Do you feel your training dollars are achieving “less with less” or “more with less”? Learning & Development (L&D) teams often feel victimized by constrained budgets and staffing reductions spurred during the economic downturn. Many adjusted to do less with less. No matter what the economic circumstance, it is how you respond that determines the success of your budgeting strategy.
While analyst reports cite an improving budget picture, the reality is funds have not been restored to pre-recession levels. The Bersin Corporate Learning Factbook 2013 reports that training spend dove dramatically in 2008 and started to limp back up in 2010. However, the uptick experienced between 2010 and 2012 doesn’t compensate for the severe impact budgets experienced in 2008 and 2009. This roller-coaster spend trend translates to significant learning investment compression. Bersin’s Factbook also reports that the 2012 average training spend was $706 per learner. The 2007 Training magazine Training Industry Report set the 2006 per learner spend at $1,273. That is a 45 percent decline within the last six years. (Download the Year-over-year Change in Training Spending graphic at the end of this article.)
The Bersin Corporate Learning Factbook also indicates that L&D staffing levels are still experiencing declines with no indication of improvement. Today’s staff ratio is operating at 3.7 L&D staff per 1,000 learners. That’s a 37 percent reduction since 2007.
This also explains why Finance has become more involved in managing L&D expenditures. Finance seeks far more rigorous budget planning. Detailed business cases often are required to sustain programs that were not under a microscope previously.
Radical changes in learner expectations have compounded the situation. Today’s learners expect instant access to learning resources, social opportunities, and mobility. Consumer behaviors are heavily influencing learner expectations, and it is incumbent upon L&D to respond.
Exploiting Technology
Is our field doing all it can to stretch budget dollars farther? If we’re honest, we’ll admit we can do more by exploiting the technology. Other business functions figured this out a long time ago. It is hard to imagine a Marketing department that didn’t maximize the use of electronic media to reach its audience, track clicks on Websites to identify high-interest electronic real estate, or use search optimization in its demand generation activities. It is hard to conceive of an Operations department without supply chain intelligence, production automation, and instant delivery tracking software. The velocity technology brings is still in the early stages of being exploited within HR, and especially within L&D.
When technology is applied to how an organization learns, it can scale further, decrease costs, and fuel a more agile workforce. It unleashes the potential within human capital—unquestionably the most expensive and important type of capital within any organization. Now is the opportune time for L&D to run itself like other parts of the business.
Reading the L&D Instrument Panel
The way to drive better budget results starts by reading your L&D instrument panel. That panel includes the three odometers—one representing each of the pillars of the Talent Development Reporting Principles (TDRp):
- Efficiency
- Effectiveness
- Outcomes
Responding to the dials of your L&D instrument panel makes you a budget-planning victor, not a victim.
Training budget optimization begins with understanding how efficiently you are meeting the strategic needs of your workforce. Perpetuating the same levels of brick-and-mortar habits prevents organizations from harvesting digital’s innate benefits. Despite a wealth of evidence that shows e-learning is as effective as the classroom, many L&D delivery approaches largely represent passé paradigms. No budget owner wants to sacrifice effectiveness for the sake of efficiency, and industry research indicates they don’t have to.
The U.S. Department of Education published a summary of more than 1,000 online learning studies in 2009, at the same time Bersin by Deloitte announced learning budgets were experiencing a second year of double-digit decline. The Department’s meta-analysis found that, on average, online learners performed better than those receiving face-to-face instruction.
Thomas L. Russell published a book entitled, “The No Significant Difference Phenomenon,” in 2001. Russell’s book is a fully indexed, comprehensive research bibliography of 355 research reports, summaries, and papers that document no statistically significant differences in outcomes between modes of education delivery. Russell’s work is carried on today through a Website (www.nosignificantdifference.org) where new research is continually published.
KnowledgeAdvisors recently conducted a study of Skillsoft’s e-learning effects. Skillsoft is one of the industry’s largest suppliers of quality e-learning content used by more than 5,000 organizations and 12 million people around the globe. KnowledgeAdvisors conducted a study with 7,800 Skillsoft learners from 465 organizations to determine how much their performance improved and what percentage of that improvement was directly attributed to the e-learning. The business results ROI scorecard methodology was applied to reveal increases in employee satisfaction, customer satisfaction, quality, sales, and productivity. The learners also reported reductions in the time it takes to perform tasks, costs and risk. When KnowledgeAdvisors compared Skillsoft e-learning to classroom benchmarks, Skillsoft was comparable in all eight areas and outperformed classroom training for its ability to build skills that decrease costs, increase sales, and decrease cycle time. The KnowledgeAdvisors research also reported that Skillsoft learners are 43 percent more satisfied than classroom learners.
Adjusting the L&D Instrument Panel
Since research indicates that e-learning doesn’t jeopardize effectiveness and it tends to be a cost-effective approach, organizations should leverage e-learning more to optimize their budgets.
With this goal in mind, the first adjustment to make on your instrument panel should be to the efficiency dial. Begin by getting a baseline of your organization’s three key efficiency metrics: delivery mix, learner reach, and cost per learning hour. Then examine the delivery composition of your high-volume, high-cost strategic programs. Once you identify where you can extend the benefits of e-learning within those programs, you’ll be in a position to identify how that will positively affect your learner reach and cost-per-learning-hour metrics.
The quality effectiveness dial should remain steady. It is a good practice to regularly conduct assessments of how your learning programs—across all delivery forms—are maintaining their effectiveness. Organizations typically apply a combination of models and methods to do this. The most pervasive is the use of the Kirkpatrick Four Levels or Phillips Five Levels of learning evaluation.
The outcome dial will indicate how strongly your L&D efforts are aligned to the strategic goals of your organization and how much you contributed to achieving its objectives. Examples of outcome measures include learning’s impact on increasing sales, reducing injuries, improving call center operations, or causing positive movement within employee engagement scores.
No matter what it is, a budget is only a number. Position yourself in the driver’s seat by accelerating your use of e-learning and monitoring your learning instrument panel.
Kieran King began her career in learning 20 years ago. She started her journey working for private companies to build curricula, implement learning management systems (LMSs), conduct needs analyses, and analyze ROI. In 1999, King joined CBT Systems (formerly SmartForce, now Skillsoft) and participated in the evolution of the learning industry by consulting with various Fortune 500 organizations as they made the transition from the classroom to blended models. During her career, King has authored several methodologies, white papers, and Webinars. Today, King serves as the global director of Client Loyalty at Skillsoft, where she studies the composition of successful learning programs and partnerships.
