What is the value of learning?
For workplace Learning and Development (L&D) professionals the answer may take many forms. It may be an individual’s positive reaction to learning something new. It may be the ability of individuals – or their employers – to tackle a new task. In more formal measurement, it may be seen in the calculation of a learning programme’s Return on Investment (ROI). Whatever approach the department takes, however, any assessment of the impact of learning is effectively meaningless without answering one question.
How does the business see the value of learning?
It is the business which pays for the activities of L&D and it is the business which is the ultimate authority on what constitutes value. That value may be in avoiding risk, in reducing time to competency, in increasing sales, in cutting staff turnover or in any other area, but it is the business that decides the goals for L&D, and it is L&D’s duty to keep itself informed of these goals.
Strategic Value of L&D Today
In the slower-moving past, these goals were fairly clear and were seldom made explicit. Staff were trained so they could learn how the organisation did things and investing in staff training was simply part of the overhead of running a business. In the 1990s when I worked for an IT training company, we tried many times to find clients happy to engage in a proof of impact study. The reaction was always the same: “No, thanks. We’re committed to the training, we know it works, just go ahead and deliver the programme.”
Since then two things have happened which have made the role of L&D more strategically important to the way organisations run.
The first is that we have shifted to a world where intangible assets make up the vast majority of the value of a company’s value. In the 1970s tangible assets – what a company physically owns – made up around 80% of the value of the S&P 500 index of leading US businesses. Today, that figure has dropped to about 20%. It is intangible assets – dominated by an organisation’s human capital – that makes up the other 80%. Investing in, developing and maintaining that value has become part of the lifeblood of any organisation.
The second factor is the speed of business today. Product cycles are shorter, and adoption curves faster. In 2013, Harvard Business Review reported that a typical automotive design cycle was 24 to 36 months, against the 60-month cycle of five years earlier. The same article pointed out that it took decades for the telephone to reach 50% of US households, while achieving the same penetration for mobile phones took just 5 years.
The result of these two factors is a more pressured environment for businesses. Investors who once took a long-term view are now impatient for returns, and unwilling to forgive short-term setbacks. In the 1960s, stocks in US companies were held for an average of over 8 years. Today that average is under 6 months. This all makes it harder to stay at the top. In 1958, the average company in the S&P 500 Index remained there for 61 years. Today, the average company can expect to stay no longer than 15 years.
What do CEOs want from L&D?
Against this background, it is understandable that CEOs of large organisations regularly cite talent or human capital as one of their major concerns.
Which leads us back to L&D and the value of learning. CEOs know what they want – better operations, less risk, higher sales – but they often do not know how to achieve these goals in terms of people, their knowledge and skills.
We, the people working in L&D, do.
But knowing how to do something is not enough. Our role goes beyond that. Our job is not simply to create learning programmes. It is to interpret organisational performance goals, to understand where they are linked to knowledge and skills to an organisation and to relay that interpretation back to an organisation’s leadership and management. Then, through dialogue with those stakeholders, we can develop an approach to organisational learning fully aligned to the business.
Where can you find the value of L&D?
At the beginning of this blog I asked what the value of learning was. This is our answer – it is not to be found in some mechanism invented by L&D. Rather it is to be found in the goals of the business, understood and interpreted in collaboration and then addressed by our activities. These might be large, organisation-wide change programmes. They might equally be tactical initiatives. Whatever they are, if they are based on that understanding of the needs of the organisation, their value is clear.
Chairman, Learning and Performance Institute
A 25-year veteran of the learning, skills and human capital industries, with experience at every level from design and delivery to chairman of the board. He has been chairman of the Learning and Performance Institute since 2010.
A recognised commentator and organiser in the fields of workplace learning and learning technologies, Donald is passionately committed to helping develop the learning and development profession.
Donald will be the keynote speaker at NextSteps 2017, NetDimensions’ EMEA User Conference in London, UK on May 10-11, 2017. Learn more at the NextSteps website.