Every company has a strategic asset that can’t be emulated by any other firm: the knowledge, skills, and talents of its employees. A recent report indicates that senior executives don’t feel that keeping these skills and knowledge up to date is their problem.
Only a third of C-suite executives surveyed felt that it’s their company’s job to prepare employees for future roles. Fewer than a third think that employees should be able to get all the knowledge and skills for the work from their employer. Half indicated that they saw their own firm’s training efforts as a waste of time.
It’s no surprise, then, that fewer than 20% of workers surveyed felt that their company has a strong learning environment.
Ron has his own recent example of this short-sighted view of the value of talent development. His role requires a specific certification that must be regularly renewed. This certification isn’t simply “nice to have.” His employer’s customers require it. Still, Ron’s employer has been reluctant to foot the bill for the re-certification costs.
It’s especially surprising that so many senior execs disparage training and development efforts, given that research shows that they have such a high return on investment. Studies show that training and development initiatives have a 300% ROI.
The research found companies that invested in training and development had
- 21% increase in productivity
- 24% higher profit margin
- 300% reduction in employee turnover
- 218% higher income per employee
- 86% higher company value, and
- A return per dollar invested of $6.72
Our own view is that managers disdain investments in training because they’re simply doing it all wrong in too many cases.
The ‘Hard Knocks’ Approach
Also known as the “sink or swim” approach, managers seem to like it because it’s the method most of them experienced in their own careers. They also like it because they think it’s less expensive than hiring full-time trainers or consultants.
The problem with the Hard Knocks approach is that employees move up the learning curve slowly. That means a higher opportunity cost. It also leads to needless errors, delays, mistakes, rework and frustration. These factors all have costs of their own—from lost sales, to lowered productivity, to higher turnover.
The ‘Training Light’ Approach
Rick once worked as the in-house trainer of supervisors and mid-level managers for a large integrated steel firm in Cleveland back in the 1980s. The general manager and his direct reports would think of a topic that hadn’t been covered, then Rick would put together some content and spend the next six weeks inflicting it on the supervisors and managers at the plant.
The senior leaders decided that all the supervisors needed to go to a class in “setting goals and objectives.” Rick put together the script, the materials, the overhead slides and a number of exercises, which he hoped would fill the eight hours of class time. (They didn’t, and that led to some problems for the instructor, but that’s a story for another time.)
The supervisors didn’t really enjoy those workshops, but Rick is a good story teller and had spent time getting to know the supervisors on their own turf, so everyone had a good rapport. During the first workshop, just before the end of the day, one of the workshop participants spoke up:
“Rick, we know that you don’t choose these workshop topics and you do the best you can with them. And your stories are mostly fairly interesting. But if any of us went back to the plant and told our bosses that we wanted to apply what we’ve learned here and start setting some of our own goals and objectives, our jobs would be in jeopardy. We’re told in many ways that our jobs do not include planning or goal-setting and to do anything along those lines would be unwelcome.”
As I looked around the room, Rick saw several heads nodding in affirmation. It was a long six weeks. The ROI on the investment in Rick’s time, the supervisors’ time and the expense of renting the room at a local hotel over the next six weeks was, as you might imagine, low.
Many organizations would tell you that they are committed to training and development and would point to such investments as evidence. But, as in the example above, such training doesn’t really do anything to help either employees or the organization. Training and development are given lip service and even funded … until times get bad. But they’re never seen as an important element of the firm’s ability to attain and sustain strategic advantage.
The Investment Approach
What if investments in training were viewed as investments in capital are viewed? What if due diligence were carried out prior to the investment? And what if the expected return on investment was clearly specified. Finally, what if the return on investment on all training and development activities was regularly evaluated? What would that look like in most organizations?
When companies invest in tools, equipment, machinery or technology, that investment fills a specific need or addresses a specific strategic opportunity. Senior leaders don’t sit around and brainstorm what they should buy next. They carefully assess the need or the opportunity, review the alternative investments and plan how they’ll most effectively implement and utilize that capital. Why don’t managers take the same approach to training and development? Training that provides a positive ROI starts with a needs assessment that seeks answers to questions like these:
- What knowledge, talents, and skills do our people possess right now?
- What knowledge, talents, and skills will our people need if they’re going to be able to help pursue our strategy?
- What are the best methods and means for imparting that knowledge and those skills and talents? And what will we need to invest in those methods?
- How will we know if the methods are providing value?
Develop a Plan
Managers don’t acquire and install new capital or technology without a plan. Nor should they carry out training and development activities without a plan. That plan needs to address who will get what training and education and how.
The quick answer to “Who will get the training and education?” must be “Everyone!” CEO, CFO, VP of Sales as well as new hires. What training and development the CEO participates in will be very different in content and format than that received by front line supervisors and new hires, of course. But if the plan doesn’t include the CEO, everyone else will see training and development as something that leadership really doesn’t see as important. And they’ll be right.
As to what training will be delivered, the answer will come from the needs analysis. It’s important that the “what” derives directly from the organization’s strategy.
There are myriad options as to how the training and development gets delivered, from executive workshops at Ivy League universities to classroom lectures and exercises to mentoring and coaching to videos. Each can be effective; it’s simply a matter of matching methods to the who and the what.
Assess the Results
Rick learned a lot from his father, who worked as a training and development professional. He often told Rick, “Don’t do training just so people will die smart. Do training that makes a difference.”
Part of the planning phase comprises consideration of the question, “What difference will training and education make? What will we see get better? How will we know that it’s working?”
Gathering the information that allows an organization to answer these questions isn’t always easy. When Rick worked as training director for the hospital here in Cleveland, he’d send out emails asking the managers who had attended his sessions how they were using what they had learned. He’d schedule meetings with most of them to talk further about how well their efforts to use their newfound knowledge were working for them. It took a lot of his time, but, then, that’s what Rick was being paid to do.
Rick also got in touch with the bosses of the managers in his sessions, asking them to ask their reports questions like, “What did you learn and how are you going to use it to be a more effective manager?” He knew it would take some of the bosses’ time, but he figured that’s what they were being paid to do.
So, you can see why we refer to this as the Investment approach. Obtaining a good return on investment—requires investment. Money and, especially, managers’ time and attention, are the requisites to a good return. Without that investment, organizations risk carrying out training and education just so that employees will “die smart.”
Ron Jacques is a 35-year veteran within the lean, manufacturing and consulting arenas. He is a certified lean practitioner who has delivered hundreds of kaizen and transformational solutions to clients and companies within the Pharma, Medical Device, Automotive, Food/Beverage, Electronics, Military Defense, Personal Care, Consumer Durables and Capital Equipment industries.
Rick Bohan, principal, Chagrin River Consulting LLC, has more than 25 years of experience in designing and implementing performance improvement initiatives in a variety of industrial and service sectors. He is also co-author of People Make the Difference: Prescriptions and Profiles for High Performance.