Make Training Pay
First published in Edge magazine
Smart companies know that a trained up workforce is an asset in the battle for market share. But just sending staff on training courses is not enough - it has to be worth the investment. Lyn Bicker reveals how to get the most from training budgets.
One of the defining aspects of the dot.com bubble of 2000 was the talent war - people were the priceless commodity. Companies competed for the most skilled employees who could add immediate value to their businesses, while developing potential through training was rarely a priority. Scared, if not scarred, by the lightening speed of the technology sector fall-out, many organisations have since grasped that developing the skills of your existing workforce can be one of the biggest competitive and performance differentiators. Indeed, the more enlightened - and successful - organisations have always known this to be the case.
But achieving a skilled and focussed workforce comes at a price, and the upshot is that public and private sector organisations are now spending enormous sums on training and development - the DFES puts it at £23.5bn annually. It's no surprise then to see an increasing emphasis placed upon demonstrating value from this investment. How to show a clear return on training expenditure is a fast-growing, if sometimes elusive imperative for many.
Statistics from the most recent DFES survey, Learning and Training at Work 2002, show training levels have increased year-on-year since 1999. In 2002, two thirds of employers who provided training during the previous year said their investment boosted productivity and profit margins. Other figures reveal that 62% of employers provided off-the-job training in 2002, an increase of ten percent on 1999. Eighty two percent provided on-the-job training, three per cent up on 1999.
Off-the-job training Generally then, we can see that more employers are providing more off-the-job training. They are also training a greater proportion of their staff, albeit for shorter periods of time. Only a minority of employers feel training is unnecessary. Two thirds of companies who did not provide any job-related training said the existing skills of staff met business needs. Other reasons mentioned were that employees learn from experience and new recruits bring the required skills with them.
But today's highest-performing organisations are most likely to be those maximising human capital development in line with overall strategy. This critical combination helps deliver senior management's need for capital efficiency, while boosting productivity growth, innovation and customer satisfaction.
Harnessing and nurturing the energy, creativity and potential of a workforce requires vision and commitment on the part of the company. The impact of training investment on financial performance is less likely to be through a sudden increase in share price than an incremental improvement in areas such as productivity, quality and customer care.
Under economic pressure, executives are more acutely aware of how workforce-related issues are a consistent strategic priority. They recognise that a lack of critical skills can compromise the organisation's ability to attain ever-increasing targets for operational as well as financial performance. Ensuring training is strategically planned, well sourced, and the return accurately measured, has therefore become more important than ever.
Last year's CIPD annual survey of 500 UK-based employers - seen by many as a reliable barometer of training productivity - gave cause for optimism. During the last five years the survey shows that training has increasingly become geared to meet strategic needs. There is almost universal agreement that more bespoke training is being delivered, with the objective of solving specific organisational problems. More than three-quarters of participants report that line and senior managers take up more development opportunities - 40% of line managers form the largest source of training requests.
But while most companies seem to be aligning their training with organisational strategy, it is also vital that they measure the return on training to ensure it is proving a worthwhile investment. It's all very well to have recognised the need for measurable processes with tangible results, but getting beyond that point seems to be problematic for many.
Distinguishing the benefits of training from other business drivers can prove tricky. Tining evaluation can often be inconsistent and subjective, while miscommunication between those who commission training and those who participate in it can lead to mutual frustration and lack of trust. The result?
Measurement for many organisations amounts to little more than a poorly designed and costly tick-in-the-box evaluation sheet. These post-training so-called 'happy sheets' are often nothing but a short-lived and sometimes defensive sticky-plaster solution. Simple satisfaction with a training event is arguably the least relevant business intelligence managers require.
Despite this, the CIPD survey reveals a widespread use of written statements and pre-and post-training briefings. More than 85% of organisations make some use of post-training written statements of trainees' intentions. Most say this mechanism helps improve performance and more than half use statements as a discussion base for debriefing sessions. Interestingly, the public sector makes more use of written statements than other industry sectors, though this could be a reflection of increased training budgets relative to the private sector, which is still recovering from an economic downturn.
It must be acknowledged that size impacts this debate and that the training needs of smaller employers differ to those of larger ones. Staff are more likely to be required to multi-skill in smaller businesses and the level of job-related training increases with the size of company. Also, the smaller the organisation, the less likely they are to have a formally structured approach to evaluation. According to the CIPD survey, almost a third of organisations with 25-49 employees do not use written statements after training.
Smaller establishments are also less likely to invest in post-training debriefing sessions with line managers. It is interesting to note this is mirrored in the finance and banking sectors, where apparently line managers also fail to meet expectations in supporting the implementation of trainees' actions.
Generally it is time constraints, rather than lack of resources, line manager support and employee motivation, that is considered to be a major hurdle in the path of learning. So, to commit compressed time and valuable resource to learning investment - and ensure it pays off - what are the critical parameters around which training and development should be planned?
Train for success First, assessment criteria should be in-built from the beginning, not tacked on as an after-thought. The current research shows that there is a strong trend to integrate T&D planning with business strategy, with achieving specific business goals being a clean measure of the impact of learning. But, importantly, this approach also guarantees a simple but important question is asked: 'Is training the right solution?'
In making a case for training, what is the most important factor? Staff needs, manager requests or business issues? What are the performance indicators?
There is a danger that training is used in place of performance management, particularly where an individual employee is contributing poorly. A manager may resort to training as a means of addressing the problem. Or, they may simply implement it as a way of being seen to be doing something. In such a scenario, the employer, the manager and the employee all lose out.
So builds the case for 'training needs assessments', traditionally a tool to get people trained as efficiently as possible. It is crucial that any training assessment considers the needs of the business and relates these to the training requirements of individuals. This process avoids the pitfalls of investing in training simply because there is money to be spent and asks more pertinent questions such as: "We spend at least 50% of our overhead on the payroll - what can our people do now and what do they need in order to be able to do more?" Understanding employee skills in relation to their jobs moves the issue of training out of the realm of HR and takes it closer to the 'beating heart' of the organisation.
A good example of linking learning to a business outcome is through the 'time to competency' measurement. Reduce the time in which an employee reaches performance competency and you reduce their up-front training cost. You also get a more productive person more quickly. Productivity, quality and resourcing are obvious areas for ROI metrics. Benchmark them to measure value, whether in terms of sales figures, products manufactured, higher customer satisfaction levels or improved staff retention rates.
Disseminate know-how De-briefings and knowledge sharing are important elements of the ROI process. Formal post-training sessions with line managers help clarify benefits and identify how best to apply them. Give a delegate time to consider what they have learned and to identify opportunities, whether these are improvements to what they do or perhaps more impacting, organisational changes.
Ensure learning is captured for the organisation, as well as the individual. Encourage the sharing of course materials, as candidates to crystallise their experience for colleagues, and suggest they talk about what they have learned at an appropriate event like a team meeting. Gauging basic reaction to a training event, even using 'happy sheets', is worthwhile, so long as the limitations are recognised. The approach does not measure how much a participant has learned, but satisfied people will feel better motivated and more likely to apply their new or enhanced skills. When measuring the benefits of training investment on organisational performance ensure you return to original business objectives. You should also collect other facts in areas such as staff morale, absenteeism and overtime, on error rates and customer feedback.
Measuring learning over the longer-term and through a comprehensive assessment of knowledge, skills, attitude and performance ensures a consistent approach. Processes for this include the appraisal system or 360-degree feedback, which will help make explicit the link between development and effective job performance.
Crucially, the way the benefits of training are measured must be tailored to the individual needs of a company. Effective evaluation does not mean implementing all commonly used mechanisms - increased use of web-based training and blended learning are introducing new evaluation techniques. Just as an organisation's strategy and its financials are unique, aligned training investment and measurement will, in turn, have individual criteria. The single most-important ingredient in successful ROI, which makes a positive contribution to a wide range of organisations, is enjoyment. Learning should be enjoyed, and seen as an opportunity for personal and professional growth. Because satisfied staff help create the kind of organisational culture that positively impacts the bottom line.
Case study 01: Jayne Edwards, Learning & Development Manager, HBOS Few companies manage such a large and diverse training programme as HBOS. Jayne Edwards is learning and development manager in the firm's Group HR Services Division. With a market-leading position to maintain, some 67,000 employees and an annual training budget measured in tens of £millions, it's vital that HBOS has robust processes for measuring return on investment. It does this with Kirkpatrick-style pre and post-training course testing of employees, plus a further test three months after the course ends. HBOS also measures progress towards attainment of individual training goals via annual its annual appraisal system.
"Taking this approach overcomes the problems with traditional feedback forms and 'happy sheets'. These are too easy to manipulate and can't tell you whether participants have learned anything, or if it's been applied to produce improved job performance," says Jayne.
Case study 02: Chris Hadfield, Chief Executive, Bio Products Laboratory (BPL) BPL is a unit of the National Blood Authority and a special health authority within the NHS. Time and focus were the key elements that came under scrutiny when BPL reviewed its strategic plan for the next seven years. Chief executive Chris Hadfield had a clear vision of what he wanted the organisation to achieve but there were a number of impacting issues at hand. Working with TSO Consulting, BPL invested in a two-day workshop facilitation designed to allow the board to properly review its strategy.
BPL invests in regular training of its 500-strong workforce, focusing on regulatory needs, skills required for specific tasks and personal development for individual staff. The investment in focus, creativity and consolidated agreement was a departure for the organisation. 'What we didn't want was a two-day workshop which resulted in an unachievable wish-list,' explains Chris. 'What we did get was a list of clearly identified objectives.'
