The Value of Learning and Development
The value of investing in training is a hot-button issue for many businesses. While there’s little argument that companies have a need for skilled workers, many organizations question the value of investing in learning and development and often, training is made to take a back seat as a way for companies to relieve the strain on tight budgets. But while cutting learning and development (L&D) costs can save a company a considerable chunk of cash in the short term, research suggests it may be having other, more detrimental, effects on business.
Investing in learning and development
According to the Conference Board of Canada, it’s vital for companies to invest in training if they hold any hope of staying competitive in the marketplace. In the board’s publication Learning and Development Outlook 2011, a summary of survey results from more than 2,500 Canadian organizations found a correlation between a decline in economic performance and a decline in spending on L&D. In that same document, its author concluded that one of the key drivers behind a decrease in Canada’s capacity for innovation could be that companies are neglecting to make L&D a priority.
In a 2006 study, researcher Laurie Bassi found direct correlations between a company’s investment in training and its financial results. Her work found that the quality of a firm’s human capital is one of the top four determinants of future financial performance, and discovered a relationship between training and stock prices. In fact, Bassi found that per-employee expenditures on training and development were a leading indicator for future stock prices. Her work concluded that investment in training resulted in a financial payoff for the company.
The Bank of Montreal is one company that’s reaped the benefits of investing in its human capital. In 2012, the company spent $90 million on L&D—roughly $1900 for each of its 47,000 employees—a sum that translated into a minimum of five days of learning per person over the year. BMO recognized the need to foster learning in its employees, and in 1994, the company built a dedicated $40 million corporate university facility in Toronto known as the Institute for Learning (IFL). A tangible representation of BMO’s employee promise, “turn your potential into performance,” the facility is the flagship of what’s grown to be a network of corporate learning centres across Canada and the United States with satellites in places like Vancouver, Chicago and Milwaukee.
It wasn’t long after the IFL opened that BMO began to see positive results, particularly in the form of a year-over-year rise in employee engagement as measured through an annual survey. That growth stabilized after a few years, and BMO has consistently reported top-tier engagement scores ever since. “One of the key drivers for our employees is the recognition that the company is investing in them, in their learning and development,” says BMO senior vice-president and chief learning officer Barbara Dirks.
Over 300 different courses are delivered face to face at the IFL. BMO employs its own internal facilitators who ensure that specific learning objective are met, and the course learning strategies often include out-of-industry and BMO case studies, subject matter experts from within the organization, and executive discussion panels. The company also provides an online library with additional educational materials not offered at the IFL for employees to access, pending management approval, using a library card. Virtual classroom settings and e-learning are used for much of the training and orientation done at the branch level.
More than 80% of BMO’s learning and development is done through the IFL, but the institution has partnerships with other schools, including the University of Toronto’s Rotman School of Management, and uses third-party educators for some of its more specialized courses. As well, BMO offers a tuition reimbursement program for certain courses taken at other institutions.
The IFL is primarily a place to learn, but to BMO, it represents much more. Its inclusive and collegial atmosphere breaks down barriers between the lines of command and allows employees of all levels to come together to solve business problems. Most significantly, it plays a huge part in creating the sense of engagement that’s necessary to carry out the company’s vision of being the bank that defines great customer experience. “From a culture perspective, it’s really the heart of our company,” Dirks says.
BMO knows its L&D methods are working: the company goes to considerable lengths to measure the results. Pre-course and post-course check-ins, plus another at three months down the road help to determine the success rates of particular types of courses, while others are measured using the Net Promoter Score method. The results have been telling, Dirks says. “We’re seeing a consistent rise in the number of customers who would recommend BMO and our products and services to our friends, neighbours and family. We can tie that right back to the training that we give and the culture that we’ve created.”
A training and professional development focus has also helped Quebec’s Forensic Technology, a leader in forensics ballistics and firearms identifications technologies, to rise to the top of its field. Over the years, the company has been recognized with a slew of awards, including the HSBC International Business of the Year – Large Enterprise and the Les Mercuriades Proactive Workforce Management Award in 2011, along with a spot on Deloitte’s 50 Best Managed Companies list the past three years running.
Forensic Technology takes an individualized approach to training, crafting an annual individual development plan (IDP) for each of its employees every autumn.
The objectives are hammered out during a meeting between the employee and their direct manager, and the company’s training manager, Céline Desmarais, who then drafts the IDP.
Not only is training essential for keeping employees up-to-date with new skills and technologies, it’s essential to keeping them, period. “It’s the only way you can keep your employees engaged,” Desmarias says. “If you don’t train them and show them new things, they’re going to get bored and look outside. It’s a way to attract them and to keep them here with us.”
Rather than trying to confine people to assigned slots, Forensic Technology is supportive of its employees’ career aspirations. Whenever possible, the company encourages the development of new skills, and has seen that investment pay off. A recent example is that of an employee who expressed interest in switching from coding software to project management. The company decided to split his time between departments so he could learn the role, and he will soon be transferred to the project management department full time. Other employees are taking project management certification courses as a part of their IDP, broadening their skill set and proactively preparing them for other positions in the company as they open up.
Like BMO, Forensic Technology leverages its own employee experts from its offices around the world to train others. These employees receive specialized instruction to become internal trainers, adding a new dimension to their careers. The program was implemented two years ago, and according to Desmarais, it’s had good results. “It gives the employee a challenge and increases engagement,” she says.
While companies such as BMO and Forensic Technology are seeing great results from their commitment to investing in training, still more have room for improvement. Howard Stolovitch is an expert in learning systems and the author of top-selling guide Telling Ain’t Training. His company, Harold D. Stolovitch & Associates, offers learning and performance solutions to clients as diverse as Enbridge, the Canadian Navy and McDonald’s, and their work has produced incredible results: a nationwide bank realized a 613% ROI on new loan training and performance support, a large brewery experienced a 40% decrease in necessary learning time, and a military certification program saw a 50% increase. According to Stolovitch, results of this caliber are the norm. “Small changes in behaviour lead to giant changes in performance,” he says.
Stolovitch explains that there’s a half-truth to the sentiment that money spent on training employees is money wasted. His years of research into the topic have led him to the conclusion that training on its own simply isn’t enough. “Training is a little bit like parenting: everybody thinks they can do it, and then they find out that it’s not so easy,” he says. “But training doesn’t work if companies aren’t providing other things: it’s a waste if you’re not supporting it and integrating it properly.”
There are a host of other factors Stolovitch says organizations need to keep in mind if they want their L&D investment to come to full fruition, including creating work and learning environments, making resources available, hiring for characteristics rather than competencies, providing clarity of expectations and instituting feedback systems.
One of the most important first steps, says Stolovitch, is determining whether employee training is actually needed or if the issue being addressed is a result—as it often is—of the environment. Next, determine the desired outcome of the training—what it is that you want people to be able to do and then work backwards. “The characteristics of the training have to match the job so that the supervisors see the value of it as well as the trainees. There has to be a great deal of participation, interaction, and application, plus a lot of practice with feedback and tools and job aids that can be taken back into the workplace,” says Stolovitch.
He points to the book value of leading companies as compared to market value and the role that intellectual capital plays in the difference. Stolovitch asserts that, as a large part of a company’s intellectual capital, its human capital should be maintained in much the same way as any piece of capital equipment. “I can’t just let it sit there. I’ve got to cultivate it, build on it, get the best productivity out of it,” he says.
A company’s carefully considered, properly planned investment in the learning, development and training of its employees is a huge part of that. “Like any capital that you invest, you expect to get a high rate of return,” says Stolovitch. “You don’t just throw money and stand back.”