L&D’s impact on business

by 30 Oct 2007

COMPANIES WITH great learning and development practices are using a combination of strategies, processes and technology solutions to align the workforce with business objectives and achieve measurable business improvement, a report has found.

Seventy-seven per cent of such companies, or ‘best-in-class’ organisations, leveraged organisational learning and development to improve employee performance, whereas 41 per cent of industry average and only 28 per cent of worst in class, or ‘laggard’companies were able to do the same.

The best-in-class companies also had improved operational metrics such as compliance rates, time to productivity and revenue per employee. The report found that a key differentiator was whether an organisation’s learning and development strategy was integrated with the organisation’s overall strategy (as was the case for 66 per cent of best-in-class versus 37 per cent of industry average and 31 per cent of laggard companies).

“The urgency for organisations to align their workforces with business objectives continues to grow and shows no signs of weakening,” said Kevin Martin, research director, human capital management at USbusiness intelligence firm Aberdeen, which conducted the report.

“Organisational learning and development has long been second-guessed because the executives that set strategy and hold budget have not been convinced of its business impact.”

As such, Martin said HR professionals need to become more strategic within their organisations.

It is imperative for HR professionals to learn to impact soft and hard organisational metrics, he said, so HR must get into business units and talk with business managers in order to understand their specific critical business drivers.

“HR professionals can then take that knowledge and correlate that to specific learning initiatives or programs,” he said. This is a priority at 57 per cent of best-in-class organisations versus only 34 per cent of laggard companies.

A side benefit to getting into the business units is the ability to identify all stakeholders that can benefit from learning. This is pursued at 56 per cent of best-in-class organisations as compared to 40 per cent of industry average and only 38 per cent of laggard companies.

The report, which is a compilation of surveys and interviews from 687 organisations globally, showed a strong move toward integration to impact talent retention and development. Again, it goes back to becoming more “strategic” within their respective organisation, Martin said.

“A look at learning and development shows the many ways a learning strategy can impact the entire talent life-cycle. For instance, in regards to recruiting, a successful strategy can be to showcase learning as a means to attract top talent,” he said.

“A public-facing organisational learning and development program may be the difference as to why a top candidate chooses your company or selects another one in its place.”

When it comes to succession planning, once organisations define the competencies required for success in a given position, Martin said a focused learning and development program can be the key to permit a prospective candidate to acquire the knowledge and skills required to ascend to that position.

In terms of compensation, he said a strategy that works well with indirect sales organisations is to assign variable monetary rewards/incentives to certifications and completed training programs.

“By leveraging learning and development across these elements, industry average organisations will retain and develop higher quality human capital, and be in a better position to improve metrics such as employee performance, workforce turnover and revenue per employee.”

HR professionals can take a number of steps in order make their learning and development initiatives more strategic, Martin said.

“Focus first on measuring and improving soft metrics and then move to do the same with hard metrics,” he said. The report found that laggard companies measure the same metrics as industry average and best-in-class organisations, however, their ability to improve learning and development metrics is abysmal.

Laggards should refocus their efforts on soft metrics such as levels one (reaction) and two (learning) of Donald Kirkpatrick’s training evaluation theory.


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