Are You Spending Too Much on Training by Spending Too Little?

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Editor's Note

L&D organizations are now under increasing pressure to ensure that the learning function supports the overall goals of the business and investments in training/learning deliver maximum value to the company.

This article focuses on how to best meet one of the key challenges facing the L&D organization–how to demonstrate to CEOs and CFOs via definitive measurements realistic estimates of the ROI of training investments. 

Simply put, given today's more demanding business environment, new emphasis must be placed on training metrics that are business-driven.

There is overwhelming evidence that results of many training programs in subjects such as leading change, innovation, strategic marketing planning and many others can be reliably measured to estimate its short & longer-term ROI.

Training chieftains must now seriously re-evaluate their management/leadership development curriculums (i.e., content).

"Nice to know" subject matters must be replaced with content that provides skills for managing for today's new realities & simultaneously managing for a new tomorrow.

A Special Note Before We Begin...

At our virtual Corporate Learning Week 2021 conference (March 9, 16, 23 & 30), Dave Vance, founder & former CLO of Caterpillar will detail why every L&D organization must new rethink what to measure & how to measure it. 

Click here for more information about Dave's new book (with Peggy Parskey), Measurement Demystified: Creating Your L&D Measurement, Analytics & Reporting Strategy. 

Dave will explain at CLW 2021–in clear, simple language–a step-by-step methodology or process for selecting, computing & reporting appropriate measures designed to satisfy the most demanding CFOs & CEOs.


To paraphrase Peter F. Drucker:

Training costs cannot be viewed in a vacuum. They must be related to results.

Focusing training/learning resources on business-driven results is the best and most effective cost control. Costs are incurred for the sake of a result.

No matter how cheap or efficient a training effort, it's a waste, rather than a cost, if it's impossible to achieve expected or promised results.

The New Learning Analytics: The Best Are Business-Driven

Bottom line: If a training expenditure is deemed incapable of producing either business-driven and/or needed core competency results from the very beginning, it must be viewed as a "match to money" initiative.

That said, in many instances "convenient rationalization" or lack of understanding of the subject matter being taught has caused many L&D organizations to spend too much on training by spending too little.

The Harvard Business Review reported in their March-April 2019 issue, "CLOs are having trouble justifying their annual training budgets because traditional executive education/leadership programs no longer adequately prepare executives for the challenges they face today & those they will face tomorrow..."

However, the article also discussed what kinds of executive education programs are working and why they are working.

Many relative newcomers, former second-raters & even prestigious, well-established universities (who have re-engineered their executive/leadership development programs) are gaining momentum because their offerings are producing impressive ROIs for attendee organizations.

But make no mistake: these ROIs also satisfy today's new business-driven measurement standards.

Two Ways You Can Spend Too Much By Spending Too Little

  1. You can spend more than you should spend to achieve the objective(s) you've set and are achieving; and, less obviously,
  2. You can spend too little, thereby making it impossible to achieve the objectives you've set out to achieve and wasting at least part of the funds you're spending to do the impossible with them.

Paradoxically, you can spend too much by spending too much or too little.

Outcome Versus Output/Efficiency Measurements

Internal service organizations of all kinds can be likened to government agencies. L&D is an internal service organization.

Back in1993, David Osborne and Ted Gaebler published their national best-seller "Reinventing Government." It contains an excellent discussion on the difference between measuring process/efficiency and measuring results.

Even though we're using a government example, most training executives will see the relevance to their internal training organization.

Said Osborne and Gaebler, "When the vast majority of government agencies set out to measure performance, their managers usually draw up lists that measure how well they carry out some administrative process: how many people they serve; how fast they serve them; what percentage of requests are filled within a set period of time...

… In essence, they measure their volume of output. But outputs don't guarantee outcomes…

……A vocational school might pump out more and more graduates of a welding program, for instance. But if those graduates can't find jobs as welders, what good is the program?…

… It may be generating impressive efficiency measurements (i.e., outputs) without generating any positive measurable outcomes…" 

It should be noted, in the Vance/Parskey book mentioned above, an entire chapter is devoted to the difference between L&D efficiency and outcome measurements.

Dave's virtual conference presentation will cover this much-needed subject in clear, simple language, Best of all, L&D executives will be provided with a roadmap for what to do & how to do it.

Click here to learn more about Dave and his presentation.

A Six Sigma/Statistical Process Control Manufacturing Example

W. Edwards Deming was a pioneer in quality management.

Indeed, he was truly an advocate for the use of Walter Shewhart of Bell Labs’ mid-1920s invention of statistical process control (SPC) as the method of choice to locate the root causes of problems in specific processes.

In a manufacturing process, the cost associated with scrap, rework inspection, re-inspection, field service calls, warranty claims, returned items and the like can be calculated before a Six Sigma/SPC training program is initiated.

If these cost metrics are significantly reduced as a result of an SPC training program, the return on training investment can be computed given the before-and-after metrics.

Just to be clear: Deming showed how to apply SPC to processes of all kinds including those of hospitals, government agencies, internal service organizations and the like.

Why Many Organizations Wasted Huge Sums of Money on SPC Training

In truth, Deming's SPC approach failed/stumbled in many organizations.

It's wonderful employees claim "the training program was great." However, the program could be of little value if it's not converted into measurable improvements in performance & quantifiable results.

Many well-taught SPC programs produced zero results in terms of measurable improvements in given processes.

Oversimplifying a bit, the most successful SPC programs were specifically related to given processes that were studied by professional SPC experts & the right way to sample and carry-out the necessary SPC tasks were organized into a step-by-step learning program.

A Useful Digression

In essence, this is really the essence of Frederick Winslow Taylor (1856-1915).

Taylor invented what we now call "training." Prior to Taylor's invention of Scientific Management, workers learned viz years of apprenticeship.

Taylor was the first to study, and reengineer (i.e. redesign) work so the worker could become more productive–enabling workers to work smarter, not harder.

Taylor studied, analyzed and divided work into a series of systematic, well-organized steps, each of which had to be done in one specific way and with a specific set of tools.

This led directly to the invention of training. Why? Because Taylor's approach converted the work to be done into a methodology that could be taught, learned and immediately practiced.

An Example

Take for instance Taylor's first project: analyzing a laborer shoveling sand.

Taylor figured out which steps to eliminate and how to do the job with the least physical strain on the operator. (Taylor was the inventor of what's not known as "time & motion studies").

Further, Taylor found the traditional shovel was the wrong size, shape and it had the wrong handle. He then redesigned the shovel for maximum output with minimum effort.

As a consequence, the laborer's productivity (output/hours worked) nearly tripled. The job became easier and enabled the laborer to be paid a much higher wage.

Lessons Learned From Taylor's Pioneering Work

All work must first be studied, analyzed and divided into a series of simple tasks. Taylor's greatest impact all told was probably in training.

Once the work was studied and put into a series of tasks that had to be done, most people could achieve truly excellent results in a short period of time. They were taught the right way to do the job!

Indeed, Peter F. Drucker strongly believed that one of the major factors explaining why America so successfully converted a peactime economy to a wartime economy at the beginning of World War II was because of Taylor's contributions.

Observed Drucker: "We Learned in World War II, with respect to the manual crafts, we could compress years of apprenticeship into weeks, or at most months, of organized and systematic learning."

The Armed Forces demonstrated–using Taylor's prescriptions for training–we could quickly turn out truly competent people in engineering work of all kinds, navigators, fighter pilots, electricians, masons, medical workers, welders, riveters and hundreds of other types of work formally though to be learned over a period of 10 or more years.

Back to Our SPC Example

Off-the-shelf SPC training programs didn't work in the great majority of situations. Why? Because it couldn't be applied to the specific processes of the organization.

Only when SPC training was related to the organization's specific processes, and those responsible for a given process were taught exactly what to do and how to do it, did the training produce desired improvement metrics.

Our point? You can spend too much by spending too little.

Lessons learned? Teaching textbook or generic SPC programs without studying the specific work to be done, analyzing the processes and then being able to train the people to correctly use SPC to manage their own processes, many organizations ended up with embarrassing non-results.

The Rhetoric of Six Sigma Process Improvement Training Budgets

Without doubt, the buying behavior of many Six Sigma/process improvement training groups was/is heavily influenced by budget restraints. Deep down, many training executives know the limitations of what they’re purchasing.

However, they rationalized their behavior with a statement such as: “We’re only doing what top management asked us to do... We’ll do the best we can under the circumstances."

The Deming SPC methodology was stalled or has been abandoned in many organizations because the training was ineffective in terms of promised results.

Does the Following Conversation Based on Actual Experience Ring a Bell?

A typical episode between an internal training organization and a first-rate vendor of quality training/process improvement training programs was often characterized by the following dialogue:

Training Group: Tell us the steps we must follow to get our quality/process improvement training program started.

Supplier: We’d like to send in a data collection expert to generate measurements relating to specific processes and compute or obtain actual measurements related to scrap, rework, inspection, re-inspection, warranties and services and cost.

From this, he would develop a case study using your company’s own data.

Training Group: How much will that cost?

Supplier: We don’t really know until we review your processes. We could probably give you a better answer after the first week.

Training Group: We can’t do that. We must know now. What happens if you tell us you need five or six weeks? Our budget is not large enough. We have to train a lot of people in quality improvement.

Supplier: We just can’t know until we study the problem. We want to give your people real problems. We want them to craft solutions to actual problems. That’s the only way we can provide meaningful performance consulting.

Training Group: We just don’t have the budget for this. Let’s get started without doing these extras. Let’s see how it goes. Maybe we can convince our management to go along with what you suggest, but not now.

Supplier: Again, our training program also involves performance consulting. We go out on the plant floor with the employees. We first teach them what to do and how to do it. Then we ask them to do it under the guidance of a real pro, of course.

Next, we work with them to do the required analysis and implement the needed changes. We repeat this process several times until we’re sure they’ve got it. This is what we call training. It’s a lot more than education or awareness.

Training Group: Doesn’t that extend beyond the three days we’ve specified in our RFP?

Supplier: Yes, but how else are we going to train your people? We don’t want to provide “hit and run training." Great lectures produce smiles, but smiles are not enough. Lectures are just a preparation for real learning.

Training Group: We’re sure you’re right. But we can’t afford it. You’ll just have to do it the old fashioned way. If management wants us to train 645 people in quality improvement, we must bring down the price to an affordable per-student cost.

Maybe you can throw in the extras. Remember, we’re going to be training 645 people. And if it works, maybe 2,000 more employees.

Supplier: But how can we make the program problem-specific and relevant to each group? Each group is involved with different processes.

We could use textbook examples. But our experience indicates that doesn’t really work when it comes to teaching quality improvement via the use of control charts…

… Also, performance support and just-in-time training usually implies solving real problems. How can we generate real problems if you don’t have a budget for it? Wouldn’t it be better to “pilot” a program? Let us do it for just one group…

…Then, we can “dollarize” the before-and-after performance measurements. You can prove to yourselves and your management that there’s a big payoff if done right…

Training Group: Our management doesn’t want to hear this. They want us to train employees in quality/process improvement at the lowest possible price. If you can’t do it the way we want, we’ll get somebody else.

Supplier: Okay, we’ll do it your way. But just think about what we just discussed, perhaps we can run an experiment. Let’s see which one has a greater return.

Training Group: Fine, but when can you start training our first set of employees?

Supplier: We’ll begin the education process next week.

Whether or not this is a matter of budget restraints, lack of subject matter knowledge or incompetency is not for us to judge.

But we do believe the vendor was correct in his assertions. And, ultimately, the quality/process improvement training programs proved ineffective.

Using Before-and-After Measurements for Innovation Training Programs

Innovation is not a Eureka moment. It's now an acquired management skill. Translated, this means it can be taught, learned and practiced.

There are literally hundreds of innovation metrics that reveal whether or not innovations are succeeding.

The specific innovation metrics used depend upon the kind of innovation being sought (e.g., process innovation, business model innovation and product innovation).

Let's now take product innovation as an example. Some of the metrics (suggested by McKinsey & Company) that can be used to prove beyond a shadow of doubt innovation training is yielding unquestionable results are:

  • Revenue growth due to new products and services
  • ROI of new products and services
  • Profit growth due to new products or services
  • Percentage of sales derived from new product launches in the last year
  • Number of product innovation projects in the pipeline that could prove to be tomorrow's breadwinners
  • Success rate in new products attributable to creating the right structures for innovation

What are we trying to say? Training chieftains must work with the appropriate departments including IT and Finance to obtain before-and-after innovation measurements.

That said, innovation metrics are obtainable by every organization. But training executives will have to have more knowledge about the subject matter to discover the questions and enough organizational clout to get the required information to compute required after-training metrics.

Leading Change Measurements

Even for a subject like leading change, important metrics can be obtained. For example, leading change really consists of four major components.

For those that like acronyms, we've created a new one for leading change. We call it ACE-I.

These four Peter F. Drucker-inspired leading change components are, namely: (1) Abandonment of the unproductive and obsolete; (2) Continuous productivity improvement; (3) Exploiting successes, and; (4) Innovation.

Obviously, there are entire methodologies and a corresponding scorecard of metrics for each one of these components, but it should be noted—indeed emphasized—that an all-important training program on leading change can be evaluated/appraised for specific quantifiable/bottom-line results over time.

News About Our Drucker Master Class Day (March 30, 2021)

Attend our for-fee Drucker Master Class Day and learn Drucker's all-powerful prescriptions for leading change and successful outcome-based innovations. Click here for more information.

Also, keep in mind, we are offering deep discounts for Drucker Master Class Day. We hope to encourage team attendance.

This is great material. But as is usually the case, a single individual tends to return to an unreceptive audience (a voice in the wilderness).