COVER STORY
Return on Your E-learning Investments

“‘Tis an ill-favoured thing, sir, but mine own.” - Shakespeare, As You Like It.

Winter 2005
By Thomas A. Kraack

Everywhere we go these days we hear a common lament about the learning or training function of organizations: money goes in, but who knows what comes out? Do my people know more? Are they performing better? Are they developing new capabilities? Are new employees achieving competency faster? More important, is any of this translating into business benefits or increased value?

If we had to put our finger on the one thing standing in the way of organizations achieving better business results through learning it would be this: the sizable legacy investment that companies have in their existing learning content, their training organization structures, and their technology platforms. With apologies to Shakespeare, it’s an ill-favored thing, but it’s mine and I’m sticking to it.

But consider what happens next. Typically, companies are pushing titles and content out to their people based on what they think the employees need. Then they measure how many people take the courses or how many hours are spent on training. What’s missing from this picture? Any measurements on the back-end as to what the workforce has gained in terms of productivity and capability, and then how those new workforce characteristics show up on the financial statements.

Although the economy appears to be turning around, the focus on cost-cutting isn’t going away. And other issues, such as aging workforces and the movement from fixed to variable cost structures, continue to put pressure on management to transform the delivery of learning. But even with today’s economic constraints, we think companies are not dreaming big enough when it comes to their learning function.

Without the right mindset toward what learning is to accomplish, and without the right measurements that link learning investments to business benefits, companies are shorting themselves in two ways. First, they’re not getting a sufficient return on their learning investment. Second, they are missing out on upside opportunities that could make a significant difference in their competitive framework.

Learning and Training that Make a Difference

Companies in top 25% of training investment/employee net Source: American Society of Training and Development 2005

Here are five examples of how a focus on the efficiency and effectiveness of the learning function translates into upside opportunities and increased business value:

1 Speed to Market
Everyone wants to beat competitors in getting products and services to market. But the skills of a workforce often stand in the way. Consider the example of Avaya, a global leader in business communications solutions and services. Facing an aggressive schedule of product launches to introduce new Internet protocol (IP) telephony services and solutions to the market, the company assessed its learning and training department and decided that it couldn’t help the company’s people ramp up fast enough.

Accordingly, Avaya turn to an outside contractor for learning development, delivery and operations management for some 1,800 courses delivered in 93 countries to more than 50,000 employees, customers and channel partners. The relationship allowed Avaya to focus on the rapid introduction of communications solutions, while its outside partner developed highly scalable learning experiences. Together, the two firms maintain a program office to ensure critical training is available at the point of need.
In less than a year’s time the firm is already touting many benefits. A new learning management system infrastructure was implemented in 3 months and is successfully supporting the delivery of learning content for the largest release of new communications products in Avaya’s history at an investment level lower than the previous year.

Another example: A large North American technology manufacturer was dealing with unacceptable lag times — as much as six months — between the launch of products in North America and their launch in Japan and the Pacific Rim. The delay really boiled down to training: getting technicians and distributors up to speed, preparing translation services, developing facilitator training, and so forth. By outsourcing their training function, the company was able to reduce that delay from six months to 30 days, with annual benefits exceeding $10 million.

2 Speed to Competency.
We’ve always known that people learn to perform in new ways faster if they actually do the actions that are required. Unfortunately, the technologies that allow “learn by doing” in a risk-free environment weren’t in place.

Those restrictions are gone, as the technique of “performance simulation” has revolutionized the field of computer-based training. By making the training environment look like the work environment (and vice versa), companies now have the potential to realize big business benefits derived from shrinking the time it takes to get someone trained to perform at optimal levels. For example, the Avaya outsourcing solution already discussed restructured a series of important new product training courses to reduce redundant material and focus more directly on the employee behaviors desired. The solution migrated course delivery from instructor-led to Web-based, reducing time-to-proficiency of the company’s sales and customer service staff by 63 percent.

3 Reskilling to Support New Strategic Objectives.
What is your average lag time between setting new strategic direction and developing the workforce skills to enact that strategy? In many companies, that period gets measured in years, not months or weeks.

Today, though, new learning approaches can align a workforce with company strategy in dramatically faster times. For example, when faced with the need to strategically shift their offerings from “voice and switch peddlers” to “new wave” data propositions, British Telecom (BT) trained 20,000 of its people to sell digital solutions in just six months. With the objective of improving sales and customer satisfaction, a learning program was developed for the sales force employing a state-of-the-art, Web-based learning solution involving simulated conversations with customers.

As a result, BT achieved a 102 percent increase in the rate of sales conversions and a 16-point increase in customer satisfaction ratings. Furthermore, these business benefits were directly linked to success metrics for the program providing additional insight (and incentive) into continuous improvement.

4 Responding to Technology, Market or Regulatory Change.
We live in volatile times. If you couple this volatile business environment (whether this comes from competitors, regulators or from technological developments) with a static delivery platform, you have cause for concern. From a risk management point of view, the situation may even be untenable. Here is where outsourcing solutions protect companies from investments that, in fact, may leave them less able to respond to change. But lets also turn that around. Downside risk can translate into upside opportunity for companies that can design and administer their learning function in such a way to give them an edge over their competitors in responding to environmental change.

5 Shareholder Value. Bit by bit, researchers are creating an increasingly compelling picture of how value is created in a company through its human performance investments, particularly in learning. Recent studies show a high correlation between learning investments, employee development, and long-term business performance. For example, consider a recent study from the American Society of Training and Development, which found that companies in the top 25 percent of per-employee training expenditures had revenue per employee that was 218 percent higher, profit margins that were 24 percent higher, and price-to-book ratios that were 26 percent higher than companies in the bottom 25 percent.

These numbers are impossible to ignore. Of course, the level of training spend is only one measure of commitment to employee development and doesn’t address issues of effectiveness and resource leverage. Nevertheless, such indicators are important. They create some urgency for companies struggling to compete effectively. They point to a truth that is surprisingly easy to ignore: Learning is an investment in people…and in the business.

Unless companies are prepared to make their leaning investments with an eye toward actual financial return, they are not going to reap benefits from cost reduction moves; they will not see a successful return on the learning investment; and they will miss opportunities to create new kinds of value. Learning costs may be high; but without the proper business perspective, the opportunity costs will be even higher.

Thomas Kraack, Ph.D., is a lead partner for Accenture’s global learning services business, Accenture Learning. In that role, he is responsible for leading the firm’s initiative in learning transformational outsourcing (LTO). Kraak is an industry leader in the learning and human resources outsourcing marketplace, responsible for developing and leading several market-defining engagements. He is based in Accenture’s Minneapolis Office. For more information on Accenture’s services visit www.accenture.com.

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