Money matters when it comes to a high-performing learning organization. Getting the budget to analyze needs, develop programs and seize opportunities shouldn’t be underestimated as a key to success.
But the size of the learning budget matters less than the precision with which L&D deploys it.
A look at several years’ worth of data from the Chief Learning Officer LearningElite, the magazine’s annual list of high-performing learning organizations, reveals that the best learning organizations focus on efficiency. (Note: A full report of these findings is available at www.learningelite.CLOmedia.com.)
Since 2011, the LearningElite has ranked and benchmarked organizations that employ effective workforce development strategies to deliver business results. Developed under the guidance of a group of experienced chief learning officers, the program evaluates organizations based on learning delivery, business impact, executive support and leadership development.
According to that data, the majority of companies with a high-performing learning organization spend less than 1 percent of their operational budget on learning (Figure 1). This level of spending has been consistent since 2012, with some fluctuation in actual spending levels.
In 2017, the number of companies spending more than 5 percent of operational budget on learning sank to its lowest level yet (12.8 percent), showing just how important efficiency in spending is to organizations.
That focus on efficiency carries through when examining the average amount spent per learner (Figure 2). The majority of learning organizations (61 percent) spend less than $1,000. Only one quarter of companies ranked on the LearningElite spend more than $2,000 per learner. This level of spending has remained remarkably stable over several years with only slight variations year over year, indicating this level of spending as a benchmark for high-performing learning organizations.
As might be expected, organizations with a larger learning budget are more likely to score high on strategic competence. Organizations that had a budget of more than $100 million for learning scored highest on a 5-point scale for learning strategy. Getting the learning organization funded, especially on a large scale, comes through a demonstration of solid business acumen and a commitment to delivering value. That credibility can take years to build.
Increasingly, that credibility also comes from looking at learning as a valuable business asset that can be deployed beyond the confines of the organization. A growing number of elite companies for learning and development (73 percent in 2017) also deliver learning to an extended enterprise of customers, suppliers and business partners. One in four high-performing learning organizations engage with clients and deliver learning to customers.
Regardless of the audience and end user for learning, what remains consistent is a focus on delivering against key indicators of business impact (Figures 3 and 4). For example, the ability to recruit and retain essential employees remains as a top driver of impact as the job market continues to tighten and organizations compete for workers with in-demand skills. Other key performance indicators include operational efficiency metrics as well as customer indicators such as Net Promoter Score.
That relentless focus on delivering what is valuable to the company is what sets elite learning organizations apart. Money isn’t everything. It’s what the learning organization does with it that matters most.
Mike Prokopeak is vice president and editor in chief of Chief Learning Officer magazine. He can be reached at editor@CLOmedia.com.