The Royal Bank of Scotland (RBS) has built a multi-million pound business school to develop its top talent, but has avoided the tricky issue of return on investment (ROI) by declaring that it is an “investment in a belief”.
Measuring the return on leadership training has proved notoriously difficult for many employers. Last month, a global study of more than 15,000 organisations by Saratoga, the human capital arm of consultancy PricewaterhouseCoopers (PwC), said: “There is no clear indication that enhanced performance is arising from the considerable investment in leadership development.”
But Neil Roden, HR director at RBS, said the lack of success companies have had in tracking the ROI on leadership training – despite trying for the past 30 years – had led the bank’s chief executive, Sir Fred Goodwin, to go back to basics with the business school.
“He reverted back to asking: ‘Do we think that if people are trained it will make a difference? Will improving our leaders make a difference?’,”
Roden explained. “It is a symbol of commitment and a statement of intent to make us the UK’s number one employer.”
David May, RBS head of executive development, said the training programmes were based on those from leading institutions such as Harvard Business School.
“We have looked elsewhere to see what we can adopt and adapt,” he said. “When you get the kind of dialogue and exchange of ideas you get here, it’s inevitable that people will learn and develop – that’s why it doesn’t always have to be about charting ROI.”
But Richard Phelps, partner at PwC, said the key priority in sending people to business schools was having a clear understanding of the business outputs required.
“A lot of people are sent to business schools without understanding what they are going to get out of them,” he said. “You need to ask what is required of your leaders for them to have an impact.”
The business school, which opened in January, is part of a new £350m global headquarters that RBS has built at Gogarburn on the outskirts of Edinburgh.
For more on the Saratoga report click here