Many factors, including the threat of outsourcing, the war for talent and the shift from a manufacturing economy to a knowledge economy, are forcing both learning and HR to move beyond their traditional, transactional roles to focus on performance—workforce performance in direct support of business performance. The challenge is how to transform a reactive, transactional training department into a strategic function that creates real business value. The answer is not simple. A carefully thought-out plan that involves every aspect of the learning function must be created and executed with care. Here are nine steps to achieving business results through actionable workforce performance strategy.
1. 1-to-70 Ratio
Over the past 10 years, learning departments have focused on efficiently delivering quality training and development to a more broadly distributed learner population. Learning technologies have been embraced as the means to accomplish this. In the quest to squeeze costs out of the delivery process, training departments often make the mistake of building business cases for technology investments based on cost reduction alone.
Cost control is essential, but what is the value of these cost-cutting measures? According to the ASTD’s 2004 State of the Industry report, companies spend on average .5 percent to 1 percent of their overall operating budgets on learning initiatives. If training departments can reduce this by 10 percent by delivering learning more effectively, they have the opportunity to cut the operating budget by .05 percent to .1 percent.
In 2005, organizations will spend, on average, 70 percent of their overall operating budget on labor costs. Imagine if learning initiatives could increase the performance of the workforce by just 5 percent. The top-line value created from labor investments would grow by 5 percent. The question is: Where will you derive the greatest value? Squeezing costs out of .5 percent to 1 percent of the operating budget, or by increasing the performance of the 70 percent of operating budget that goes to labor costs?
The answer to this question varies by organization and changes with the global economic climate. According to a recent survey by the Conference Board, senior management is increasingly focused on growth over cost control:
- Focused primarily on growth: 26 percent 12 months ago, and 42 percent 12 months from now.
- Focused primarily on cost control: 41 percent 12 months ago, and 18 percent 12 months from now.
Learning is in the position today to build strategies and make investments that focus on value creation, business impact and operational and financial results.
Learning leaders can take action by:
- Understanding where their companies fall on the growth/cost-control continuum.
- Building methodologies and tools that require learning staff to define specific performance goals and anticipated value creation.
- Demonstrating to senior management (using industry benchmarks) how learning initiatives will increase the value created.
2. Partner with HR: Build a Performance Brand
Because HR and learning have arrived at the crossroads together, a powerful alliance should be built around workforce performance. Whether or not your corporate learning department reports to HR, both organizations are likely striving for the same thing: increased workforce performance in direct support of business goals.
Over the past several years, much attention has been given to the idea of human capital management—a business strategy that positions people as the most important business asset. Human capital management has mistakenly become associated more with HR and technology than with learning, but learning is, in fact, one of the most critical pillars of this strategy. Learning departments need to understand and position themselves as a critical component and perhaps even the primary champion of the business’ human capital strategy. A joint commitment to execution of this strategy is the platform on which to build the alliance between HR and learning.
By developing a cross-functional strategy, technology map and brand, learning and HR can demonstrate how workforce performance processes and technologies impact business results. Create joint strategies to:
- Connect learning to employee performance goals and assessment.
- Create individual development plans in support of succession plans.
- Provide employees with insight into the linkages between business goals and learning.
- Reduce employee attrition based on the misperception that career opportunities don’t exist internally.
- Provide management with a comprehensive view of the talent of the workforce, including performance ratings, training history, work experience, knowledge, skills and abilities.
Learning leaders can take action by:
- Meeting with HR to understand how they are reacting to the workforce performance mandate.
- Developing a performance brand that demonstrates unity in purpose to the business.
3. Build a Strategy Map
All too often, learning technology projects just don’t deliver expected results. A key factor in this is a failure to define business and functional requirements according to an overall plan. By not rooting these requirements in a solid human capital management strategy plan, organizations spend too much money on ad hoc software purchases or, worse, under-use learning software they already own. The value of learning investments can only become apparent when addressed from the larger perspective of workforce performance.
Learning leaders can take action by:
- Understanding HR’s technology road map.
- Developing a joint strategy map that illustrates learning’s relationship to other workforce performance processes and technologies.
- Identifying the end state, setting priorities and building a plan to get there.
4. Align Your Learning Governance Model
In order for a learning organization to produce programs that directly support measurable business goals, the right learning governance model needs to be in place. Best practice organizations today are finding that a combination of learning consultants aligned with the business and a shared services model is the most effective method to deliver training that directly aligns with business goals while maintaining a high quality of instructional design and delivery.
The learning consultant bridges the gap between training specialists who are experts in instructional design, adult learning theory, e-learning content development and the subject-matter experts in the business. Shared services provide consistency in the strategy, planning and execution of all common learning processes throughout the organization. By developing a solid shared services model, organizations can provide business units with the tools to produce quality learning programs while at the same time leveraging subject-matter experts, and in some cases even developing and delivering their own learning programs.
Learning leaders can take action by:
- Assessing the ability to understand and deliver training that yields tangible business impact. Include lines of business in this assessment process.
- Aligning learning professionals with business units, where possible.
- Developing a shared service model to support quality training initiatives.
5. Align Your Technology Strategy
Technology investments are usually initiated as a result of one of two drivers:
- To streamline, automate and squeeze costs out of highly administrative processes. LMS purchases often fall into this category.
- To answer a specific need for a particular project, initiative or department. Authoring, testing and assessment, virtual classroom tools and off-the-shelf content often fall into this category.
Neither of these drivers takes into account the strategic objectives of the organization, or even the strategic goals of the learning department. When technology investments are driven by transactional and reactive drivers, chances are good they will remain relegated to the category of administrative, non-strategic tools and never garner the internal support that’s needed to transform the way learning occurs or talent is managed.
Five years ago, workforce performance technologies were in fact primarily administrative in function and capability. Today, organizations have the opportunity to use learning and other performance technologies as true enablers of corporate strategy. In order to make the right investments and position workforce performance technologies as key enablers of business performance, organizations must show how they align and support the overall strategies of the organization. It’s essential to take the time to demonstrate the linkages between overall corporate goals and strategies; human capital management objectives, goals and strategies; and learning technology strategy.
With a clear map that illustrates how learning technologies support a multi-tiered strategy, funding is easier to come by, the right investments are easy to determine, and learning and performance technologies have an opportunity to be truly transformative.
Learning leaders can take action by:
- Identifying the overall corporate goals and strategies of the organization. Be sure to include concrete business initiatives and events.
- Meeting with HR and HRIT to understand human capital management objectives, goals and strategies, and how they support the overall corporate goals and strategies.
- Drawing out tangible linkages between learning technologies, human capital management strategies and corporate strategy.
6. Align Programs: Learning Investment Portfolio Strategy
Every learning executive struggles with the challenge of building strategic plans that support the overall objectives of the organization, while remaining responsive to the unplanned and often tactical needs of the line of business. The most effective organizations develop a prioritization framework through which all learning needs are filtered.
Any successful framework will balance multiple criteria. In one model, an organization built investment quadrants for each business unit (representing the business unit training budget), as well as a macro investment quadrant (representing the entire organization’s training budget). Individually, each of the four quadrants represented a different type of knowledge that was critical to the success of the business. Together, they represented the types of learning that were essential for growth. The quadrants were company knowledge, industry knowledge, operational knowledge and advance strategy.
By mapping learning initiatives onto a quadrant, over- and under-funded areas become apparent, and business unit and senior executives can quickly and easily re-balance the portfolio without losing sight of the big picture.
Learning leaders can take action by:
- Identifying the criteria and categories around which the learning portfolio will be built.
- Developing an easy-to-implement framework on which learning requests are mapped and filtered.
- Evangelizing or mandating the use of the framework by all training departments/functions.
7. C-Level Speak
Eight of the top 10 challenges cited in the Conference Board’s “CEO Challenge 2004” are a direct function of people, their abilities and the organization’s ability to align their behavior with changing business goals. The top 10 challenges are:
- Sustained and steady top-line growth.
- Speed, flexibility and adaptability to change.
- Customer loyalty and retention.
- Stimulating innovation and creativity, and enabling entrepreneurship.
- Cost and ability to innovate.
- Availability of talented managers and executives.
- Tight cost-control.
- Succession planning.
- Seizing opportunities for expansion and growth.
- Transferring knowledge, ideas and practices within the company.
Learning leaders can take action by:
- Asking the executive team to identify their top challenges.
- Using C-level language to demonstrate the value of learning investments.
- Using concrete examples (even from other organizations) backed up by numbers.
- Describing what will be enabled by knowledge transfer, instead of grounding learning investments in concrete areas of knowledge transfer, such as product, service or industry knowledge.
8. Measure Business Results
The focus on cost control as an indicator of departmental performance is evident in the types of metrics that learning departments typically generate: cost of training per student hour, training budget as a percent of revenue, enrollment rates, completion rates, scores and certification rates. These metrics fall into one of two categories: transactional reporting (necessary to run the department) and training operational metrics (necessary to monitor learning department performance). What is far too often neglected are metrics that measure the effectiveness of learning as an enabler of business goals.
Learning leaders can take action by:
- Not overcomplicating the effort. The impact of learning can usually be measured without a data warehouse.
- Measuring the impact of learning on pivotal roles in your organization whose performance is already measured by quantitative data.
- Finding out what to measure by talking with business leaders.
9. Market, Market, Market
Even high-quality learning programs that support the strategic goals of the organization can fail. Poor communication, inadequate project management and poor customer participation lead to low adoption rates of learning and performance technologies, low completion rates of courses, low levels of corporate awareness of learning and performance initiatives and, therefore, wasted time and money.
Create a comprehensive internal marketing plan with the goal of creating mindshare and transforming the way learning and performance are viewed by the organization. Only when workforce performance initiatives are viewed as strategic enablers to individual, departmental and corporate success will adoption rates be high enough to truly impact business results.
Success breeds success. You, as learning and HR professionals, are already impacting business performance. Market your successes. By making them known throughout the organization, you will pave the road for your work in transforming learning into a critical strategic function with a direct and measurable impact on business goals.
Learning leaders can take action by:
- Identifying goals, objectives, audience, measures of success and key messages.
- Developing internal marketing plans that address these and leverage existing communication channels.
- Considering potential risks and developing a strategy to overcome them.
- Being creative, yet not “cute.” Focus on value.
- Not underestimating the value of promoting success.
Heidi Spirgi is president and co-founder of Knowledge Infusion, and has more than 10 years of experience in the human capital management technology industry. She can be reached at hspirgi@clomedia.com.
