Investors know the importance of a balanced portfolio to optimize return on investment. They manage portfolio effectiveness by balancing risky investments that offer high returns with safer ones with lower paybacks.
Learning and development (L&D) teams can use the same principle to balance learning investments. They must consider that a certain percentage of the budget is needed to provide mandated, compliance-related training. Organizations focusing investments here are operating at a foundation level and are achieving the business equivalent of keeping the lights on. While the programs are essential, they do not push critical business objectives.
L&D should consider purchasing off-the-shelf content when this training involves generic topics such as safety, diversity, regulatory compliance, and minimize, if not eliminate, time to customize these programs. The objective at this level is to invest the exact amount required to get the job done.
One large gas and chemical company found that its objective to be the safest company in the industry led to an overinvestment in safety training. While it achieved the objective, it did so to the detriment of other critical areas
of the business, leaving the door open for competitors
to slip in and take away market share.
At the next investment threshold, organizations allocate funds for programs that will help ensure the company remains competitive. These programs teach employees to use the professional tools they need to be effective in functional/technical roles and to understand and interface well with company operations. Other programs in this category include those that improve business operations, including topics such as Six Sigma and common leadership practices such as coaching for performance.
Programs in this segment represent a mix between generic and industry-specific content. For example, Six Sigma is a standard methodology with training available from many sources. However, L&D teams may customize modules to supplement Six Sigma programs that would help practitioners evaluate company-specific projects to find those promising the biggest benefits.
Companies on the leading edge allocate ample funding for L&D programs targeted at new initiatives, innovation, company growth objectives and other areas with potential to push the company ahead of competitors. Programs at this level require a significant degree of customization because they present management innovations and business trends in the context of the company’s industry and in relation to its specific challenges. This is the key area where L&D has the potential for the greatest impact but also presents the most risk.
A basic portfolio management tool that analyzes investments by projected return, required funding, resources, timing and other decision criteria can significantly improve the overall impact of learning on corporate sustainability and success.Filed under: Measurement