Measurement

Running Learning Like a Business

Corporate learning is a $200 billion per year business, and it should be run like one. Unfortunately, this is often not the case, which means there is significant opportunity for improvement.

Running learning like a business requires the following:
1. Clear mission for the training department.
2. Strategic alignment of learning to organizational goals.
3. Development of a business case for learning.
4. Evaluation and measurement strategy.
5. Creation of a business plan for learning.
6. Disciplined execution against specific, measurable goals.

First, just like any successful business, learning and development (L&D) must have a mission statement that clearly defines its purpose. It should explain what the L&D function is expected to do, and by extension, it should make clear what the L&D function will not do. In other words, what are the roles and responsibilities for the group? For example, what are the responsibilities of a centralized L&D group versus other L&D groups and individual business units?
Second, L&D should align learning to an organization’s most important goals. The process starts by talking with senior leaders, stakeholders and governing boards to thoroughly understand the organization’s goals and priorities. The discussion continues with stakeholders responsible for the individual goals. If resources are limited and L&D cannot address all of the goals, the focus should be on the most important ones. The CEO or governing body should approve L&D priorities.


Third, the expected costs and benefits of recommended learning programs should be collated into a convincing business case. L&D staff should determine the total cost for each major program including the budget cost — design, development, delivery, reinforcement — and the opportunity cost — the value of participants’ time. The expected impact of the program on organizational goals, like a 2 percent increase in sales, should be thoroughly discussed with the stakeholder. In many cases, it will be possible to translate this expected impact into dollars or gross benefit. The business case then is made by comparing the total cost to impact or gross benefit.

Fourth, the L&D group needs to create an evaluation and measurement strategy for recommended programs. The group must decide how the various learning programs will be measured — levels 0 to 5 — and what the goals will be. All programs should be measured at Level 0 — volume — and Level 1 — reaction. Level 2 — learning — should be used where a knowledge or skill test makes sense, perhaps in 30 to 50 percent of courses. Since levels 3 to 5 — application, impact and ROI — are not easily automated and are therefore more labor-intensive, measurement at these levels will be for relatively fewer courses, perhaps only 10 to 30 percent of courses. Goals — participation at Level 0, knowledge acquisition at Level 2, application at Level 3 and impact at Level 4 — should already have been discussed with the stakeholder. The L&D group should also set a goal for Level 1.

Fifth, best practice is to create a business plan for learning. Just like the business plan for an organization, this document pulls together all the relevant information regarding plans for the next year. Typically, a learning business plan would include an executive summary, review of last year’s accomplishments, a summary of the strategic alignment process and recommended learning programs, the business case for those recommended programs, the evaluation and measurement strategy, a detailed work plan, a summary of dedicated learning resources, and a budget. Ideally, this is a written document, but it could be a PowerPoint presentation. In any case, it should be approved by the CEO or governing body for learning.

Last, the business plan must be executed with discipline in order to deliver the planned results. This requires capturing all the important goals on scorecards and measuring progress against these goals on at least a monthly basis, preferably in a staff meeting held the same day each month just for this purpose. Regular meetings to review progress also should be held at least quarterly with the CEO or governing body and key stakeholders. This type of discipline will ensure that goals are taken seriously and that any problems meeting the goals are addressed early.

Conceptually, these key steps to running learning like a business are not difficult, but very few learning groups do all six. Implementing these six steps will make learning a strategic, valued business partner and maximize the return on learning investment.

David Vance is the author of The Business of Learning: How to Manage Corporate Training to Improve Your Bottom Line and is former president of Caterpillar University. He can be reached at editor@clomedia.com.

Filed under: Measurement, Strategy