Tom Kraack, partner with Accenture's Learning Outsourcing business, looks at the pressures on training and the demand for ever quicker returns.
Everywhere we go these days we hear a common lament about the training function of organizations: money goes in, but who knows what comes out? Do our people know more? Are they performing better? Are new employees achieving competency faster? More importantly, is any of this translating into business benefits?
A major roadblock standing in the way of organizations achieving better business results through learning is: the sizable legacy investment that companies have in their existing learning content, their training organization structures, and their technology platforms.
Consider what happens next. Typically, companies push titles and content out to their employees based on what they think they need. Then they measure how many people take the courses or how many hours are spent on training. What’s missing from this picture? Any measurements at the backend as to what the workforce has gained in terms of productivity and capability, and then how the new workforce characteristics show up on the financial statements.
These are tough and challenging economic times. Enterprises are looking to cut costs. And other issues, such as aging workforces and the move to variable cost structures, continue to put pressure on management to transform the delivery of learning. But even with today’s economic constraints, we think companies are not dreaming big enough when it comes to their learning function. Without the right mindset about what learning can accomplish, and without the right measurements that link learning investments to business benefits, companies are shorting themselves in two ways. First, they’re not getting a sufficient return on their learning investment. Second, they are missing out on upside opportunities that could make a significant difference in their competitive framework.
Learning and Training That Make a Difference
Here are five examples of how a focus on the efficiency and effectiveness of the learning function translates into upside opportunities and increased business value:
1. Speed to Market
Every organization wants to beat its competitors in getting products and services to market, but the skills of a workforce often stand in the way.
2. Speed to Competency
We’ve always known that people learn to perform in new ways faster if they actually do the actions that are required. Unfortunately, the technologies that allow “learn by doing” in a risk-free environment haven’t always been in place. The technique of “performance simulation” has revolutionized the field of computer-based training. By making the training environment look like the work environment (and vice versa), companies now realize big business benefits from the reduced time it takes to train someone to perform at optimal levels.
3. Reskilling to Support New Strategic Objectives
In many companies, the average lag time between setting new strategic direction and developing workforce skills to enact that strategy gets measured in years, not months or weeks. Today, new learning approaches can align a workforce with company strategy in dramatically less time.
4. Responding to Technology, Market or Regulatory Change
We live in volatile times. If you couple this business environment with a static delivery platform, you have cause for concern. From a risk management point of view, the situation may even be untenable. Here is where outsourcing solutions protect companies from investments that could leave them less responsive to change. But let’s also turn that around. Downside risk can translate into upside opportunity for companies that can design and administer their learning function in such a way to give them an edge over their competitors.
5. Shareholder Value
Researchers are creating an increasingly compelling picture of how value is created in a company through its human performance investments, particularly learning. Recent studies show a high correlation between learning investments, employee development and long-term business performance. For example, a recent study from the American Society of Training and Development found that companies in the top 25 percent of per-employee training expenditures had revenue per employee that was 218 percent higher, profit margins that were 24 percent higher, and price-to-book ratios than were 26 percent higher than companies in the bottom 25 percent.
These numbers are impossible to ignore. The amount of training spend is only one measure of commitment to employee development and doesn’t address issues of effectiveness and resource leverage. Nevertheless, such indicators are important. They create some urgency for organizations struggling to compete effectively. They point to a truth that is surprisingly easy to ignore: learning is an investment in people … and in the business.
Unless companies are prepared to make their learning investments with an eye towards actual financial return, they will not reap benefits from cost reduction moves, they will not see a successful return on the learning investment, and they will miss opportunities to create new kinds of value. Learning costs may be high, but without the proper business perspective, the opportunity costs will be even higher.
