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Accountability

The Learning Budget Conundrum

How do executives see the learning and development budget? Is it a cost, an investment, or a combination of the two?

Question mark heap on table concept for confusion, question or solutionWe are living in a world of economic uncertainty. Although the economy is growing in the U.S., some industry segments are not doing well. Across the globe, uncertainty exists in many areas. For instance, the Brexit vote is causing significant uncertainty in the UK and Europe. The price of oil is causing uncertainty and reducing budgets in oil producing countries.

Economic uncertainty also has an effect on executives who are preparing for the future. To be safe, these executives often curtail expenses, particularly variable expenses that are not absolutely necessary. Whereas they invest in projects they believe have future value.

This is a good time to reflect on how executives see the learning and development budget. Is it a cost, an investment, or a combination of the two? If they perceive it as a cost, they can easily trim it or eliminate it in the worst case. If it is seen as an investment, it may not be reduced. Executives may actually invest more. Although most executives will proclaim that people are their most important investments, their actions speak much louder as they cut staff when there is the least bit of uncertainty.

In the past two decades, we have tried to convince executives that the best time to invest in learning is when there is an economic downturn. In these situations, employees must be at their best and are usually multitasking more because of a smaller staff. Learning needs more budget not less.

During these uncertain times, we are often contacted by HR or learning leaders who need help quickly. A senior executive questions the value of a certain program and wants to see the results. We refer to this executive as the “gorilla” who has shown up at the door and is demanding to be fed. The gorilla wants data. In many cases, the gorilla has concluded that a program — usually an expensive one — is not adding value, so maybe it should be eliminated. The gorilla is willing to listen to us if you have data that shows these programs delivered a positive ROI.

Unfortunately, when the gorilla shows up, you are in a precarious position. Three things happen:

  1. You have a short timeline to show results, often weeks — not months. Changing some of the processes so that you can measure the results may take much longer.
  2. You now have ROI on an executive agenda. It needs to be on your agenda. You need to be driving this issue.
  3. You are now defensive. You need to be on the offensive. If the program that you evaluate is not adding value, it is hard for you to make the argument that you would like to change it to make it better. You are defending what you have accomplished. If you are on the offensive, and the evaluation is not where it needs to be, you can make some adjustments without a problem.

You need to feed the gorillas to keep them away from your door. You feed the gorilla by having an executive-friendly learning scorecard, along the lines that we have presented in a previous column. This scorecard cannot be dominated by input data counting people, times and costs, nor should it be filled with reaction or learning data. It must have some application and impact data, detailing how people use what they have learned, and the impact it has on the organization. Major projects or programs need financial ROI showing they were a good investment. When this is routine, the gorilla will be happy and will not come to your door.

We have two major recommendations. One, don’t wait for the request for a particular project’s value. Be proactive. Remember, when showing program value, hope is not a strategy, luck is not a factor and doing nothing is not an option. Two, feed the gorilla often with important data that is meaningful to executives to help them see the value in this important learning and development investment. We must change the ways we evaluate and report results. Change is inevitable. Progress is optional.

Jack J. Phillips is the chairman, and Patti P. Phillips is president and CEO of the ROI Institute. To comment, email editor@CLOmedia.com.

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