Building a business case to justify learning and development spend can be a simple or a complex process. Teresa Russell examines how three companies successfully built the business cases for large L&D investments and looks at the lessons learned in the process
Building a business case to justify learning and development spend can be a simple or a complex process. Teresa Russell examines how three companies successfully built the business cases for large L&D investments and looks at the lessons learned in the process
Although AMP, Coles Myer and the Australian Bureau of Statistics operate in completely different environments and markets with different customers and different staff profiles, they have quite a bit in common when it comes to L&D.
Each organisation restructured its L&D function a few years ago to better serve the needs of its business. Two centralised L&D and one decentralised, although L&D strategy and the learning management systems remained centralised in all three. Each still has L&D professionals working within the business, but these people report back to central L&D.
Judi Childs, director of L&D at the Australian Bureau of Statistics (ABS), says that centralising the L&D function allowed them to build in a lot more business rigour. “We developed a small business management unit that kept the training rolling out, tracked new work, did the budget and managed accounts payable. That freed up resources to look at the strategic aspects of L&D. It also ensured consistency of message across the business and guaranteed the quality and equity of access to L&D by all 3,000 staff,” she says.
Childs says that the organisation’s vision three years ago was to be the world’s standard for best practice by 2005 in the area of L&D and they are on track to achieve this target.
Ruzika Soldo is AMP’s L&D manager for advice based distribution. She operates in a business partner model, as part of the line HR team in a business area managing the organisation’s external financial planners. “The HR function focuses on meeting the varied needs of each business unit and does this best by operating close to the business,” she says.
Coles Myer owns a number of recognised brands such as Myer, Target, K-Mart, Officeworks, Coles and Liquorland. It employs around 180,000 staff across 2,000 sites in Australia, delivering its on-line induction program to around 60,000 staff per year. Michael Robinson, learning strategies manager for the Coles Myer Institute, says the company’s L&D function centralised three years ago and now employs 120 people.
The format
AMP, Coles Myer and the ABS all have business case templates as a part of their L&D administration. “AMP introduced its Project Definition Report so it could get more rigour and discipline into the way we analysed the investment required for a project,” says Soldo. The business case is authored by the business that wants to institute a major change program, with both financial and non-financial measures needing to be identified. (See box below).
Using change management methodology and tools, the author must work his way through a long and rigorous process to clearly define and justify a project. Some factors that must be considered include identifying the scope, objectives, outputs and outcomes of a project, the timeframe and the costs, listing assumptions, constraints and dependencies and identifying stakeholders and reviewing any governance issues.
Coles Myer also has a standard form to justify any of its major L&D initiatives. Topics covered include an analysis of and comparison between the current and expected future states, a risk analysis, a cost benefit analysis and an implementation timeline. “When we built the case for our learning management system, about half of the predicted benefits could be measured in financial terms, and half in qualitative terms,” explains Michael Robinson.
“Before you start building a business case, you need to understand the business outcomes and how L&D can help achieve them. L&D can’t just inflict itself on the organisation. It needs managers who are keen to turn their businesses around. You need to first build some credibility with the business by getting basic deliverables achieved,” says the ABS’s Judi Childs.
The ABS operates a two-tier approval process. An initial project scoping document is used for anything that falls within L&D’s pre-approved budget, while a more detailed business case document must be completed for projects requiring a substantial investment or supplementary funding. Some issues considered include expected outcomes, identifying the project owner and stakeholders, required staffing resources, business, process and systems rationale, constraints and assumptions, financial and qualitative analysis, risks and issues as well as the project plan.
Evaluation
Some types of learning are easier to evaluate than others. Coles’ Michael Robinson finds compliance training easier to measure return on investment (ROI), because there is a fine if you don’t do something. “The softer skills are harder to evaluate because you can’t isolate the effect of coaching from other environmental factors over time,” he says.
Ruzika Soldo tailors feedback around the learning: “AMP uses quantitative measures like ROI and sales results to evaluate sales training, but more qualitative measures such as 360 degree feedback for management training. Time is a constraint for a lot of feedback, but high value courses such as executive training are always evaluated,” says Soldo.
Judi Childs finds skills development easier to measure than behavioural change and knowledge transfer. The ABS’s leadership management training program is assessed at three, six and 12 month intervals. Last year’s course participants demonstrated a sustained capability improvement in leadership management of 20 per cent at 12 months, with 60 per cent of the course participants promoted inside one year.
Common problems
“When you build a business case for L&D, the hardest thing is nailing the required business outcome in business terms that the business finds compelling,”says Childs.
“Your training budget needs to reflect the needs of the business. The L&D investment must build the capability required to deliver on the business strategy, rather than following some formula that gives a dollar figure per person. In order to build a budget that will effectively manage the learning needs of your organisation, you need to assess current skill levels, discuss future career needs and prepare sound individualised development plans. It is not uncommon that training for high performers is under-estimated, because they are working well and the investment required to get them to the next step can be quite substantial,” says Soldo.
She adds that one should also beware that evaluating performance measures on large scale programs can be difficult to administer without the right tools.
Getting a business case approved
There are many things you can do to ensure that your business case is approved. However, these seasoned L&D professionals can offer the benefit of their years of experience.
Robinson says it is vital to gather all the facts up front, considering who all the stakeholders are and involving them from the beginning of a project. “It is especially important to work with the IT and finance departments to help build the business case. Once it is done, pressure test it with stakeholders who have no sign off authority before you present it,”he says.
Soldo suggests you should first look at other business cases that have succeeded, as well as ensuring that there are adequate evaluation tools to track progress after the training has been delivered. She also tries to benchmark any financial information she can get on L&D spending across her organisation by using her own network and web searches. “Link any capability or growth targets to the HR and business strategic plans. Reflect the costs of not investing in L&D using financial measures such as staff turnover or revenue,” says Soldo.
Childs says the first thing you have to do is understand the target group that will be affected by your learning proposition – especially the challenges they face. “You have to have a realistic idea of what you can do to help the target group achieve their outcomes. Be pragmatic. It’s OK to over-deliver at the end of the day, but don’t oversell the benefits up front.
“You need to understand what people really want changed and get to know them and their business. Find a champion, especially in mission critical areas. Do some little stuff first to get buy-in and credibility straight away, before tackling the big issues.”
Infrastructure
AMP and Coles Myer both use a fully integrated learning management system, while the Australian Bureau of Statistics is in the process of launching its system as this article goes to print. All three L&D professionals agree that having the ability to link performance plans to training is an essential part of monitoring the outcomes of any L&D investment.
AMP measures
Non-financial
Staff survey feedback (every six months)
Culture survey results (every two years)
Results and trends from 360-degree leadership surveys
Feedback from internal and external customers
Financial
Staff retention and reduction in turnover costs
Revenue results - individual, team and business unit
