Training budgets first to be cut due to unclear business valueby
Learning and development budgets are among the first to be cut when times are hard because it is unclear what value training brings to the organisation and what return on investment it generates.
According to a survey among 104 learning and development managers undertaken by managed learning company, KnowledgePool, three out of five said that cost-cutting was hitting their training pots hard. But a huge 79% agreed that for things to change, the way training was evaluated had to improve as did the ROI derived from it. Kevin Lovell, KnowledgePool's learning consultancy director, said: “Drastic L&D cuts are not the answer in these tough times. Training that is tightly aligned to business goals is much more important. It ensures that businesses are in good shape to weather current storms and take advantage of the recovery when it comes. One of the great challenges for L&D is how to take a business-oriented view of learning.” The problem was, however, that it is much easier to see training as a cost rather than as an investment and cutting costs by boosting efficiency or reducing waste was eminently defensible in the current climate. “We know a great deal about what learning costs, but very little about its value to an organisation," Lovell explained. "Our approach to the evaluation of learning involves post-training analysis, which is time-consuming, costly and, by the time you get the result, it’s too late”. As a result, he recommended that HR professionals evaluate business benefits and ROI before training took place rather than trying to assess them after the event. To this end, Lovell suggested that practitioners ask the following questions of themselves:
- What business issues do you expect your training to solve or reduce?
- What business improvements or behavioural changes do you expect to see after training?
- What past experiences make you think that the proposed learning activity will achieve the desired change?
Lovell also proposed that the answers to such questions should clarify:
- How well your proposed learning aligns to business strategy
- The proposed learning activity's ROI
- What learning activities should be prioritised based on their business impact
- The business impact of failing to do training that does not fit within your budget
- The commercial business case for your training budget beyond it just being "really important".
The advantage of going down this route was that it should enable training budget holders to talk to business managers using commercial language that they understood, said Lovell. "We are talking about estimates here, but our experience of analysing learning outcomes after the event shows that most outcomes (good and bad) are not unexpected and could have been anticipated at the outset," he added.