In the first post in this series, we expressed a vision for learning and development that is aligned, economical, scalable, flexible, engaging and, above all, powerful in terms of the results it achieves. In this post, we look at the argument for l&d to be economical.
It almost goes without saying in today’s testing times that learning and development needs to be economical. In fact, there has always been this need. It is incumbent on any manager, regardless of function, to utilise as few of the organisation’s resources as possible in fulfilling their responsibilities. L&D is no different. It makes no difference whether you regard training as a cost or an investment. If a cost, then the organisation’s profits will be maximised by keeping this to a minimum. If an investment, then you are obligated to keep this as small as it can be without unduly threatening the returns.
Although it is dangerous to generalise, it is probably fair to say that, until 2008 and the credit crunch, l&d budgets had not been the subject of much critical examination as long as they were in line with historical levels and comparable to those of other, similar organisations. This situation has changed and how. Budgets in the USA took a hit of 20% or more and the story in the Europe is not so different. Even richer organisations, not seemingly under pressure, have become defensive about expenditure. Conserving cash is the name of the game. Senior managers no longer take the l&d budget as a given; it has to be justified from the bottom-up as just one of a number of means for influencing performance and competitiveness. This should alway have been the case. It is best to assume that, from now on, it always will be.
One way that l&d can have a much greater influence on organisational expenditure is by making sure that it considers the full cost of any intervention, not just the obvious ones which require a cheque to be written. By far the greatest cost in any intervention is learner time. Every hour spent away from productive work is a cost to the organisation and one that should be minimised. Sometimes this cost is directly visible because overtime has to be paid or contractors brought in to cover the lost time. But even if this is not the case, the cost is still real; time spent learning could have been used productively elsewhere – in other words, there is an opportunity cost. Indirect costs occur within the l&d department as well. Time spent by salaried staff on design, development and delivery of any intervention should be costed against that intervention. And yes, we are proposing that time sheets are maintained, so the cost can be accurately monitored.
It is hard to argue against accurate budgeting and cost monitoring of l&d interventions, yet this is very rarely carried out in practice. Yes, the obvious, direct, external costs – like the use of external trainers and e-learning developers – are closely watched, but these are only a small proportion of the true cost. It’s time l&d took responsibility for its true effect on the finances of the organisations that it serves.