To demonstrate the effect of learning on business outcomes, corporate education must first be linked to employee performance. This month’s Business Intelligence Board research explores this connection.
by Site Staff
March 1, 2005
Every other month, we pose questions to Chief Learning Officer magazine’s Business Intelligence Board on a variety of topics to gauge the issues, opportunities and attitudes that make up the role of a senior learning executive. One of the most meaningful connections that can be made is between the learning experience and its effect on business outcomes. There are two parts to this. The first is the connection between learning and employee performance. The second is between learning and the overall performance of the business. This article addresses the learning-employee performance linkage.
The Technical Connection
The first area addressed was the extent to which learning and performance systems are linked within the organization. In many enterprises, employee performance is owned by the human resources function, whereas learning and development may not be connected to human resources organizationally. The second area of exploration was whether the linkage between the two is formal or informal. The third connection explored pertained to whether the linkage is automated. Interestingly, 48 percent of respondents indicated that the two areas are somewhat linked, but are neither formalized nor automated. This implies an informal exchange of data across the cubicle walls without much in the way of integration of the two functions. Twenty-three percent of respondents said that performance and learning are linked and formalized, but not automated. This is likely due to the fact that the majority of enterprises have not yet updated their older paper-based performance appraisal systems. Only 7 percent of respondents said that employee performance and learning are linked, formalized and automated. This indicates that there is ample opportunity for growth in the areas of both automating and routinizing the learning-to-performance value chain. (See Figure 1.)
Speaking of Paper…
To fully understand the connection between learning and performance, and to learn about the degree to which the link might be automated, survey respondents were asked specifically about how performance is managed. If the link between learning and performance is manual, the culprit might have been likely to reveal itself as an under-automated performance management process. Responses bore this out. Of the respondents, 57 percent indicated that they still use a homegrown performance management system with little automation in place. Seventeen percent utilize either an HRMS or an enterprise resource planning (ERP) system that is separate from learning. Another 9 percent use a best-in-class performance management system that is distinct from learning. Only 5 percent of respondents have a single, integrated system in place that automates both learning and performance management. (See Figure 2.)
For those that do not yet have a formal management system in place for performance, 35 percent indicate that they have plans to implement one—almost as many respondents said that they just don’t know, which demonstrates a potential disconnect not only at the system level, but also at the cross-functional communication level. Of the 35 percent that plan to implement a formal performance management system, there is a real mixed response in terms of how they plan to go about it, with responses pretty much evenly split across three out of the four options given. Only 13 percent plan to acquire a performance management system that comes from the same vendor as their learning management system. The balance of respondents plan either to build the capability in-house (29 percent), to utilize their existing HRMS or ERP (28 percent) or to acquire a best-of-breed performance management tool and integrate it with learning themselves (30 percent). (See Figure 3.)
The Functional Connection
Given the fact that there appears to be a relatively significant technical gap between learning management and performance management systems, it made sense to explore the connection and relationship between the two areas from a functional perspective. The results are somewhat encouraging in that the majority (60 percent) of respondents indicated that learning either serves in an advisory capacity or has an established and fully involved partnership with the performance management process. Only 19 percent indicated that they have little or no input to the performance management function. (See Figure 4.)
Of the 19 percent that have little or no input today, an overwhelming 92 percent of them believe the level of involvement should be higher. Suggestions for increasing the level of cross-functional involvement were too numerous to mention, but there were a number of common themes. One called for a more formalized goal-setting process for the enterprise. In this way, all functions have a common view of the end point and can lead both the learning aspects and the performance and reward aspects of workforce management toward the overall enterprise goals. Another common theme that surfaced dealt with competencies. Like common goals, a set of competencies can be used across both learning and performance to help assess and improve performance and deliver training where it’s most needed. As one might anticipate, a third common theme focused on the lack of communication between the functions. Progress on the goal-setting and competency-setting fronts could go a long way toward improving cross-functional communication.
The Competency Connection
The Business Intelligence Board also responded to questions about the use of competencies across the learning and performance functions. Somewhat surprising progress has been made in this area. The largest number of respondents (45 percent) said that they’re using competencies across both functions. As mentioned earlier, the majority of respondents (60 percent) have either advisory or formal input to the performance management process. A correlation between these two findings shows that the use of a common set of competencies is indeed one of the drivers enabling the linkage between learning and performance for this subset of the respondents. The remaining 55 percent of respondents are not yet using competencies across both areas, and 21 percent of respondents are not using competencies at all. (See Figure 5.)
Of the 21 percent who do not use competencies at all within the enterprise, nearly half have no plans to do so. The common theme that ran throughout the feedback is lack of budget, time, management buy-in and the perception that deploying competencies is just too difficult.
The good news is that more than half of respondents are at least somewhat satisfied with their enterprise’s performance management. The bad news is that the vast majority do not have automated performance management, nor do they have a formalized link between learning and performance. Integration across workforce functions is driven from the supply side, but the demand side is lagging.
It is common knowledge that 70 percent of enterprise costs are workforce costs. As executive teams invest in the workforce by offering learning and development, they will begin to demand an accounting for their investment. They’ll first look to see if their investment is having an impact on the performance of the workforce. If learning outlays can’t be correlated to performance outcomes, management may be less likely to increase this investment. Wise CLOs should ask themselves these same questions and take action to make this linkage a reality. Coming up with a common language, such as competencies, with which to assess performance and prescribe needed development is one place to start.
Lisa Rowan is program manager of HR and staffing services research at IDC, a global market intelligence and advisory firm. She can be reached at email@example.com.