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Avoid
Wasting Money on "Training" and Start Achieving
Measurable Performance Improvements
Gary C. Hinkle -
President, Auxilium, Inc.
According to the American Society
for Training and Development (ASTD), U.S. companies invested over $134
billion in training, education and professional development for their
employees in 2007. The reasons for the investment in learning range from
providing a benefit to employees – to increasing knowledge in the company
– to ensuring employees are proficient in their jobs – to improving
bottom-line business results.
But rarely are tangible business outcomes considered in the
investment decision. A ballpark figure that indicates how much money is
wasted on ineffective training is difficult to estimate, but business
leaders and training professionals generally agree that a significant
percentage of the $100 billion plus spent annually is wasted. Focusing on
clear, measureable outcomes – though not always easy – is the answer for
eliminating this waste.
José Campos, founder of the consulting firm Rapidinnovation, LLC said,
“The fundamental assumption should be that training is not about training,
it’s all about improving the profitability of your company. Consequently,
the evaluation of training activity must be done using the ‘Language of
Dollars.’ Don’t be misled by the myth that training effectiveness is
difficult to measure, or that training cannot, by itself, improve
performance.”
The vast majority of corporate investment in learning has the simple
objective to increase employee knowledge. Increasing knowledge definitely
has its benefits, but isn’t it better if measurable business outcomes
are achieved during the process of increasing knowledge? This is the
objective of outcome-based learning, and this approach should always be
considered before investing in any learning activity.
Table 1 lists four categories of corporate educational activities and
example outcomes for each activity.
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Educational
Activity |
Definition |
Example Outcomes |
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ROI-Based Learning |
With ROI-based
learning, outcomes that can be measured in terms of financial gains
for the business are defined, and a team is accountable for ensuring
the results are achieved.
Education is a major aspect of achieving the ROI, but is
not the focus of the activity. The ROI is the focus. |
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Accelerate
time-to-market based on increased knowledge of delay costs.
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Increase
profitability of product portfolio from learning portfolio
management methodology.
-
Measure and
improve productivity based on in-depth knowledge of employee time
allocation and burdened costs.
|
|
Outcome-Based
Learning |
Outcome-based
solutions first define measurable business outcomes, and then a team
is formed that is accountable for results. The team remains engaged
until the measurable outcomes are achieved. Education is a major
aspect of achieving the sustainable improvements, but is not the
focus of the activity. The outcomes are the focus. |
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Implement project
management methods upon completion of a workshop, to achieve
better results on a specific project.
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Improve average
project cycle times by a pre-planned measurable outcome.
-
Implement
comprehensive R&D performance metrics.
|
|
Training |
The goal of training
is to bring a person or group to an agreed standard of proficiency
through practice and instruction. Training is successful when
learning objectives are well-defined and met. |
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Become proficient
in using a business process.
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Learn how to use
software or other tools.
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Learn how to
prepare and deliver a PowerPoint presentation.
|
|
Education |
The goal of
education is simply to increase knowledge for the benefit of your
business and employees. It is successful when there is evidence
that knowledge is increased. |
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Complete a college
degree or certificate program.
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Learn about
effective communication skills after attending a seminar.
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Become aware of
leadership characteristics to develop after taking leadership classes.
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Learn about
management techniques.
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Learn new
technical skills.
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Table 1 – Definitions and
Example Outcomes for Corporate Learning Activities
Accurate data regarding the investment in each of these categories is not
available, but the general empirical data that is available indicates that
the relative investment is as shown in Figure 1. The category with the
greatest expenditure is education simply for the purpose of increasing
skills and knowledge. The reason for this is because of the basic
principal that most companies want a knowledgeable workforce. It’s also
the easiest form of learning to implement.
A significant amount of learning expenditure is incorrectly categorized as
“training,” but to really qualify as training, the learning activity must
have clear objectives for an increased level of proficiency. With this
definition of training, it’s the learning category with the second highest
level of corporate investment.
Unfortunately, the investment in outcome-based learning is relatively
small, and learning activity with measurable ROI is seldom pursued. Here
the line can get blurred between learning activity and business
improvement efforts that might involve consulting services, but for our
purposes here the definition of the activity involves organized learning
events such as workshops.
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Figure 1 |
Figure 2 |
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Relative
Investment in Learning, Training and Development
Expenditures for outcome-based
learning are minimal compared to the investment in general knowledge
and skill development. |
Relative Business
Value of Educational Activities
Investment in learning that
achieves measurable business results has the greatest value, but
expenditures in these categories are comparatively low.
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Figure 2 illustrates the relative
business value of each type of activity. This is a subjective, generalized
view which might not be shared by all business leaders, but most business
people would agree that measureable ROI is most desirable, and if not
possible then at least some measureable outcome is important. If that
can’t be achieved, then the next best possibility is evidence of increased
proficiency (the objective of “training”). If none of that is possible,
business leaders might settle for knowing that there is at least some
evidence of increased knowledge (the goal of “education”).
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Note: "Education" is often
associated with academic endeavors. A company might pay for an MBA
degree, but these employees are expected to develop leadership and
apply the knowledge to improve profits. Frankly, many MBA's
cannot execute well. The notion that education is to acquire knowledge
is fine for academics, but in business you must be able to apply,
execute and show results. |
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Since outcome-based and ROI-based activities have greater business impact,
why aren’t they more popular than “training” and “educational” learning
events and programs? Because they require four elements that are
difficult to achieve:
1) Management involvement to clearly define the desired outcome;
2) Willingness to increase the investment to achieve a more difficult, but
highly worthwhile outcome;
3) A facilitator who is capable of educating and steering the organization
to achieve the planned results;
4) Metrics that gauge the results.
Success with this approach requires changing the mindset from “we’re going
to send people to training and hope for excellent results” to “we’re going
to focus on desired business outcomes and get there through education, effective facilitation,
and measuring the results.”
Strong facilitation must often begin before the learning activity starts,
because getting the necessary level of management involvement can be
difficult, as well as getting a commitment to fund the initiative. If your
chosen facilitator can successfully drive the effort to achieve management
engagement and adequate funding, that’s a good sign that your facilitator
will also be capable of leading your team to the desired business outcome.
Experienced, qualified consultants are generally the best fit to serve as
facilitators/educators because they are skilled at closing deals with
decision-makers, and they bring a valuable external view into the process.
Once management is on board and funding is secured for an outcome-based
approach, a core team should be selected who will be accountable for:
• Ensuring the specific outcomes are well-defined, measureable, and
achievable
• Learning what they need to know to be successful
• Following through until the outcomes are achieved
The facilitator should stay engaged with the core team until the outcome
is achieved, but the facilitator’s role upon completion of the learning
sessions should be primarily to serve as a coach and consultant. Avoid the
trap of relying on the facilitator to also serve as project manager.
Ownership of the project really needs to be internal to the business.
Finally, I want to reemphasize that expenditures in the categories of
“education” or “training” are not necessarily a waste of money when
measureable outcomes aren’t defined. Large corporations, for example,
often have significant budget set aside just for education, because they
value learning and employee growth. CEOs expect results, however,
that are proportional to the investment. Wealthy companies are typically
wealthy because they invest in their people – and more companies should do
the same.
Also, companies that do a good job with training set clear learning
objectives and ensure those objectives are met. Training has its place,
and there is opportunity for most companies to increase the effectiveness
of training. Decision-makers can provide even more benefit to their
business, however, if measurable business outcomes are achieved during the
process of learning. Take the time to assess and define measureable
outcomes before investing in any learning activity.
Click here to obtain a PDF copy of this article to
share with your colleagues.
Ten Critical Training and Development Mistakes (PDF)
Three Critical Actions for Improving Productivity in
Technical Organizations (PDF)
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