Time for L&D to Bear Down?

“Some confluence of events at some point in the future will cause a recession. I don’t know what those are, nobody knows what those are, and nobody will ever know what they are.” – Jamie Dimon, CEO JPMorgan

So I am as uncertain about a coming recession as a guy on track to make $30 million in salary this year and whose business it is to see them coming. But it is an honest answer and it is important to watch and see if, “at some point,” is this point in time.

  • American central bankers have grown more fearful, models gauging recession probabilities had “increased notably in recent months.” Meanwhile, indicators tracking manufacturing and services industries, as well as business and consumer confidence — so-called “soft” indicators often seen as a harbinger for weakness in hiring and spending — continued to worsen. – Livemint · October 10, 2019
  • In a recent Forbes article Sergei KlebnikovthatHarvard University professor and former treasury secretary Larry Summers placed the odds of a recession before 2021 at nearly 50%. This supports Summers’ interview with the Wall Street Journal, In which Summers delivered a grim outlook for U.S. economic conditions—“I haven’t been this alarmed since the financial crisis,” he admitted.
  • Even our prescient friends at SHRM, in a 2017 article entitled, “How HR can prepare for the next recession,” plainly stated, “Economic downturns are inevitable, so HR should act now to prepare for the next one.”

L&D Under the Macroscope

While the L&D industry (IMHO) can get caught upin the micro (is. learning solutions, platforms, evaluation) I prefer to focus my attention on the macro because these become the undercurrents that drive the broader industry. Judging by my LinkedIn connections there are a number of L&D leaders that were not in place in 2009. So let’s begin with a quick L&D recession primer.

  • The effects last longer than you think. a Harvard Business Review article entitled “Roaring out of the Recession,” (published in 2010!) stated, “CEOs continue to combat the myriad challenges thrown up by the Great Recession of 2007.”
  • L&D gets the axe. JB at Bersin & Associates reported that average training expenditures per employee fell 11 percent in the past year, from $1,202 per learner in 2007 to $1,075 per learner in 2008.
  • It is global. The UK Commission for Employment and Skills released a report on the impact of the 2008-2009 recession on training at workIn it authors Alan Felstead, Francis Green and Nick Jewson made it clear that discretionary training got the brunt of it with, “Private sector employers continued to train their workforces because they were faced with a number of ‘training floors’; that is, types of training that are essential, and therefore cannot be abandoned, by functioning businesses or organisations.”
  • It doesn’t go back to the way to was. Bersin’s group also noted that at the time almost all business leaders reluctantly admit that the current crisis also marks an inflection point: The world after it is unlikely to resemble the one before it.

 

Why I am Excited About a Recession

“He said what?!?!” I recently met a out-of-town friend at the New Orleans Air BnB he was staying at. I took an Uber to his place. Why does this matter. Because macros trends like recessions have played in role in both Air BnB’s and Uber’s success. In his “startup land famous” TED talk Bill Gross identified the number one factor in determining startup success. Bill should know. His firm, IdeaLab has been there since the beginning and has seen hundreds If not thousands of startup over that time.

In his talk Gross identified “timing” as the most highly correlated factor. Not quality of idea. Not founder, industry or technology. If the recession had not occurred would the founders of Air BnB needed to rent out thier extra air mattress to make ends meet? If you ever wondered where the “Air” came from, it isn’t from aspirations to sell plane tickets. Would people be willing to offer perfect strangers rides in their personal vehicles if it weren’t for the need for extra income in an economy where it can feel like job skills have the shelf life of an avocado.

In addition to the economy, another macro that caught my attention this was this one showing that at H1B visas are being issued at record LOW levels! Combined with the fear of recession does this accelerate the trend towards remote workers? With budget reductions in the back of executives’ minds is L&D empowered to more effectively implement new ways of doing things (given we can make the cost-saving case) that were resisted prior?

Discomfort enables behavior change and constraints drive innovation. I agreed with JB when he said last time. I agree with it for the recession to come.

“The world after it is unlikely to resemble the one before it.”

And I, for one, think that that is something to get excited about.

 

The Math of Upskilling

The case for learning versus hiring has long been a topic of discussion. With the recent job market as tight as ever the conversation continues.  Just this week Josh Bersin (or as I call him, “JB”, not because I know him that well, just because it sounds cool) released the highlights of a study done with three firms that concluded,

“It can cost as much as 6-times more to hire from the outside than to build from within.” – JB

While I can take issue with the phrase, “as much as”, since I have a dog who can be obedient “as much as” half the time.  Or perhaps the sample size, only three companies in different industries. Or maybe that the study used highly paid jobs +$150k salary to joust at.  But none of that will stop the industry from using this stat widely.  This may be fine at L&D conferences but try it with a CFO and you better be prepared with the math.

So that you know that I am not picking on JB (who I think is the Seth Godin of Human Capital) the issue that I have is with reports that don’t stay loyal to the kind of math that has credibility with finance folks.  While for some, being able to simply cite a case study with a recognizable company may be enough.  For me it is not. And for my own learning this blog is my attempt to take Jane Bozarth’s work out loud approach and show my work.

“And showing what we’re doing—narrating our work in a public way—helps make learning more explicit.” – the other JB

The Case for Upskilling

We start with the simple comparison of costs to determine value.  If the result is positive then reskilling wins.  If not, hire away.

The value of reskilling (V) = Cost of New Hire (CN) – Cost of Reskilling (CR)

Seems simple enough but the devil is in the details.  So lets break it down further.

V= [Cjn+Chn+Cpn+Co+Cs] – [Cjx+Chx+Cpx+Cu]

The cost  of new hire (CN) equals:

  • Cost of job opening (Cjn) plus
  • Cost of new hire (Chn) plus
  • Cost of lost productivity (Cpn) plus
  • Cost of onboarding (Co)
  • Cost of redundancy/severance (Cs)

The cost of reskilling (CR) equals:

  • Cost of job opening (Cjx) plus
  • Cost of transfer hire (Chx) plus
  • Cost of lost productivity (Cpx) plus
  • Cost of upskilling (Cu)

This approach leaves some very real variables out:

  • Calculation does not include fully loaded employee costs (benefits, occupancy, equipment, etc.  This is assumed to be a wash between CR and CN.
  • Does not include quantifiable costs associated with loss of investor confidence due to layoffs  which would likely show up in stock price.
  • Does not not quantifiable costs associated with loss of employee/candidate confidence due to layoffs such as; unplanned attrition, longer time to hire, reduction in candidate quality.
  • Does not include the 2X-3X higher turnover rate for new hires used by JB for his calculation.

Please let me know what I have missed and how this calculation can be more valid and useful.  In my next post I will further breakdown each of these costs, insert some assumptions (cost of onboarding/upskilling, recruiter fees, time to productivity, etc.) and share the excel spreadsheet plus the results it spits out.

 

Learning is the Silver Bullet

Originally posted on LinkedIn 10.16.19

Nelson Mandela said,”Education is the most powerful weapon which you can use to change the world.” Malcolm X called education, “the passport to the future.” And with the World Economic Forum currently estimating that 54% of today’s global workforce will need reskilling in the upcoming years…never were these sentiments more relevant.

Fortune 500 companies alone employs over 65 million people, many of which will need to be reskilled in order for them and the companies they support to thrive in today’s business environment.  Whether you call the times we live in  VUCA, transformative or just batshit crazy, the reality is, we live in a time where learning is needed as much as air to survive.

According to the Bureau of Labor Statistics,  the US currently has over 6 million unemployed. This comes at the same time that there are over 7 million open positions to be filled at our companies. This mismatch of skills to opportunity affects approximately 1 out of every 30 families.  Add to this the almost 2 million jobs impacted by corporate layoffs in the month of July and the need for learning is crystal clear.

Education, at all levels, has the ability to deliver unmistakable value on a multitude of fronts. From  socio economic issues like poverty and classism to global challenges like terrorisim. Malala Yousafzai,  Pakistani Taliban target turned activist for female education and the youngest Nobel Prize laureate said, “With guns you can kill terrorists, with education you can kill terrorism.”  I couldn’t agree more.

As Learning and Development professionals we have an obligation to continuously seek and employ new ways to deliver the ever higher levels of value required by today’s world.  This is why I wrote Running Training Like a Startup. To provide a new way of looking at the work we do and they way we do it.

Over 20 years ago I was lucky enough to be part of the team tasked with taking the concepts and practices described in the seminal book Running Training Like a Business to clients around the world.  The book focused not on the solutions being provided but rather on the L&D engine that provided those solutions. For the last two decades I have worked with companies of all sizes across the globe to explore ways to improve the value their learning delivers.

During this time I also worked as part of the rapidly emerging startup economy.  First as strategist for a VC fund during the first dot com run then as manager of a 50 million dollar fund and advisor to startups, angel investors and startup ecosystems in both Delaware and New Orleans. Then 5 years ago, I saw an opportunity to bring these two domains and the passion I had for each, together.

W. B. Yeats said, “Education is not the filling of a pail, but the lighting of a fire.” This is the same fire sought after by startups as well, in the form of virality and exponential growth. With the support of Ed Trolley and David van Adelsberg, the authors of Running Training Like a Business, I set out to turn the practices of high performing startups into principles for use by L&D organizations. The book includes approaches to speed, team, product, communication, data and even failure. The lessons from early stage companies like Uber, Air BnB, Slack and a multitude of others are captured in my updated look at what it means to run training like a business today.

Taking a page out of the startup toolkit I open sourced the book in January.  The principles were too important and the mission too critical to limit the spread of these ideas. It also allows the book to be a living thing and not a snapshot.  Like an app on your phone I have released 2 updates to the book this year with more to come as we gain more experience with its approach. Running Training Like a Startup is my contribution to addressing the challenges we, as L&D pros, face.

Abraham Lincoln viewed learning, “as the most important subject which we as a people may be engaged in”. As an L&D community we must engage with new ideas and new approaches. Call today’s business environment what you will. But hanging out in the desert with its vibrant and beautiful ecosystem reminds me that even in the harshest environments we can adapt and thrive.

Note: In case you think I am just a sappy romantic about L&D, read this tough love post from a couple weeks back.

L&D is a Master of VR

When Ed and David released Running Training Like a Business (RTLAB) it was clear to many that the industry needed a new way of looking at not just how and what we were training employees but why.  The book aspired to take the industry discussion up a level.  Away from the micro of courses, design methodologies and technology to the macro and meta.  The book encouraged a turn inward away from the course and curricula towards the creator, the L&D organizations itself.  What the factory was designed for, pre-determined what the output was.  Transforming the organization would transform the output and the value it produced.

In 2010 when I started writing the Learning Hacks blog as a way to capture my musings on L&D I began with a blog entitled “The Spark That Started It All”, the working title for this post can still be seen in the URL for the post.  It expressed my disappointment that many of the challenges described in RTLAB, over a decade prior, remained unaddressed.  In my book Running Training Like a Startup I cite one of my favorite Ed Trolley quotes.  A quote that was validated in many of the assessments we did for clients around the world.

“Business leaders have low expectations of training. And they are being met.”

-Ed Trolley

Yesterday, Harvard Business Review released an article entitled. “Where Companies Go Wrong with Learning and Development” that put things in clear perspective. In it Steve Glaveski highlights recent studies that show:

  • 75% of 1,500 managers surveyed from across 50 organizations were dissatisfied with their company’s Learning & Development (L&D) function;
  • 70% of employees report that they don’t have mastery of the skills needed to do their jobs;
  • Only 12% of employees apply new skills learned in L&D programs to their jobs; and
  • Only 25% of respondents to a recent McKinsey survey believe that training measurably improved performance.

Glaveski nets it out this way, “Not only is the majority of training in today’s companies ineffective, but the purpose, timing, and content of training is flawed.”  I don’t disagree.

While the L&D community hold conferences dominated by sessions on how to create compelling Powerpoint title slides, the use of chatbots, and incorporating podcasting into a curriculum, the businesses they support keep moving and changing desperate for employees that can perform.  In the late 90’s I was tasked to lead a project for Microsoft.  At the time they were under intense scrutiny for monopolistic practices.  It was also a time when Fred Reicheld (who would later create the Net Promoter Score) released the “Loyalty Effect” debunking the marketer “top-box” approach to assessing satisfaction.  I won’t go into it here but when retention does not show a drop off as satisfaction goes down there are other market forces at play. High switching costs, tie-ups and lack of alternatives can be some of those drivers. The retention results don’t reflect the satisfaction of customers (it may make it worse because they feel trapped) but it does give the provider an extremely distorted view of how it is performing.

Over 20 years post the release of RTLAB the data on L&D’s customer satisfaction continue to come in.  While the L&D industry focuses on budget amounts, spend per employee and other “vanity metrics”, the HBR article clearly shows it is long overdue for the learning organizations that are delivering leadership training to take a leadership role.  For the L&D groups supporting innovation initiatives to innovate.  For the industry, as a whole, to take off the goggles and stop living in its virtual reality world.

Revisiting the Learning Stack

A framework to help identify amplifiers and limiters of learning

I find frameworks extremely helpful.  I also find blogging useful for memorializing ideas and belief at a given time.  So going back and revisiting  a blog post about a conceptual framework is really enjoyable for me.  Before I started the Running Training Like a Startup project and blog I had been capturing my L&D musing on a blog I titled Learning Hacks.

In 2013 I authored a post  on the Learning Stack.  A framework for thinking about the amplifiers and limiters of learning. My focus has always been the macro and meta of corporate L&D.  I found the framework a useful way for me to organize the huge volumes of new research and experience being released.  It also provided useful context for more discrete elements of learning. In today’s environment, as L&D pros look widely for levers to enhance impact I felt it was time to take another look.  You can see the original post here.

Six years later, with so much more known and accepted in areas like neuroscience, learner personas and game dynamics, I am curious how the framework holds up.  Take a look.  Tell me what you think.   I look forward to your feedback.

Gatorade® or Broccoli: L&D Marketing

Why L&D needs to build its marketing capability.

Last week a few tweets caught my eye. ATD released an bit of research on “Top 10 Skills to Get You Ahead in L&D” .  Number 8 on the list was marketing.  I was glad to see this.  While the Learning & Performance Institute identified Marketing and Communications in its L&D capability map, there is no mention of it in SHRM’s L&D Body of Competency and Knowledge. Sardek Love, I feel, correctly identified this skill as one of the gaps that can offer significant competitive advantage. Drawing this response form ATD.

ATD Marketing

Sardek Marketing

I touched on the need for this capability in 2018 in this blog post. I expanded my thoughts on this dimension in Running Training Like a Startup as an important driver of speed, Speed to Learner.

“In order to impact this dimension, we believe the mind-set of L&D needs to change from manufacturer to marketer. One look at attendance data will show you that the most attended trainings are frequently mandated, not sold, to their audience. Assuming that learning is solving a real problem, getting users to recognize and “buy” the solution quickly is critical. Running Training Like a Business means L&D must become marketers and packagers of a truly performance-inducing product. Like Gatorade® for employee performance.”

From course descriptions that ” sell benefits not features” to launches that capture and engage target audiences (think something than than cafeteria tables), L&D is fighting for mindshare.  Marketing can help us connect learners to learning and produce business impact in a world where learner attention is a rare commodity.

 

Rotting Boards

L&D Advisory boards need a fresh look.

The current geo-political landscape aside, the topic of governance, with its advice, consent and oversight functions, remains at the forefront of discussions for L&D.  In the book Running Training Like a Startup I cite a report done by NIIT and CorpU to find out how learning organizations have adopted the core principles of van Adelsberg’s and Trolley’s book. Two findings from the report which jumped out at me were in the area of governance.  The study found that:

  • The use of governing boards with C-level executives to ensure strategic alignment is fine in theory but has little effectiveness in practice. Sixty percent (60%) of the companies have them to some degree, but only 10% deemed them highly effective.
  • The use of more tactical advisory boards, while slightly less prevalent (59%), are more useful in that 17% of the respondents deem them highly effective. 

While this study is now aged, my recent discussions with clients have confirmed  that this remains a sub-optimized tool for learning organizations.  While many have a documented governance structure much fewer are gaining the benefit.  Most of L&D seems to acknowledge the generally accepted three-tier model for governance. Executives form the strategic executive level with business heads and line managers operating in increasingly tactical functions in the lower levels.

Earlier this year, Training Industry Magazine published  a “Learning Governance Framework Cheat Sheet” that had been developed by Kaplan.  While fairly common sense, lots of “uh-huh and not a lot of “ohhh”, one pithy item on the checklist stuck with me as much for the pithiness as the “how?” questions that remained unaddressed.

“Construct a governance structure that is inclusive, agile, and commercially pragmatic with senior leader advocacy.”

I am currently working to expand the governance section of the book based on recent experience and research.  But, for those that are currently operating advisory boards at any level here are a few questions worth considering.  These are taken and adapted from a set that Jerry Colonna, executive coach to founders and author of Reboot, uses to assess the boards of startups.

  1. When the shit hits the fan, which of your advisory board members would you turn to and why?
  2. If your advisory board was your executive team, what experiences or temperaments are missing?
  3. What skills would you like to see on your advisory board?
  4. How do non-advisory board executives and managers view your current advisory board?

In today’s fast moving business environment L&D cannot fail to get the most out of this critical element of driving unmistakable value for the companies they serve. How are you using advisory boards and what challenges are you facing in getting the most out of them?