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 include 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?

 

Why Not Re-skill?

Why Not Re-skill? Recruitment vs. Re-Skilling

A survey from the Consumer Technology Association, the trade association representing the $398 billion U.S. consumer technology industry, which supports more than 15 million U.S. jobs and more than 2,200 companies stated the following:

  • 37% of those surveyed will displace workers due to technology advancements in the next five years.
  • Of those with displacements, only 52% of the displaced population will be re-skilled and retained!

My question is simple. Why will only half of the companies surveyed re-skill workers and choose instead to take the long, expensive, and risky path of recruitment?  Existing workers have already proven to be a culture fit.  They have cleared the hurdle of basic orientation to the way the company works.  They have already demonstrated the ability and desire to add their value to the company.  The tangible costs of new employees along with the intangible cost of layoffs to brand and public perception seem to far outweigh any costs associated with re-skilling.  So why the decision to jettison half of the displaced? How do executives view this trade off? What does this say about how L&D delivers re-skilling and the perceived value of it?

I look forward to your thoughts.

Your Learning Dashboards

Your Learning Dashboards: how to make sure they deliver actionable insights.

  1. Target a specific audience.
  2. Involve end users in the design process.
  3. Provide adequate context.
  4. Describe how to interpret the numbers.
  5. Choose the right data charts.
  6. Anticipate the flow of questions.
  7. Streamline for easier consumption.
  8. Highlight what’s important.
  9. Recommend prescriptive actions.
  10. Review content periodically.

In Running Training Like a Startup I propose several dashboards for L&D to consider. What dashboards are watching and sharing?

An Upvote for an Update

Keeping your stakeholders engaged .

Pat Riley, CEO of the Global Accelerator Network (GAN) wrote a great post last week about how to best keep stakeholders updated.  In the book I discuss and provide some ideas on how L&D pros can keep their stakeholders “in the loop”.  Pat had been waiting for a, “truly exceptional update to arrive in my inbox that I could showcase to the world.” I would agree with him.  Having seen my share of both startup and L&D updates most would benefit from this article.

While our world may be learning, our program sponsors and executives have other things at the center of their worlds.  Keeping them engaged is critical and updates, like the one dissected by Riley.

You can view the article here.

What are your best practices for keeping your stakeholders engaged?

The Pause That Refreshes

Some thoughts on the value of taking a break.

I took the summer off.  I did this for several reasons.  First I took the break to focus on my health, both physical and mental. These are things that often find themselves on the back burner when a client challenge or passion project arrive on the scene.  The second reason was that after taking 18 months to research and write Running Training Like a Startup I had lost my perspective on the practices it contains.  Taking almost 90 days to work on myself initially felt like extravagant waste.  As the days passed it became increasingly clear that it was overdue and that I had come dangerously close to a place I did not want to be.

When my self allotted time began to come to a close I found myself quieter and able to hear my passion for rekilling today’s workforce.  I was growing increasingly confident in the path I had selected.  A confidence that had wobbled and waned prior the summer. I gave myself time to reflect on the learnings from client engagements and feedback I had received on the book. All in all it was an extremely valuable pause that I hope will make my future contributions that much more valuable to my readers, clients, friends and family.

The summer was not entirely without work.  I read and learned prolifically.  Articles, books, videos and conversations have fed my mind with ideas for blogs, book additions and activities.  You can look for the next version of the shareware book to be released in Q4 with expanded content on governance and minimal viable product design.  I am excited to share and get the advice of other practitioners.  You can see a curated selection of articles I have been reading here.

I recommend a pause to everyone.  It feels selfish.  It feels like a luxury that can’t be afforded. It feels amazing. Sometimes we forget our “why.”  Why we do what we do.  Applying the 5 Why’s exercise to our own actions can sometimes be a valuable check on the alignment that we have in our life and work.

Why I Do What I Do

I believe that learning is the silver bullet.  I believe it solves social and economic issues.  I believe it impacts terrorism and global issues.  I believe that it is the single most important driver in ensuring our future is better than our present.  I believe that Running Training Like a Startup is my contribution to improving the bullet.