strategic value of learning & development
DESCRIPTION
Presentation to The BILD Connect Event 14th January 2009TRANSCRIPT
telos partners
Organisational contribution of Learning & Development
BILD Connect Workshop14th January 2009David Vachell MA, FBILD
2 telos partners
In many organisations, learning is not seen as a key driver for success
What they want...
What we do...
What they do...
3 telos partners
Learning & Development is one of the most significantly leveraged investments any organisation
can make
4 telos partners
We have a sound process and some ideas about how to evaluate learning and development programmes
EvaluationPlanning
DataCollection
DataAnalysis
IdentifyIntangibles
CaptureCosts
of Solution
THE PHILLIPS ROI METHODOLOGY
DevelopDevelop
EvaluationPlans And
Baseline Data
Develop/ Review
Objectives ofSolution
CollectData After Solution
Implementation
CalculateThe Return
OnInvestment
CollectData During
Solution Implementation
(1) (2) (3) (4) (5) (9) (10)
(8)
(7)
Reporting
ConvertData To
MonetaryValue
(6)
Report andCommunicate
Results
• Satisfaction/ planned action
• Learning
• Application/ behavior change
• Business impact
• ROI
• Intangibles
Isolate
The Effects of solution
EvaluationPlanning
DataCollection
DataAnalysis
IdentifyIntangibles
CaptureCosts
of Solution
THE PHILLIPS ROI METHODOLOGY
DevelopDevelop
EvaluationPlans And
Baseline Data
Develop/ Review
Objectives ofSolution
CollectData After Solution
Implementation
CalculateThe Return
OnInvestment
CollectData During
Solution Implementation
(1) (2) (3) (4) (5) (9) (10)
(8)
(7)
Reporting
ConvertData To
MonetaryValue
(6)
Report andCommunicate
Results
• Satisfaction/ planned action
• Learning
• Application/ behavior change
• Business impact
• ROI
• Intangibles
Isolate
The Effects of solution
Isolate
The Effects of solution
5 telos partners
But L&D professionals are still struggling to be taken seriously by business leaders
6 telos partners
In this workshop we will attempt to develop ....
• an understanding of the issues
• some ideas
• an action plan
7 telos partners
WHAT ARE THE WHAT ARE THE GOVERNING GOVERNING FACTORS DRIVING FACTORS DRIVING INVESTMENT INVESTMENT CHOICES IN CHOICES IN ORGANISATIONS?ORGANISATIONS?
8 telos partners
L&D is in competition for investment.......and it’s not a level playing field
Investment in L&D
Investment in other things
Perceived Value of
L&D
Perceived Value of
Other things
+
-
+
-
+
+
P
P
9 telos partners
This system creates a “feast & famine” cycleIn
vest
men
t
Time
“Our people are our
greatest asset”
“L&D spend is not getting
results”
“We need to do something to train
these people”
10 telos partners
Three broad stakeholder groups – each have different perceptions of value
Value criteria
Will it contribute to our strategy?
Will it help achieve my
team objectives?
Will it develop me
and my earning
potential?
Horizon Multiple years < 1 Year Depends...
Control (investme
nt)Money Time Commitment
11 telos partners
So what is on the mind of your executive stakeholders?
12 telos partners
HOW CAN WE BUILD A STRATEGIC BUSINESS CASE FOR L&D?
13 telos partners
We frequently start with costs... ... try starting with impact
For each participant in a programme:•What is the potential gain in terms of...
– Cost
– Output
– Quality
– Time
Programme Business Case elements•Per Participant Benefits
•Variable (per participant) costs
•Fixed costs
Benefit:Cost Ratio = Total Benefit/Total Costs
14 telos partners
Get answers to level 4 questions for every intervention before you start
• What would be the benefit if people did more/less of….?
• What is the cost of people doing too much/not enough of….?
• How much/often does this happen?
15 telos partners
A worked example
Fixed costs: £10,000
Per Participant Costs: £200
Per Participant Benefit: £300
No of Participants: 200
Total Cost: £50,000
Total Benefit: £60,000
Benefit/Cost Ratio: 60,000/50,000 = 1.2
Return on Investment = Net Benefit/Total Cost= (60K-50K)/50K = 10/50 = 20%
16 telos partners
Work out the projected ROI for all proposed programmes and order by BCR/ROI
Prog ramme
Impact per participant
No of participants
Total impact Total cost BCR ROI
Cumulative Spend
Cumulative Impact
R 95,000 130 3,800,000 124,348 30.560 2956% 124,348 3,800,000 U 110,000 100 2,200,000 146,000 15.068 1407% 270,348 6,000,000 S 100,000 250 2,500,000 172,200 14.518 1352% 442,548 8,500,000 T 105,000 200 1,575,000 184,467 8.538 754% 627,014 10,075,000 P 54,600 286 1,092,000 160,075 6.822 582% 787,089 11,167,000 C 20,000 500 500,000 87,500 5.714 471% 874,589 11,667,000 N 27,500 248 687,500 124,798 5.509 451% 999,388 12,354,500 B 12,000 300 240,000 52,500 4.571 357% 1,051,888 12,594,500 O 19,800 267 594,000 133,934 4.435 344% 1,185,822 13,188,500 Q 23,600 305 708,000 161,573 4.382 338% 1,347,395 13,896,500 I 32,500 153 1,625,000 386,600 4.203 320% 1,733,995 15,521,500 H 45,000 134 900,000 252,700 3.562 256% 1,986,695 16,421,500 A 10,000 200 200,000 60,000 3.333 233% 2,046,695 16,621,500 J 27,500 172 1,100,000 536,600 2.050 105% 2,583,295 17,721,500 G 40,000 100 600,000 343,333 1.748 75% 2,926,628 18,321,500 M 13,800 229 207,000 124,655 1.661 66% 3,051,283 18,528,500 L 50,000 55 500,000 422,500 1.183 18% 3,473,783 19,028,500 K 34,500 191 414,000 499,459 0.829 -17% 3,973,242 19,442,500 E 30,000 700 600,000 1,430,000 0.420 -58% 5,403,242 20,042,500 F 35,000 900 1,050,000 3,010,000 0.349 -65% 8,413,242 21,092,500 D 25,000 280 375,000 1,705,000 0.220 -78% 10,118,242 21,467,500
17 telos partners
The graph can be used to make tough decisions on programme prioritisation
-
5
10
15
20
25
- 2 4 6 8 10 12
Total Spend (£M)
To
tal
Imp
act
(£M
)
Target BCR
Budget
18 telos partners
Worked example
ProgrammeFixed cost
Per participant
cost
Per participant
benefitNo of
participants
Total participant
cost Total costTotal
benefit BCR ROICumulative
CostCumulative
Benefit
A
35,000
50
150
2,500
B 2,000
500
1,000
400
C
10,000 1,000
2,000
100
E
5,000 1,000
2,000
20
D
5,000 1,500
2,000
150
19 telos partners
You should end up with a table like this....
ProgrammeFixed cost
Per participant
cost
Per participant
benefitNo of
participants
Total participant
cost Total costTotal
benefit BCR ROICumulative
CostCumulative
Benefit
A
35,000
50
150
2,500
125,000
160,000
375,000
2.34 134%
160,000
375,000
B 2,000
500
1,000
400
200,000
202,000
400,000
1.98 98%
362,000
775,000
C
10,000 1,000
2,000
100
100,000
110,000
200,000
1.82 82%
472,000
975,000
E
5,000 1,000
2,000
20
20,000
25,000
40,000
1.60 60%
497,000
1,015,000
D
5,000 1,500
2,000
150
225,000
230,000
300,000
1.30 30%
727,000
1,315,000
20 telos partners
This information can be used to communicate strategic decisions about programmes
ProgrammeFixed cost ROI
Cumulative Cost
Cumulative Benefit
A
35,000 134%
160,000
375,000
B 2,000 98%
362,000
775,000
C
10,000 82%
472,000
975,000
E
5,000 60%
497,000
1,015,000
D
5,000 30%
727,000
1,315,000
Total 57,000
21 telos partners
IT IS ESSENTIAL IT IS ESSENTIAL TO TO COMMUNICATE COMMUNICATE PERFORMANCE PERFORMANCE AGAINST PLANAGAINST PLAN
22 telos partners
There is frequently a significant time lag between action and visible response
Average size of opportunity in sales reps pipeline compared to average overall
0%
50%
100%
150%
200%
Wave Start Start+6 Start+12
23 telos partners
Participant judgement can be used to predict impact and accelerate reporting cycles
X. What percent of your total work time requires the skills and knowledge presented in this training?
Y. Estimate the degree to which you feel you can improve your performance related to this course subject matter.
Z. How much of the improvement will be a direct result of this training?
X. What percent of your total work time requires the skills and knowledge presented in this training?
Y. Estimate the degree to which you feel you can improve your performance related to this course subject matter.
Z. How much of the improvement will be a direct result of this training?
Productivity Improvement =X * Y * Z * Weighted Annual Salary
Example:X = 20%Y = 25%Z = 10%Salary = £25K
Productivity Improvement =0.2 * 0.25 * 0.75 * £25K =£937.50
If cost of programme = £500BCR = 937.5/500 = 1.875ROI = 87.5%
24 telos partners
Participant judgement can be used to predict impact across the system and accelerate reporting cycles
Good use of my time
Good investment by company
Relevant to my role
25 telos partners
Create dashboards that can be readily accessed by all stakeholders
26 telos partners
Using this three stage approach could change the way that people development is viewed in organisations
Use participant
estimates to create timely
impact assessments
Use ROI practice to
project impact results and prioritize projects
Evaluate Programmes
to create reliable and
credible impact
statements
27 telos partners
Breakout conversations
• To what extent can we develop the perception of strategic value of learning & development?
• What specific actions will you take in the next 3 months?