Their reality should be your training reality
In general, managers view training (yes, I refer to it as “training” not “learning” as that is how stakeholders refer to it) from one of three perspectives. Each of these perspectives depends on the intent and requirements to be met by your learning efforts. The three generally accepted perspectives on which stakeholders will assess your request include:
- Necessary or expected training
- Part of a larger initiative or effort
- Investments in learning infrastructure
Most practitioners believe that stakeholders instinctively evaluate each perspective based on financial expectations. The simplistic belief is about having costs directly linked to a positive financial result. This thought is simplistic, and it often undermines the already fragile and uncertain credibility of a learning practitioner. Yes, stakeholders value everything financially as a starting point, and in some cases this simplistic belief is true, but in these cases, your training efforts are not the only relevant factor. Most cost and investment evaluations are somewhat more involved.
The one evaluation criterion often omitted from the discussion is performance. Yes, GPs try to adapt to company performance, but this is often done incorrectly, or like the familiar dog and squirrel, they slip into the economic discussion and are eventually shot down by key stakeholders.
It is widely accepted that financial consequences and outcomes work together. But how each bet is counted depends on how a fund is classified … and it’s about whether it’s a profit center, a cost center, or an investment center. For this article, the focus is on education as a “cost center”, which is the most common economic classification for education. Referring to exercise as a cost is not meant to be derogatory, which is how many GPs tend to take it; it is an actual accounting classification. Let’s look more in depth at each of these categories.
1. Training (learning) as a necessity
I guess my statement that your business leaders and stakeholders consider training a necessity was just amazed. I’m also guessing you’re probably mumbling to yourself, “yup, this guy does not know my leaders!” Well, before you move on to another article, let me know. I want to demonstrate why they consider some training efforts a necessity.
Most stakeholders recognize that their employees must constantly learn, especially in the current environment. It is true that there are many cases where your stakeholders will try to do without training, but they also know that there are cases of non-negotiable activities that require your support. Consider obvious requirements such as hiring and deploying new staff, training staff in new equipment, methods or techniques and the always-expected compliance training.
I’m guessing now that you’re seeing the necessity. In these cases, stakeholders will rarely require you to seek their explicit approval or support; they expect these training tasks to be performed. You do not have to beg for funding to get these things done, but mind you, sometimes they can reduce your budgets, but they will never eliminate it.
Now, I’m not saying you have a blank check to do what you want. Of course, stakeholders expect you to make the best possible effort with the funds they have allocated. They expect you to maximize the budget and will adjust it depending on economic conditions (e.g. more money during growth and a reduction in slow periods). The one thing they expect and will secure funding for is to ensure that all of this training remains relevant and current.
Here the training necessity focuses on performance results and not necessarily on financial expectations. Stakeholders accept (reasonable) justified costs for these training initiatives. What they expect is to have skilled employees who are able to perform in ways that ultimately lead to positive financial results, such as increased efficiency, productivity, and even increased earnings. So your focus is on performance metrics, not on financials.
Unfortunately, these are often the training areas where practitioners become complacent. It is not that they are lazy; however, these elements are not the most exciting training activities. But in the same way as a child’s formative year, introduces new employees, while at the same time anchoring the basic knowledge, the tone, the culture and the future behavior of the organization. Let the weight rest on your shoulders.
2. Training as part of larger initiatives
The exciting thing about developing training initiatives is when it involves major business and operational efforts. You know what I’m talking about. These are the training initiatives you develop as part of the operational effort, such as new product introductions, market expansion, procurement of new technology and equipment and implementation of new processes or methods, to name a few.
This is where stakeholders focus on the daunting economic calculations, and we begin to hear the term Return On Investment or ROI. Now this ROI is not “training ROI”; remember that stakeholders never measure cost centers’ economic ROI. This ROI is about measuring the effort or the project’s financial return or project ROI.
Your stakeholder’s financial “questions” apply to all project costs with the aim of maximizing the project’s ROI through cost reductions. Okay, so what relevance does this have for training? I will not bore you with the details, but your training contribution is a “project cost”, like all other operational support requirements.
In short, they do not measure the ROI of your efforts, but rather assess the relationship between the project’s training costs and the expected value it contributes to the overall project. Even when the project is expected to deliver a positive ROI, they will still come and ask you to reduce your costs. What they are trying to achieve is to further improve ROI by minimizing worthless activities.
But it is not personal; they ask for it of all operational project costs. It is your responsibility to give an honest assessment of the training effort and look at reducing the cost without undermining its expected contribution. If you can not, they say no with valid reason.
In leader-speak, a positive ROI is about maximizing cash flows (the earnings or cash the project is expected to generate) while minimizing specific internal activity costs, all while maintaining the value expected of the project. Their goal is to maximize project profitability or ROI, not ROI of internal costs.
Allow me to share an example. One of our customers launched a new drug. They asked us to develop a training program to train their sales team and doctors. Now our training was one of many other internal activities needed to bring the product to market. Although our costs were reasonable (in their words), they asked if we could achieve similar results more economically. They simply asked us to focus on the most relevant education at the lowest cost.
3. Investments in learning infrastructure
There is some really interesting and innovative learning technology available. So it comes as no surprise that practitioners want to get their hands on these, just to get a solid “no” from their stakeholders. It seems that these stakeholders always say “no” and will never spend money.
Well, that’s not entirely true. Stakeholders are always looking to buy, or rather invest in, necessary operational infrastructure and are willing to spend the money if there is a case to do so. One possible reason they keep rejecting your requests is that you did not present a clear business case for the purchase.
Here is why it is unusually useful to have some financial understanding. First, respect that your stakeholders have formal business and financial education. This education is not necessarily interpretable, as with many learning concepts.
They learn early on the clear demarcation between cost and investment. There is even a difference in cost and expense. In short, an actual training activity – you know, the training itself – is considered a one-time expense. Whereas the supporting requirements, your learning infrastructure requirements and what stakeholders call assets are seen as long-term investments. Of course, financially, stakeholders evaluate each of these differently.
Not long ago, a learning department in a larger company contacted us to evaluate the purchase of a Learning Management System (LMS). This is considered a technology asset that lasts for many years, so we wrote a business case that demonstrated how LMS would benefit the company over its lifetime, including its acquisition costs and ongoing support costs, and specified the expected qualitative benefits it would bring. the company compared to their current situation.
To be fair, we insisted that their learners work closely with their finance and IT teams to develop the business case. You are not expected to be a finance and technology expert; you were not hired for expertise in any of the areas and your company has people for it, so get to know them and ask for their support for your next learning investment.
Your next steps
It impresses me how many practitioners do not practice what they preach to others. Do not be these people; be the L&D example for others and develop your basic business and financial skills. So before you pitch your next training initiative, consider how your leaders will view it. If you do, you can better position your next training proposal and how it fits into one of these three management perspectives. There may be nuances in each perspective, but knowing how your efforts fit into the needs of your stakeholders will save you time and help build credibility.
Please share your thoughts and feedback with us. We would very much like to hear about your efforts. And who knows, that may be the topic of our next eLearning Industry article. Also, check out our LinkedIn learning courses to learn more about developing your company’s credibility for your learning efforts. Feel free to share your thoughts and remember #always to learn!
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