When we talk about L&D, we are not simply referring to training; we are referring to a powerful mechanism that is increasingly, and intrinsically, linked with the overall strategy of a business. Or so it should be, if you want to achieve the full impact that effective learning is capable of delivering.
CIPD’s Learning & Development survey this year revealed that the most common organisational changes affecting L&D over the next two years will be closer integration of L&D activity and business strategy, and greater emphasis on monitoring, measuring and evaluating the effectiveness of L&D interventions.
Clearly, then, companies are realising that, while extremely valuable, L&D alone is not going to get a business to where it needs to be. Any learning must be tightly linked with wider organisational goals, or else it risks falling flat. But there is also an increasing desire to understand the real, tangible return that L&D brings, which can essentially be split into return on investment (ROI), and return on expectation (ROE).
Driving organisational performance
In terms of directly affecting the bottom line (ROI), L&D’s real power lies in its ability to have a significant impact on organisational performance. By making people better at their jobs, and better able to work with others, you create effective teams. By creating effective teams, you build a workforce that is capable of driving your business forward towards its goals. At the heart of it, when you strip everything else back, a company is as good as the people working within it. Make those people the best they can possibly be, and your business has a far better chance of succeeding.
Take Scotland, for example. The Employer Skills Survey from the UK Commission for Employment and Skills found that Scottish firms are spending more than ever on training opportunities for employees, collectively ploughing £200million into staff training over the last two years, with an average of 4.3 days’ training per year being dedicated to each employee. We also know that the Scottish economy outperformed the rest of the UK in the first quarter of 2014. There can be little doubt that a strong focus on people development played a part in that result.
During tougher, leaner times, many organisations have historically been tempted to cut their training budget in order to save costs. But scaling back L&D during those critical periods is the worst thing you can do. Those are the times throughout which you need your people to be performing at their very highest level. While you may save some initial costs by detracting from their development, you also run the risk of not allowing them to be as efficient and effective as possible. Again, though, you will only yield the full performance impact of an L&D intervention if it is linked with the wider strategy of your business.
Increasing employee engagement
In a recent study of 64 organisations in the US, employee engagement firm Office Vibe found that those with highly engaged employees achieved roughly twice the annual net income of those with non-engaged employees. This research reflects a belief we have held for some time: that engaged employees are a vital component of high-performing businesses.
How does L&D contribute towards employee engagement, then? By giving people a structured path of learning, you give them a sense of purpose; something bigger to work towards. This is particularly important during times of difficulty, when employees really need to see a positive view of the future. You can also identify the particular areas in which they want to develop. By identifying employees’ desires, you will be better-equipped to meet them, and by doing so you will achieve a happier, more satisfied workforce who feel like they are being listened to.
L&D can also give managers the ability to create engagement at team level. If an employee feels inspired by their immediate supervisor, and if that supervisor is able to help that employee understand the positive impact their work has on the wider organisation, then you will inevitably end up with a more engaged team member. This can be achieved through learning targeted specifically at managers and supervisors.
Employee engagement cannot necessarily drive performance on its own, however; it is entirely feasible that, no matter how engaged they are, employees could still be operating in an environment that hinders their performance. When Thales Learning & Development discusses employee engagement, and when our customers want us to help improve it for them, we prefer to talk about it in terms of ‘climate.’ While engagement is a direct outcome of a specific intervention in the same way as, say, organisational performance, the climate approach aims to permanently instil an environment (or ‘climate’) which has an ongoing positive impact on employee engagement, and any other desired outcomes such as high performance.
To fully grasp the difference between the two, you might want to consider which one of the following is the preferable scenario: employees who are engaged because they believe it will benefit them in some way (perhaps they have been offered a reward), or employees who are naturally engaged, through free choice, because of the environment in which they work. The climate approach prompts the latter.
By investing in the skills and knowledge of your staff, you not only make them more effective, but also give them a sense that they have a positive future within the business. They will therefore be much more likely to want to stay. While L&D has a positive impact on staff turnover, it is also a means by which you can develop existing talent where there is a need rather than acquiring additional staff to fill that gap. By developing people into managers, for example, rather than opting for new hires, you could make huge cost savings. Making managers out of the resources you already have, rather than buying new ones, is always going to be the more economical option.
Oxford Economics, a global forecasting and quantitative analysis firm, undertook some research this year into the costs of hiring new staff, and found that staff turnover costs the UK economy at least £4.13bn every year. The average costs for logistics (i.e. agency and advertising fees) is £5,433, and the average cost for wages during an initial period of low productivity is £25,182. The total cost for hiring a new member of staff, therefore, and bringing them up to speed, is a staggering £30,615. And that doesn’t even take into account one of the biggest costs of all in the recruitment process – time.
The changing ways of learning
All of the above are demonstrative of the ROI that L&D can bring, but in terms of specific figures, ROI can often be difficult to prove. ROE focuses more on the expectations in terms of how the learning is going to be delivered, and what effect it will have on certain behaviours that have been identified as needing development. If you can deliver learning interventions with courage and conviction, perhaps in a different way, but always link it back to the business, you can get much more out of an organisation.
So how about the specific ways in which learning should be delivered? Which methods have the biggest impact? You have probably heard e-learning being talked about. But the CIPD L&D Survey this year actually found that the proportion of training time dedicated to this format has actually reduced. Instead, techniques such as coaching and mentoring are becoming increasingly common – three quarters of organisations currently offer coaching or mentoring with a further 12% planning to offer it by 2015, according to the CIPD research.
That is not to say that e-learning is ineffective, or shouldn’t be utilised where appropriate – many of Thales Learning & Development’s blended solutions include a virtual element. But the model of learning that we find most effective, and the one that we strive to build our own L&D interventions around, is the 70:20:10 model. The idea behind it is that only 10% of learning actually happens in the classroom, with 20% through people and 70% through experience. If we take that model in relation to e-learning, perhaps the virtual format is best-placed within that 10%, provided it is supported by human interaction and ‘on-the-job’ experience.
Blended is the key
It is important to remember that there is no ‘one size fits all’ L&D intervention that will transform your business. To receive its full benefits, any learning you implement needs to properly reflect the culture, ways of working and wider strategy of your organisation. By tailoring and targeting the learning in this way, it becomes a powerful tool for meeting the specific needs of your business, and has the ability to push the organisation towards achieving its goals.
The key to achieving this equilibrium is through taking a blended approach to learning. When we use the word ‘blended,’ we are referring to the different ways in which learning can be delivered (e-learning vs. experiential vs. classroom, for example). People are individuals, and the way in which people learn differs greatly from one individual to the next, depending on their job role or learning style, amongst other things.
It is only through detailed training needs analysis and a deeply consultative approach, however, that an accurate picture of L&D requirements can be achieved, and the approach designed and blended in the most effective way possible. A reputable L&D provider should be able to help you with this process from start to finish.
Why coaching is proving so popular
The rise of coaching as an L&D tool is not surprising given the state of the economy in recent years. Although research we undertook this year revealed that L&D budgets are, for the most part, stabilising (50% expected their budget to stay the same this year, while 30% expected them to increase), budget constraint was still cited as the main barrier when it came to delivering L&D.
This is where coaching has clear benefits. By creating and nurturing a coaching culture within your business, you are enabling individual employees to take responsibility for their own development. It encourages a two-way dialogue between managers and their staff – essentially it is about asking questions, and helping people come to their own conclusions. It can be a highly effective way to solve specific issues without the need for costly or time-consuming interventions.
By asking people the right questions, coaching also has the ability to identity true training needs, which means any money you do invest in L&D will be better-targeted, more relevant and ultimately provide a greater return on investment. During times when budgets are tight, that is a very powerful benefit.
L&D is not just important for individual businesses; it is critical to the future success of our economy as a whole. L&D cannot achieve this alone, of course – it should be part of a wider strategy, just as it should be linked to the wider strategy of any organisations within which it is being implemented. With industries such as construction and engineering facing a growing skills gap (our recent research into the construction industry found that 82% of those working within the sector believe the skills gap exists), it is the continued targeted development of talent that is going to help close those gaps and secure a future skilled workforce for the UK.
By Lyndon Wingrove, Director of Capabilities and Consulting at Thales Learning and Development