Training: “Sunk Cost” Or “Strategic Enabler”?

Strategy Success from PinterestA global survey by HCM Advisory Group found that 48% of executives view their company’s learning function either as a necessary but high-cost contributor or sunk cost.

52% see the learning function as a strategic enabler for the organization.

86% of the survey participants were US companies.

Based on the skill gaps we’re experiencing as we struggle to move from recession to growth, it’s clear we need to focus on building sustainable organizations. We must now begin developing our talent to meet both current and future business needs.

Following are 3 actions to build the strategic value of training for your organization.

1.  Align training with the business strategy.

  • Train all employees in the business strategy, especially focusing on the company’s differentiation/value proposition. Employees need to have a clear and up to date personal understanding of the strategy and be able to discuss your customers. Everyone needs to be able to articulate the company’s products, services, key competitors and how they contribute to the company’s competitive differentiation. This helps to build engagement. It is recognized today that engagement helps build performance.

 

  • Develop employee skills in change management, creative problem-solving and agility.

Partner with executives to ensure there is an effective annual review of business needs and the strategy, and identifying training and development programming that will equip employees with the knowledge and skills to perform the work needed now and in the future for the organization to execute its strategy.

2. Expand your learning function’s contributions. Per HCM’s survey report, learning functions that are viewed as strategic enablers are:

  • 6% more likely to deliver training to customers.

• 8-9% more likely to deliver training to partners/channels.

• 4-6% more likely to deliver training to suppliers.

  • 25-42% more likely to report that training is aligned with business strategy.

• Twice as likely to use objective measures of employee performance to align their learning to the business strategy.

• Twice as likely to do formal learning requirements planning.

• Four times more likely to have a learning advisory board with members from the business and the learning function.

• 26-43% more likely to have an annual process of mapping the learning strategy to the business strategy.

• 39% more likely to have been demonstrating the impact that training has on the business.”

3. Set up your organization for success.

  • Design training such that transfer of new skills and behaviors are is programmed into the delivery process. In addition, partner with line managers to build an environment conducive to this transfer from the training room to the workplace.

 

  • This means developing systematic leadership, coaching, observation and performance management practices that both prioritize and support transfer of training to job performance. Learning transfer is the biggest challenge for employees and a critical component for training impact. Knowledge transfer requires support and measurement to be effective.

A function that is seen as a strategic enabler, contributing to the organization’s current and future success, is valued and more readily funded despite the intangibility of its “products”. It’s also less likely to go to the chopping block when cost savings are required.

Finally, today’s challenging business environment is right — it’s better than ever before – to make strategic impact through employee development. The chart below shows us why: the valuation of companies on tangible assets (i.e bricks, mortar, equipment) vs. intangible assets (i.e. intellectual capital, organization readiness and capability to execute the strategy, and leadership) has made a dramatic evolution during recent decades. Today, it’s the intangibles, people, that are the most critical strategic assets a company has. Your training function is uniquely positioned to make a difference.

S&P 500

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Consider this:

How is your organization leveraging training as an integral component of your Human Capital strategy? Is training viewed by employees and leaders as value added? As a strategic enabler? Or is it seen as a cost center, or as sunk cost?

Whatever your starting point, chart your steps forward. Your learning function can make an increasingly meaningful, lasting, positive impact on the business and its people.