Tough times call for tough decisions. When it comes to slashing business expenses, CEOs are faced with the unenviable task of cutting programs that do not clearly improve the bottom line. And unfortunately, learning programs often are the first to go.
Just look at the statistics: Total corporate training spending fell 11 percent in 2008, due largely to the fact that the benefits of learning are one of the most unmeasurable areas of corporate spending, according to Bersin & Associates’ Corporate Learning Factbook 2009.
It is crucial for those in charge of learning and development to communicate the real worth of their corporate programs. But how exactly do they tie these programs to business metrics that matter: sales growth, lower costs, a boost in customer satisfaction or lower inventory levels?
The standard return on investment (ROI) model simply is not suited to measure the value of training and development programs in helping employees do their jobs better and improving business performance.
First Things First: Measuring What Matters
According to a recent study conducted by the ROI Institute (see Figure 1), nearly all CLOs measure their success by how many employees are trained. Three out of four CLOs measure the efficiency of training — how well it resonates with employees in terms of timing, content and other perceptive logistics. Half measure the reaction of the employees to the training. However, these elements are the ones that CLOs admit offer the least value in assessing the overall success of their programs.
Meanwhile, only 1 out of 10 CLOs measures the impact of training on the business — the metric that the overwhelming majority of survey respondents cited as the most important measurement to determine success of employee training programs.
These statistics lead us back to the basics: What is the purpose of learning in the first place? How do we know that employees are learning and retaining the skills and knowledge and applying it to their jobs? Where are the shortcomings that need to be addressed?
ROI vs. IOB
IOB — which stands for impact on business — directly aligns employee development to business goals.
With ROI, the company assesses the cost of the learning technology versus its direct monetary return. How many people were trained? How many courses were taught? Was there a reduction in travel costs?
ROI typically falls short when it comes to determining how engaged learners were, how much they retained or how job performance skyrocketed after learning. Further, the results of programs have to last long after the classroom or online program concludes. For instance, are employees using their new skills to improve customer service? Are sales on the upswing? Has customer repeat business improved? Have inventories declined? Are the improved results maintained for several quarters, or is it just an immediate spike?
For the CLO, tracking the impact of learning against these kinds of measurable business objectives shows how much value can be tied to it.
Reducing costs by moving in-person training programs to online or blended approaches, for example, is an important business decision. However, going beyond just showing dollars saved and actually demonstrating the results — namely, more educated and informed employees meeting business objectives — is a far more valuable measurement.
Learning organizations should be able to show that if an employee is provided with high-quality and job-relevant learning, it will translate into better job performance and ultimately to better attainment of business objectives. In essence, the workforce is provided with the additional proficiency and expertise required to have an impact on the business.
Take Westinghouse, for instance. The Monroeville, Pa.-based energy company produces equipment and operating systems for nearly 50 percent of the world’s commercial nuclear power plants. As the global search for energy solutions continues, the company’s business — manufacturing advanced pressured water reactor systems for new facilities and components for existing ones — is thriving.
An integral component of Westinghouse’s services is customer training. The company must provide content to customers across the globe, and internal subject matter experts must be able to deliver it effectively. The company also has been experiencing rapid growth, hiring on average 100 or more new employees each month for its 35 locations around the world. All of these factors place a great deal of pressure on the learning department, which is responsible for educating not only internal subject matter experts and new hires but also commercial customers.
Westinghouse needed to streamline training of new hires and customers and increase instructor effectiveness. The company decided to implement hybrid-learning courses to deliver the best combination of resource utilization and improved learning.
A traditional ROI measurement determined that the online learning Westinghouse implemented reduced travel costs, and the access to online instruction saved the time and expense that would be required if face-to-face classroom instruction was the only option.
By implementing an IOB model, Westinghouse could show that the new learning courses also had a noticeable impact on the business by improving student interaction and learning.
Ultimately, IOB challenges CLOs to shift their focus from training to performance. By keeping three key points in mind — behavior, business and the bottom line — you canbetter determine ways to positively influence employee behavior.
Here are four steps for implementing an IOB model:
1. Understand business goals. Understand the business goals, priorities and metrics of your internal customers, including the C-suite and department heads. Internalize how peers and colleagues are measured before building teaching and learning programs for each department.
What are the key success metrics they are pursuing? What challenges need to be overcome to accomplish those objectives? What are the department’s employees’ strengths and weaknesses? What skills are needed to exceed expectations? What employee behavior and outputs are needed for the department’s team to achieve these goals?
2. Re-engineer learning and development strategies. Once there is an understanding of both the department’s and the overall organization’s business goals, CLOs can develop learning and development strategies and objectives that will give employees the tools, knowledge and understanding to improve in their roles and contribute to the company’s bottom line.
This is an iterative process in which the CLO and the department heads collaborate to define the skills, competencies and knowledge that department employees need to achieve results and meet or exceed the metrics established in the previous step. Then, you can create specific learning programs tailored to each department.
3. Create tactics to deliver impactful learning. At the tactical level, define how to deliver the learning programs to maximize retention. Again, this step is most successful when treated as a collaborative process. Department heads can provide valuable insight into how their employees learn best. Many times, they also provide subject matter expertise and pertinent content.
It is through the creation of a highly engaging learning environment that CLOs can really deliver meaningful results. Self-service training just doesn’t cut it anymore for mission-critical and job-relevant content. In fact, CLOs must be able to harness informal learning by making it “formal.”
We know the more interaction the learners have with their peers and instructors, but also with mentors, coaches and subject matter experts, the more they retain. The more they retain and use to help them do their jobs more effectively, the better the overall impact the learning program will have on the business.
4. Create a continuous learning environment. The IOB methodology stresses the importance of a continuous learning environment, where learners acquire knowledge and hone their skills after the learning event is finished. Research from Bersin & Associates shows that people retain only 5 percent of what they hear and just 10 percent of what they read — yet they retain almost 50 percent of what they learn through discussion and interaction.
Company executives serve as subject matter experts who create and update content themselves, resulting in faster and more efficient updates.
In an around-the-clock learning environment such as this, learning is more than just the training event itself, and the learning department is more than just a group of trainers. Instead, the learning staff serve as mentors and facilitators, helping learners to apply new skills — ultimately benefiting the business.
After all, capturing knowledge when sitting in a classroom or through an online class is one thing, but when employees are given access to content and available instructors, subject matter experts or mentors at a “teachable moment” — when the employee is out of the learning environment and back to work — they can apply the information learned to everyday tasks.
When executives can measure improved performance and meet their goals and objectives through training, it is much easier to communicate the value of the programs and generate support for their continuation.
As Gartner’s Carol Rozwell discusses in her report, “Are You Providing the On-the-Job Learning That People Really Want,” CLOs should avoid the “one more thing” syndrome: Learning is a part of the work process, and all materials should be captured in the corporate repository to empower continuous learning and ultimately impact the business.
When CLOs implement a high-quality measurement system that not only demonstrates ongoing cost reductions but also increased sales, higher levels of customer satisfaction and the achievement of other business objectives, they will earn a seat at the table. And rightfully so.
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