How to Quantify ROI on Personal Growth and Professional Development

Are you struggling to make an investment in your personal growth because you can't quantify the roi?

Then stop spinning your wheels and stay tuned because I'm gonna show you a step-by-step process that will help you make the right decision.

Stay tuned.

Hey everyone, I'm Doug Howard and welcome back to my channel. In today's episode, I'm gonna show you a simple framework for helping you quantify the ROI on intangible investments in your personal growth and your professional development. I'm also gonna give you a free tool that will help you transform subjective criteria into quantifiable metrics that will give you confidence in your decision.

The Professional Development Paradox

But first, I want to quickly explain why this is so important, and it all boils down to something I call the Professional Development Paradox. Think back to when you were an individual contributor. It's a lot easier to quantify the return on investment in the skills you're developing, whether it's a technical skill or getting a certification in a specific area.

When you think about what those investments are, it becomes very easy to quantify the return on it because, These are tangible skills that will allow you to do a tangible thing. It'll make you qualified for a specific role, or it'll make you capable of doing something that you're not capable of doing in your current role.

So it becomes pretty easy to justify the investment. However, where the paradox comes in is as you climb higher in your role into leadership positions. The skills become a lot more subjective, and it's a lot harder to quantify what skills do you need to be building and how will they impact your career and what is that worth?

What is the value of these things? And this is what holds many leaders back from advancing because they're not aware of what these skills are, and they're not investing in the right skills to drive their career forward. Then where they get stuck in the decision making process is rationalizing it for yourself or figuring out how to convince your boss to invest in your professional development.

What makes this so tricky is that the value is subjective, and it varies from person to person. When you can't quantify the value, it's literally impossible for you to determine your roi, which makes it very difficult for you to make a decision and move forward. If this is something you struggle with, you're gonna wanna follow this step-by-step process.

Step 1 - Determine Your Hourly Pay Rate

Step one is determine your hourly pay rate. Time is your most valuable resource because it's non-renewable, so you can never gain more time or create more time. Let's start by quantifying what your time is actually worth to do this, it's really simple. Just use your hourly pay rate. 

Step 2 - Identify the benefits

Step two is identify all the benefits from your investment. The first mistake most people make when trying to quantify the ROI on something is you get really fixated on the features that are included with the investment. When I say features, these are tangible things that are included with the investment and they're easily quantifiable.

For example, if you're considering a training program as your investment, a tangible feature would be the number of training sessions that are included with the program or the number of videos you get, or the number of sessions or the number of hours. And these are quantifiable things. Tangible features are important when evaluating your investment, but don't let it distract you from considering all the benefits that are included. 

Now benefits are the tangible impacts this investment will have on you and your life. To identify all these benefits, review the investment, and consider things like, what are all the skills you're gonna walk away with after you're done with this investment? What are the new capabilities you will gain from this investment? What problems will this investment solve for you? Does this breakdown any barriers that are currently holding you back? Once you've identified all the benefits, then you're gonna wanna move on to the next step, which is step three. 

Step 3 - Determine the tangible value from the investment

Determine the tangible value from the investment. To simplify this, you're gonna consider how each benefit will impact you in two specific areas.

First, increased income, second time saved. Let's start with increased income. You wanna figure out if and how this investment will increase your earning potential by considering if the benefits and the skills you outlined in step two will lead to any future opportunities, promotions, raises, and bonuses that you're currently not qualified for. If they will then try to quantify how much it will increase your income over the next year. We're gonna use a year as our baseline here. Write that number down, whatever it is, then save it for later.

Next, we wanna look at time saved. So think about what your biggest time sucks are right now. Then think about the investment benefits. Will these benefits help you save time or gain time back in any of these areas? If it does, then think about how many hours you would save each week. Then multiply that number by 52 weeks so that you can see how much time you'll save per year. Then translate that time saved to yearly costs saved by multiplying the hours you saved times your hourly pay rate that you came up with in step one.

Step 4 - Measure the Return On Investment

Step four is measure the return on investment. Your roi. To do this first, add together both of the dollar amounts you've just calculated between the increased income and the time saved. The sum total is the quantifiable value of your investment. To get your roi, subtract this value from the dollar amount of the actual investment you're making.

Now, this value is your tangible ROI because it only takes tangible impacts into account like time and money. If your tangible ROI is positive, it means you have a positive return on investment. And if money is the only thing holding you back from making the decision, then you should definitely make this investment in yourself. It's a no-brainer, basically. 

Still on the Fence?

But if the tangible ROI is a negative value, or if you're still on the fence anyways because money wasn't the only thing holding you back, you'll wanna review each benefit you identified in step two and then reflect on the following questions.

• How will this investment make you more effective in your current role, as well as your future roles? 

• What new opportunities will this investment open up for you in your career? 

• Will this investment empower you to do something that you weren't capable of before? 

• What could you accomplish with all the extra time you gained back from this investment? 

• How would this investment change your life personally or professionally?

Once you've answered these questions, take a step back to consider how you could quantify each outcome you came up with.
For example, if this creates more career opportunities for you, consider the opportunity cost of having a limited career path. Or if this reduces stress and helps you enjoy your career more, consider the positive impact it will have on your health, energy, and your personal life. 

Review all the positive outcomes you came up with, then take a step back and ask yourself this one simple question. Are these benefits and outcomes more valuable than the tangible ROI you calculated?

If your answer is yes, then why wouldn't you make this investment in yourself?

If the answer is no, then this probably isn't a good investment for you.

ROI Calculator

This ROI calculator tool is super easy to use. It walks through all the steps that we just covered in this video and in it. You can apply this framework to any sort of investment in your personal growth or your professional development.

What this does is it helps you quantify all these things. How is it gonna save you time, and how can it lead to increased income for you? Then it summarizes all that for you at the end by comparing it to the net investment versus the ROI on that investment. 

So it makes this really simple and easy for you. If you've been spinning your wheels on making an investment in your professional growth or your personal development, then download my free ROI calculator tool to help you make the right decision.

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