Corporate training: $70 billion largely wasted?

By | September 14, 2016

Corporate learning and development is a huge market. Training magazine estimates here that it is approximately $70 billion annually for companies with more than 100 employees.  While that is a huge number, it feels about right. All of this training takes the form of L&D headcount, outside consultants, training tools, travel, and other education spending. They estimate it is $700 invested per learner per year. Not hard to imagine. I estimate that I have personally sat through / participated in 3,000+ hours of learning and development over the last 20 years.

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Sadly, most training is poorly done. For anyone who has sat through endless hours of online mandatory training, or been selected to attend an offsite training session, you know that it’s often a fun experience, but ephemeral. If you ask training attendees , “Do you think this training was valuable” they are likely to say yes because its free, 1) it’s better than toiling at the office and 2) it’s often seen as a perk.  If you follow up with a second question, “if you were the owner of your own company, would you pay $____ to send a dozen people to this training?” Trust me, 8 times out of 10 the answer is no.

The need is there. No question, there is still a burning need to invest in human capital – after all, most business are really just people and intellectual property (IP). Most of the inputs of business are readily accessible by all competitors – SaaS technology, global supply chain, global capital – everything can be purchased “on-demand” like a utility service. Your real differentiating is your your people and the IP.

For new college graduates or new entry people – there is a ramp-up time before folks are productive. It’s an S-curve for new employees, as well as, established career lifers. For those 10-20 years in the same function, it’s easy to not sharpen your skills. It’s easy to get in a knowledge rut. I tell people all the time, “once you start fearing technology, you are acting old”. When I think about great consultants, the ambition and ability to continuously learn is very high on my list.

Recently read The Six Disciplines of Breakthrough Learning here (affiliate link) even though I bought the book in 2008. You can buy this book used for $4 and you notice a few things immediately: it is a consultant’s book – clearly divided into a DMAIC type of performance improvement format and has lot of scholarly research behind the recommendations. Enough geek-speak to give credibility. See the book’s six disciplines and some snarky comment by consultantsmind in red.

1. Define the outcome in business terms. Seems simple enough, but most training does not have the rigorous self-reflection to convert their efforts into $$. “The issues is not whether new skills are learned, but whether they are used in a way that benefits the organization.” (pg 19).

Critical to pick the right problem to solve. Segment and target the right audience for the training. Get line-manager input and understand that it’s probably a systems problem (lots of variables need fixing), not just a training problem. Don’t apply a “peanut butter approach” and just spread generic training around. Redundant, blunt instrument. Dehumanizing.

Do learning teams hold themselves to the highest standard and track their impact in dollars and cents?  If there isn’t a ROI from the learning, why are we doing it? What’s the business impact?

2. Design the complete experience. It’s critical people know WHY they are in training, WHAT the expectations are, and HOW they are going to apply the learning. Research shows that when managers speak with the students before training, there is a lot more retention and purpose. . . No big surprise there; accountability works.  

Training is not an event (go to the conference center – sit around bored – come back to work), but a process which only finishes when the lessons learned are applied . . .and performance improves. Also, thoughtful programs provide support resources well-after the training is finished. 

Question: Of the last 10 training you completed – how often was there follow-up to ensure that you applied what you learned? Exactly, the answer is usually zero.  In terms of a DMAIC process, that is a fail.

3. Deliver for Application. This is very basic. . .set goals and expectations of the training, create links between content and real-life, answer the question of What’s In It For Me (WIIFM) continuously.

4. Drive Follow Through. This is where most training fails miserably. Most training becomes “scrap” like a manufacturing plant that makes product very poorly – wasting resources, time and materials. The conference board did a study which showed <30% of training gets transferred to the job.  

So many reasons people don’t follow through: time pressure, conflicting priorities, lack of support, lack of commitment, fear, resistance to change, poor goals/planning, lack of accountability etc.  

Organizations should spend 10x more energy reinforcing the training they have just conducted instead of looking for the next great learning initiative.  – Ken Blanchard

This can lead to an entirely different post of change management – but you need systems and processes to 1) repeat the message 2) make it easy to make the change 3) track results 4) applaud victories  etc. . Hard wire the change, and honestly, keep beating the drum until it sticks.

5. Deploy active support. One study (Broad and Newstrom 1992) showed that involving the manager before and after the training was #1 and #3 most “potent learning transfer strategies.” Basically, manager sets expectations before “don’t goof around” and afterwards, “how are you going to use what your learned.”  Seems like simple parenting to me.

6. Document results. In the DMAIC framework, this is the “C” for control. How are we doing? They point out 4 critical ways that training programs goof at the measurement:

  • Measuring activity instead of outcomes. Yes, I see this all the time. We trained 700 people, invested $6M . . . So what?
  • Confusing positive reaction with positive results. Yes, this is silly.  “Yes, I liked the facilitator.  They were knowledgeable and fun.” Uh, bad measure.
  • Adopting a learning vs. business perspective. Business folks investing in $70 billion of learning and development have a simple question.  How is this affecting business results?

My takeaway. This is a big problem. Unless we – as managers – start treating learning and development more seriously, in a more systematic way, setting clear expectations for the learners to convert “knowledge” into business results, we are wasting a lot of time and money.  

Note: by some sources here, the $70 billion may be a low-ball number.

For your last training, manager reinforced expectations?

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2 thoughts on “Corporate training: $70 billion largely wasted?

  1. daveshultz

    Great article. I am transitioning out of the Navy and considering Team Development consulting. Would you be willing to chat with me about this topic? Just want to understand more about translating my team development skills to make a business impact.

    Dave

    Reply
    1. consultantsmindadmin Post author

      Hello. I blog anonymously. But we can email of you like. Consultantsmind1 at gmail.com

      I think the big idea is 1) defining the benefits of teams 2) targeting your clients well – those who need that kind of team consulting 3) getting a base of clients who can serve as references 4) creating a methodology which is simple, yet catchy (probably a lot out there you can borrow/license) 5) see what other ex-military trainers have done well 6) get some good public relations (free word-of-mouth advertising 7) from your clients’ perspective, figure out how to solve their top 5 problems.

      Hope this helps, feel free to email. Thanks for reading.

      Reply

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