measuring revenue/labor expense don't worry about how much L&D contributes to this as there are way too many factors at play.  However, given the significant role learning and development has in improving workforce productivity it is reasonable to assume that a positive trend is correlated to learning and development investments or the reverse is also reasonable to assume as well.

It is pretty easy to begin to track this, just go to your company's financial statements, specifically the profit and loss statement.  On a quarterly basis take revenue/labor expense and there you go.  Track that quarter by quarter.  See how it is trending.  If learning and development proactively monitors this it will be in a position to engage in constructive conversations with finance about talent investments.  If learning and development does not track this or worse doesn't understand it, finance may make decisions about learning budgets with little to no input from learning itself.

If you want to learn more about this, contact us and we can explain it further.

Thank you,

The Performitiv Team