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Business Intelligence: Mind the Global Skills Gap

A global talent imbalance is producing a skills gap that threatens economic growth around the world. In response, business leaders are investing to develop their existing talent.

Global unemployment could hit 202 million this year as debt-driven austerity measures hammer job markets, according to the International Labour Organization’s “World of Work Report 2012.” Even so, many employers are finding it harder than ever to find workers with the right skills. This imbalance is producing a skills gap that threatens economic growth around the world.

Realizing they cannot hire their way out of the problem, business leaders understand that they must develop their existing talent. Based on Bersin & Associates’ “The Corporate Learning Factbook 2012: Benchmarks, Trends and Analysis of the U.S. Training Market,” last year many organizations tried to combat skills gaps in the labor market (Editor’s note: The author works for Bersin & Associates). After two years of spending cuts and a slight uptick in 2010, U.S. spending on employee development rose 9.5 percent last year to an average of $800 per learner (Figure 1). This increase is reflected in the number of hours spent on employee development in 2011, with learners averaging 15.3 hours — up from 12.8 hours in 2010.

Considering this growth, Bersin & Associates estimates U.S. corporate training groups spent $67 billion in 2011. These investments reflect corporations’ commitment to fill workfrorce skills gaps. The study found that U.S. training organizations are working to increase their programs’ value and reach. Across the board, from industry to industry, learning organizations are seeking ways to scale their training efforts and deliver more efficient and far-reaching results for every dollar spent.

Companies Invest in Social Tools and Headcount
According to the Bersin & Associates study, large business investment in social learning tools nearly doubled in 2011 to $40,000. Social learning is no longer an experiment. Companies increasingly use it to drive innovation in their learning organizations. By allowing employees to collaborate, share ideas and exchange information, organizations are empowering users to teach one another and are supporting conversations that naturally foster creativity and problem solving.

The investment in social learning is another example of U.S. companies reinvesting in training to address the skills gap. It also signals a turning away from formal classroom training and traditional e-learning programs to only deliver learning workers need, just in time.

Learning staffing levels rose 7 percent in 2011, as organizations continued to replenish headcount lost in the recession. Even so, economic uncertainty is keeping the pressure on learning leaders to economize. While learning teams have more headcount today, the industry average of 5.2 learning professionals for every 1,000 learners is down from 6.7 in 2006 (Figure 2). The ratio of learning professionals to learners is lower because many companies added employees at a higher rate than learning and development staff.

The decline in the ratio of training staff relative to the employee population is partly driven by increased reliance on technology-based training, as well as the move to informal and collaborative learning in which co-workers and subject matter experts assume some responsibilities once held by learning staff. To make their programs more efficient, many organizations are moving toward virtual instructor-led initiatives, e-learning and social learning, which enables organizations to reach more learners while cutting costs. As a result, the cost per training hour in 2011 was $51 — the lowest in the past six years.

Increasingly, organizations empower non-training staff to deliver training outside of the classroom. One manufacturing firm interviewed for the Bersin & Associates study trains its salespeople to deliver in-store training to customers. Another example: Triumph Group, a U.S.-based aerospace company, created an adjunct faculty program to certify subject matter experts to deliver training across the organization.

Deliver More With Fewer Staff
High-impact learning organizations — those that are more efficient, effective and aligned with the business — deliver their services with 4.3 learning staff per 1,000 learners, a significantly lower ratio than the U.S. average of 5.2. While these organizations do spend $1,021 per learner on training — significantly more than the national average — they also deliver more training — 20 hours per learner annually. They are able to achieve this by pushing more delivery to local resources and building informal learning environments to develop and support learners. Further, these organizations outsource more learning services — they allocate 20 percent of their training budgets to external providers, compared to the 14 percent U.S. average (Figure 3).

High-impact learning organizations look for outsourcing opportunities to obtain expertise where needed, and to offload administrative, high-volume or noncore activities so internal staff can focus on value-added activities.

Educators have long realized that training must be reinforced to provide lasting benefits. Today, learning organizations are putting more effort into ensuring that employees apply the skills they learn through continual, reinforced learning environments. New continuous learning environments include a blend of formal classroom training and informal learning provided through coaching, collaborative tools and experiential exercises.

One method to reinforce training is to add common game mechanics to learning activities. For example, one software company from the survey developed an online course for salespeople on how to position enterprise solutions to customers. Upon completing a training module, the salesperson receives a point value based on how well he or she answers a simulated customer’s objections. Sales representatives compete with each other for points, and the winners receive prizes. This program is one of the company’s most highly used and successful sales training programs.

The Learning Staff Competencies Mix
The recession only increased the pressure on learning organizations to become more cost effective, leverage online social learning and align more closely with business needs. These pressures also forced a change in roles within the learning function. Traditional classroom instructors are now delivering more training online and in one-to-one sessions. Learning organizations are moving beyond order taking and are building consulting skills to provide effective recommendations and solutions to business partners.

BJC HealthCare, which operates 13 hospitals and multiple community health care centers in Missouri and Illinois, serves as an example of business-aligned learning. The company is increasing its learning investment despite lower Medicare/Medicaid reimbursements and a growing number of uninsured patients. It is doing this by ensuring training is relevant and reality-based. For example, twice each year learning staff members participate in job shadowing exercises where they accompany nurses during their 12-hour shifts. This shadowing gives learning team members a deeper understanding of nurses’ daily duties and challenges, so they can design training to help nurses deliver better patient care.

Currently, 21 percent of training staff resources are devoted to live delivery and facilitation (Figure 4). Based on its research, Bersin & Associates expects that figure to decline to between 10 percent and 15 percent during the next several years as organizations continue to shift toward online and informal learning roles. At the same time, it expects that more staff will be devoted to performance consulting/portfolio management and learning measurement and analytics.

The increased focus on measurement and analytics — driven in part by the current fervor around big data — is forcing training groups to sharpen their analysis and reporting capabilities. However, companies have a way to go before such capabilities truly come into focus. Despite the proliferation of learning management and talent management software in the market, companies still struggle to measure the effectiveness, efficiency and alignment of training and HR. Bersin & Associates research shows that 6 percent of HR organizations rate themselves as highly skilled at talent measurement, and 56 percent give themselves poor marks in this area.

Bersin & Associates’ research shows that most companies evolve their measurement systems over time. They typically begin by tracking easy-to-gather metrics, such as course completions and learner satisfaction. Gradually, they expand their efforts, working with managers and key stakeholders to identify the metrics most valuable for decision making.

Today, 5 percent of learning resources are dedicated to measuring, analyzing and reporting training data. That will change as companies recognize the benefits of building strong analytics capabilities within the learning function. Only by tracking and analyzing data can organizations more readily identify issues with cost structures and utilization, evaluate the impact of training on the business and determine how best to close the talent gap.

As worldwide talent shortages are expected to continue for some time, chief learning officers and their learning organizations need to look long-term at how they partner with business leaders to meet their performance objectives.
Chief learning officers also must ensure their learning organizations have a process for evaluating programs. Companies with mature measurement efforts have a systematic process to collect and analyze data and use that information to continually improve their initiatives.

Rigorously determining the costs, benefits and impact of programs ensures that learning organizations invest their dollars for the best outcomes. Through these efforts, CLOs can empower their organizations to successfully build the workforce skills needed to meet their goals now and in the future. 

Karen O’Leonard is director of research methods and analytics and principal analyst for Bersin & Associates. She can be reached at editor@CLOmedia.com.