Enterprise Learning

Life or Death: Building a Corporate Learning Culture

Posted on December 3, 2008. Filed under: Enterprise Learning, Talent Strategy | Tags: , , , , |

Witness the number of companies undergoing a wrenching transformation (read “potential death”) in today’s economy: the US Auto industry (GM, Ford, Chrysler) , the US Newspaper industry (LA Times, NY Times), and many elements of the financial services industry.

A recent global survey of 1100 business leaders by Boston Consulting Group found that one of the top three things keeping CEOs awake at night was their ability to “build a learning organization.”   Our research shows clearly that organizations can be broadly grouped into two types: those that “learn” and those that “don’t.” Those that “learn” have an uncanny ability to evolve: they are what we call “enduring” companies, and they find ways to continuously change their products and services as markets change.

Examples of companies that “learn” include UPS – which started as a horse and buggy delivery company and is now a global logistics company operating in every mode of transportation.   Another is Caterpillar, a company which has evolved its products from steam-driven tractors to a broad array of building equipment and services around the world.

Our High Impact Learning Organization® research demonstrates that companies which have a “learning culture” have much greater financial returns over a 10-20 year period – in fact the HILO 80, the 80 top companies in our 780 company research group, deliver more than 10% greater earnings growth and over 15% revenue growth over a 10 year period than the average in their industry.

Building a Learning Organization is a Matter of Life or Death

Today, with the economy clearly at a low point, an organization’s ability to learn is a matter of life or death.

So what is a “learning culture” and how do you build one?  Well there When we look at companies which endure and prosper over long periods of time, we see that they have an uncanny ability to innovate, reinvent themselves, and adapt to change.   Our research and upcoming Learning Culture assessment discovered that there are nine independent pillars which drive an adaptable learning organization:

  1. Executive Culture.  Do line executives truly support and reinforce the business processes and investments needed to support innovation and learning?  Do they take a personal interest in employee and leadership development?  Do they regularly move business leaders throughout the company to gain new perspectives?  Do they maintain funding for learning and innovation initiatives?  Do they drive and manage change?  Do they take risks and encourage and support new products?
     
  2. Managerial Culture.   Are line managers incented, coached, and directed to build capabilities in their teams?  Are they paid to develop people and innovate?  Are they empowered and motivated to be coaches and not just managers?  Are their a variety of support and development programs for managers to provide feedback and development for their people?  Are they rewarded for experimentation and innovation?  Are they open to “bad news?”
     
  3. Customer Culture.  How close are product, service, and support teams to customer needs?  Are there vigorous and regular processes for customer input?  Do customers have many ways to interact with the company and provide input?  Is customer input considered sacred and valuable?  Are customer facing roles given high priority and respect in the organization?  Is there a free-flowing set of customer needs available to everyone who creates or produces a product or service?
     
  4. Operational Culture and Process.  How are line organizations incented and organized?  Are employees provided with the opportunity to change processes and products when necessary?  Are their programs and systems to monitor and improve quality and customer service?  Are customers intimately involved in process and product development?  Are their processes in place to learn from mistakes or does the team “shoot the messenger?”  
     
  5. HR, L&D, and Leadership Development.  Does the HR and L&D organization have the funding, mandate, and executive support to build organizational and leadership development programs?  Do they support knowledge sharing programs?  What stage of maturity is the company’s leadership development program?  Are their regular opinion surveys and other forms of feedback from employees and customers which drive organizational change?  Is innovation rewarded and incented?
     
  6. Financial Support.  How is employee development, knowledge management, innovation, and training funded?  Does each business unit or operational unit have to find money in their own budget to accomplish such tasks?  Is there budget for skunk works or new ideas?  Is there a corporate funded group which promotes innovative development teams and programs?  Are such programs monitored and supported year after year or do they get cut during bad times?  Does the organization benchmark its spending against its peers?
     
  7. Career Planning and Employee Mobility.  Does the company have a plan, model, or process for career planning?  Is it easy or possible for someone to change roles or move into a new position regularly?  When a reorganization takes place, is there a way for people to move from team to team without penalty?  Are job rotation and developmental assignments regularly offered?  How well do managers understand and participate in the career planning process?
     
  8. Employee Development and Alignment.  How are employees developed and measured?  Do they have an incentive to build new skills, learn new things, and get involved in new projects?  Is development considered a valuable part of an employee’s career?  Is there a widespread goal development process and how does it accomodate the time needed to build new processes and systems?
     
  9. Technology Investment.  Is there an ongoing investment in technology infrastructure to support learning, knowledge sharing, employee connectivity, social networking, e-learning, content management, and other tools.

 

These nine pillars are not easy to build.  In fact, they often take years to build – but we find that high performing, enduring companies do each of these things well.  In the coming months we will be introducing a new set of research and assessment tools to help organizations understand their ability to “learn.”  

While many of these things seem “soft” – in fact they are “hard.”  They demand a focus from business leaders, HR, IT, and line management.  They touch the way a company is managed and the way the company works.  Does this matter today, in the middle of a recession?  You bet it does:  if your company wants to survive during a slowdown, you must be able to adapt quickly and effectively.

Watch for more on this topic in coming months – and a major launch of our research in this area at IMPACT 2009®.

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Fear: Does your organization have the Courage to invest in tough times?

Posted on November 13, 2008. Filed under: Enterprise Learning, Leadership Development, Talent Management | Tags: , , |

You can’t pick up a newspaper these days without reading about more business downturns, layoffs, and lowered expectations for retail sales, automobiles, consumer products, housing, and financial services.  Lots of business leaders are making tough decisions right now, and I also know a lot of our HR and L&D readers are worried about their jobs.

In fact, for baby boomers like me, the concept of retirement in the next 10-15 years is now becoming a fleeting thought:  many people now realize that they may have to put off retirement for another time.  (The stock market has lost an entire decade of positive performance, so we all have to wonder what that says about US business competitiveness.)  

So there is a lot of fear out there – and business leaders in almost every industry are being forced to make difficult decisions:  cutting costs, reducing headcount, getting out of certain businesses, and restructuring.  In our just-released Fall 2008 TalentWatch®, we found that almost 1/3 of our respondents have a new CEO or top management team and 26% are going through some type of major restructuring.  These changes bring stress into every person in the organization.

How do organizations deal with these transformations?  The key, of course, is to build a workforce that can rapidly adapt.  In this kind of environment people have to take on new roles, take charge of turning around their operations, and focus relentlessly on execution.  In many cases these changes identify dramatic gaps in capabilities and skills which may have been glossed over during good times.  

An example:  Global Pharmaceutical Company

Let me give you an example.  We are working with a large pharmaceutical company which is going through a business transformation.  This company is a global leader and traditionally built its business through a series of autonomous geographic business units, supported by a global research, global manufacturing, and global corporate functions.  Such a business structure worked well in a market with fast growth, high margins, and highly differentiated products.

The world has changed however.  Today pharmaceutical companies must deal with the loss of patent protection on many products, the need to sell to low cost healthcare providers, a neutral to negative regulatory environment, and the need to continuously invest in R&D as new genetic-based pharmaceutical breakthroughs become possible.

So this highly successful, well regarded company, which is over 100 years old, needs to change.  They are changing in two big ways:  first, they are reorganizing the company into global business units which focus on different market segments;  second they are revamping their manufacturing capacity to more rapidly deliver generic versions of their patent drugs.  These two changes result in new job roles, new leadership positions, and a new sense of purpose among tens of thousands of loyal employees.  The company is now focused on operating as an integrated company, with the ability to reduce costs, increase adaptability, and deal with these market changes.

Such Changes Demand Investment:

This particular company realizes that in many ways they are not prepared for this transformation.  So they are investing in a series of new leadership development programs, a new global leadership model, and a new program to rebuild the “nobility of first line management” through a new focus on managerial talent development.  

They also realize that many people who’s careers were built in one business function (e.g. sales or marketing) have to broaden their understanding of the business, so they have built a business simulation which teaches leaders about how the entire company and the pharmaceutical industry work. 

These programs show a commitment to building skills and capabilities during the downturn, with a clear understanding that now is the time to empower and enable managers and leaders to make the changes needed.

Does Your Company have this Courage?

It takes courage and leadership to invest in talent now.  One of the easiest things to cut during tough times are HR and L&D budgets.  While you may have to tighten the screws on your learning and HR operations, you will find that a continued focus on talent development today is more important than ever.  Our 2008 High Impact Learning Organization® research clearly found that organizations with a continuous, systemic focus on organizational learning greatly out-perform their peers.   Your role as an HR or L&D leader is to help build confidence in your leadership that they should continue to invest and hold you accountable to deliver the programs and strategies that help your organization transform itself during today’s economic slowdown.

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Where is the “Talent Management” Market going?

Posted on November 9, 2008. Filed under: Enterprise Learning, HR Systems, Talent Management | Tags: , , , , , , , |

As the US economy lost 240,000 jobs last month and the unemployment rate rises to 6.5%, one of the questions I know many people ask is the direction of the “talent management” marketplace.  Let me give you our thoughts on the trends taking place.

First, the urgency of “talent management” in corporate HR organizations has not slowed.  In fact, nearly every organization we talk with is moving ahead with their new talent management strategies, which includes redesign of performance management, further integration of their HR organization, assignment of a Vice-President or other senior HR leader responsible for “talent management,” and the desire to implement talent management software.

Second, we also are finding that most companies are also reducing the size of their HR and L&D organizations (the US L&D market in 2008 has shrunk significantly, and we will be publishing this data in the next few weeks).  We are now working with many organizations to restructure their training departments to create more centralized organizations in the interest of reducing costs, and we see a dramatic dropoff in the development of new L&D initiatives which are not directly related to talent management.

Third, organizations are cutting back on travel and other development-related expenditures and now investing more in lower cost, collaborative learning infrastructure.  One Fortune 100 company we are working with has decided that instead of replacing their learning managment system they are going to implement new collaborative, Learning 2.0 strategies using low cost social networking software to enhance their sales and service training and create more employee engagement.  The LMS “upgrade” looked like a $5 Million project, so it is going on hold.

Fourth, the talent management systems market continues to grow, but at a slightly slowing rate.  In fact, if we look at the Q3 2008 revenues of four publically traded companies, SuccessFactors, Taleo, SumTotal, and Saba, we see positive but slowing revenue growth in every single company.  Revenue growth rates at these four companies are 77%, 39%, 12%, and -1% respectively.  Unfortunately, each of these public companies continues to lose money and all have seen their market caps drop (along with the entire market).  But the market is still healthy:  for example we know that private companies are also growing – Plateau, GeoLearning, and Learn.com each grew by over 25% in the last year.

Fifth, if you look at the talent management software market, which we see as a tremendously important part of corporate HR and talent management going forward, it is beginning to become a bit crowded.  While we still see explosive growth into many years in the future, our latest research now shows that most buyers see similar features from many software providers.  As a result the “price to enter” the market is higher, and software vendors have to invest more and more in sales and marketing to maintain their revenue growth.  SuccessFactors, the fastest growing of all, continues to invest an amazing 61% of its revenue in sales and marketing, which is unsustainable for any company over a long period of time.   We firmly believe that the talent management software market, just like the LMS market, will segment itself into leaders in different segments (global enterprise, enterprise, mid-market, and eventually small business) – and both Oracle and SAP will continue to grow.

Bottom line:  Today’s economic environment has caused new stresses for the HR and L&D organization and will definitely slow the market for talent management software.  But is the party over?  Not at all.  Organizations of all sizes continue to push ahead with their new talent management, social networking, capability modelling, and collaborative learning strategies — they key is to maintain the focus on these programs in a highly efficient way.

New research on these topics:

The Essential Guide to Performance Management Systems and the Market

Enterprise Social Software 2009:  Facts, Analysis, Trends, and Vendor Profiles

The Talent Management Factbook

The Corporate Learning Factbook

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Restructuring HR: Where are we going

Posted on October 26, 2008. Filed under: Enterprise Learning, HR Systems, Talent Management | Tags: , , , , , |

In the last year many of our research members and clients have come to us for help in restructuring their HR or Learning & Development organizations.  There have been three major forces at play here.

1.  Reducing costs:  In nearly every industry organizations are going through restructuring, mergers, or other cost-cutting efforts.  The HR department plays a major role in these changes – both by facilitating these changes and by eliminating duplication in its own operations.  Consider the merger of two regional Banks we just worked with:  both had talent management teams, both had compensation, diversity, and compliance organizations.  

Well the decision about what to cut and how to reorganize were not easy:  one of these banks focused on high net-worth individuals and small businesses, so it had a large workforce of account and portfolio managers providing customized services.  The other was a more traditional retail bank, staffed largely by people dealing with retail clients.

Bottom line:  the combined organization design required a sharp and focused look at the new workforce strategy, the key competencies and capabilities in place, and which of the HR teams had the expertise and understanding to execute the new combined bank’s strategies.  Some of the operations went to the traditional retail banking HR leaders, others (talent management, for example) went to the HR leaders from the smaller, acquired organization.

Advice:  consider your new workforce strategy and look for the most valuable HR skills and capabilities in dealing with the new workforce, and use this to guide your reorganization.

2.  Implementing new Talent and Capability Management Solutions:  The second major driver behind new HR organizations is a need to implement talent and capability management strategies.  Consider one of our clients who is a large, well known consumer packaged goods company.  This particular company has a well established talent management strategy which moves people across functional organizations (e.g. marketing, sales, manufacturing) from product line to product line.  These people rise through the organization in these functional roles and eventually have the opportunity to become general managers of consumer products.

This is a very traditional talent strategy, pioneered by Procter & Gamble and now used by Unilever, Clorox, Kraft/Altria, and many other consumer goods companies.

But how does this type of organization work when the company enters a major economic slowdown, an acquisition, or divestiture of an entire product category?  It builds functional skills which are supposedly transferrable into a new product.  But in reality, what our research has shown, is that many such CPG (consumer packaged goods) companies have old, long-established techniques for marketing which may or may not fit into such a new market.

Clorox, for example, creates entirely new marketing and product teams to enter new markets.  The highly successful “Green Works” product line from Clorox was incubated and developed outside of the company’s traditional marketing organization.

Bottom line:  as we find in almost every industry, the “magic” to a newly combined talent management organization is not to simply squash together all the organizational development roles, but rather to stitch them together with a strong focus on the company’s strategic business needs.  In our High Impact Talent Management research we find organizations which succeed with integrated talent management create talent “pools” which are treated in special ways based on their demographic, skills, and strategic role.  Oil companies, for example, must create special “talent pools” for exploration and production engineers, because they provide such high value and are in such short supply.

3.  Adoption and Integration of New HR and Learning 2.0 Technologies:  The third major change which is causing HR to change is the rapid adoption of new HR and Learning 2.0 (read “social networking“) technologies.  It is now possible to purchase an HRMS system which includes integrated functionality for goal alignment, performance management, succession planning, talent pooling, career management, and more.  And in the area of enterprise learning, today’s new learning management systems (LMS) now have social networking, collaboration, messaging, and content management embedded.

In addition, as our latest High Impact Learning Organization research shows, more and more of an organization’s capability-building expertise now lies in its ability to create internal collaboration and communities of practices — and less relies on traditional competency management and training. 

Consider a large pharmaceutical company.  We are working with three such companies right now and each are looking for ways to reduce L&D costs by implementing integrated technologies and organization structures to share knowledge, collaboration, tools, and infrastructure across sales, research, manufacturing, and other large business functions.   The traditional HR and L&D organization which may have decentralized groups must be changed to take advantage of these new integrated technologies.

Bottom line:  new technologies can be transformational, but make sure you consider how they will force and enable your HR and L&D organization to collaborate as well.  If you want to understand how these changes are occurring, read our new Social Software 2009 research or our just-published report The Essential Guide to Performance and Talent Management Systems.

In 2008 and 2009 we expect many organizations to grapple with these challenges:  what is the “new role” for corporate training?  What do we do with the HR generalists located in our business units?  How does the talent management team create strategies which can be customized for critical roles?  And what parts of HR should be globalized vs. decentralized?

While the traditional approach to outsourcing HR transactions continues to drive cost reduction, I believe it is these higher level issues which are really going to drive HR’s value in the next 12-24 months.  With the economy slowing and more than 30% of organizations going through some type of restructure or leadership change, we must think about how we will reorganize ourselves to provide cost reduction, integrated talent solutions, and enable new technologies all at once.

(We have a variety of tools and assessments to help organizations work through these issues – please contact us if you would like to learn more.)

Comments welcome…

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Corporate Talent: Where the US Labor Market is Going

Posted on October 20, 2008. Filed under: Enterprise Learning, Sourcing and Recruiting, Talent Management, Workforce Planning | Tags: , , , , , |

One of the important things senior business and HR leaders must consider is the availability of labor – that is not just “people” but “the right people.”  Right now, with a 6.1% unemployment rate, the US labor market has undergone some major changes…. and such changes in the availability of work directly affect the skills and capabilities of people.  For example, when I graduated from college in 1978, there was a dearth of engineers and a tremendous interest in energy (as there is now).  So, I studied Mechanical Engineering.  In the decades since, that particular area of study dropped out of favor – but now it’s back.

Consider the following changes which have happened in the last 9 months:

  • The number of jobs in construction has dropped by 4.3% (323,000 jobs lost)
  • The number of jobs in manufacturing has dropped by 2.7% (366,000 jobs lost)
  • The number of jobs in natural resources/energy has increased by 8.6% (64,000 jobs gained)
  • The number of jobs in education and health services has risen by 2.1% (394,000 jobs gained)
  • The number of jobs in government has grown by 1.1% (254,000 jobs gained).
So what we have experienced is a fairly dramatic drop in the need for manufacturing and construction roles and a very dramatic increase in the demand for energy, education, healthcare, and government roles.  Interestingly, working for the government is more popular among young people now than it has been since the 1960s.

 

US Labor Market by Industry October 2008
Fig 1:  US Labor Market by Industry, Bureau of Labor Statistics

 

This data shows what a “non-manufacturing” economy we really are.  The largest industries by employment are business and professional services, healthcare, and retail (and government).  We truly have become an industry of shoppers who are trying to remain healthy.  The fact that 17% of all employees work for some form of government is also alarming.

 

The second economic factor to consider is where industry growth is occurring.  Today, despite the recent drop in the stock market, some industries continue to be doing very well:  our new TalentWatch® research (to be published this month) shows that many Aerospace, Business Services, Defense, High Technology, and Healthcare companies are still growing rapidly.  And when we ask business leaders what roles they need to grow, companies tell us that their biggest shortages are in:
  • Line Managers:  43% of organizations cite severe or major shortages
  • Engineering / technical professionals:  42% of organizations cite severe or major shortages
  • Skilled labor:  30% of organizations cite severe or major shortages
  • Sales:  30% of organizations cite severe or major shortages
  • Top executives:  yes, believe it or not, 34% of organizations cite severe or major shortages.
As our Talent Management Factbook® research supports, organizations are still suffering from shortages in their leadership pipelines, shortages in technical skills, and a never-ending need to find the right sales and executive roles to run their businesses.
 
What does this mean to you?  Despite the dire economic news, more than 40% of the companies we surveyed told us they are limited by the inability to hire key people.  And based on the information above, our economy is slowly but surely shifting to one of services, government, healthcare, and energy workers. 
 
Further supporting this trend is the following data.  According to the Bureau of Labor Statistics, the fastest growing jobs over the next five years will be: 
  • Network systems and data communications analysts – 53% increase
  • Home health aids – 49% increase
  • Software engineers and applications programmers – 45% increase
  • Financial advisors (!!! really?  yes) – 41% increase
  • Medical assistants and nurses – 35% increase
  • Substance abuse and other counselors – 34% increase (I wont even try to guess the reasons for this).

Bottom line is this:  if your organization needs technical, managerial, or healthcare workers to grow, you should plan ahead.  You are likely going to need to further invest in career development, tuition reimbursement, and increases in training in order to obtain the skills you need.  Our research shows a fevered interest in complete career development programs among corporations – programs which help young workers build their skills in professional, technical, and service roles – not only leadership.

I personally believe that the next administration in Washington is going to wake up to these shifts in labor skills and availability and start a massive emphasis on technical, energy, and health training and education in the US.  WIthout such a shift our businesses are going to be increasingly forced to invest in these skills internally.  Either way, we have no choice but to watch these trends – it’s a critical part of our role as strategic talent managers in our organizations.

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Enterprise Social Software: A New Category

Posted on October 2, 2008. Filed under: Enterprise Learning, HR Systems, Learning 2.0 | Tags: , , , , , , , , , , , , , , , , , , , , |

This week we introduced some important and groundbreaking research on a new, important category of enterprise software:  the market for corporate Social Software platforms.   Traditionally our research has focused on identifying the strategies, processes, and systems which help corporate HR and L&D drive effectiveness and business value.  But as we continued to study the market for Talent Management and Learning Management software, we found that almost every software vendor was building features for internal social networking.

As we talk with corporate HR and L&D leaders they tell us that more and more of their focus is moving toward strategies and systems which support and create internal social networks, internal collaboration, content sharing, and informal learning.  So naturally we asked ourselves, how is this all going to come together?

Our research found several things.  First, today most companies are experimenting with many forms of social software in the areas of employee expert directories, customer service, customer community management, sales force collaboration and knowledge management, and technical communities of practice.  In fact, more than half the companies we talked with have active, highly sophistocated communities of practice in many of their customer facing and technical roles.  

Second, we found that very few companies have found a way to apply these tools and solutions to enterprise-wide HR, learning, and talent strategies.  Some, like IBM and Cisco, have invested heavily in this area and are well along on implementing what we call “learning on-demand” solutions internally.  But most companies are still bringing together teams from IT, HR, L&D, sales, and service and trying to figure out how an enterprise-wide social networking strategy would work.

Third, we found that this new application segment has spawned a large and very fast-growing segment of software providers.   While the jury is still out on whether these companies will grow into billion dollar companies or be subsumed into the likes of Oracle, SAP, Microsoft, IBM, and others, we believe that for the next 3-5 years these companies will become very important in the development of strategies and solutions for enterprise-wide learning and talent strategies.  The market is already over $270 Million and we expect it to grow to over $400 Million by the end of 2009.

These new, fast-growing companies like Atlassian, Jive Software, LiveWorld, Mzinga, and Telligent have built highly functional systems which implement the four major categories of “Social Software” – conversations, connections, collaboration, and content.  While most are not uniquely targeting the market for HR and corporate training, all are moving in this direction and they warrant a good look by your organization.

Does this mean that the market for Learning Management Systems (LMS) and content management systems is going away?  No, not at all — but it clearly means that a new “category” has been created, and this new category will challenge LMS providers and corporate buyers to think hard about how they build their next-generation HR and Learning systems architectures.

I encourage our clients to learn about this space – it is transformational.  Our upcoming research bulletin on the role of Social Networking in Enterprise Learning and Talent Management will help you learn more.

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Time to Reduce Costs in Corporate Learning & Development

Posted on September 21, 2008. Filed under: Enterprise Learning, HR Systems, LMS, LCMS |

Our soon to be published research on corporate L&D spending in 2008 shows a definite slowdown in spending on corporate training.  (This research will be published in October.)  This is certainly not a surprise – in August our research panel shows that today’s corporate talent managers cite “a need to reduce costs” as their #1 business challenge (54% of all respondents, up from 51% in May and 36% in January).

One of our long-term research clients is a large pharmaceutical company which has grown by leaps and bounds over the last decade.  This company, like many others in this industry, invests heavily in R&D and has benefited from the tremendous success of many of its blockbuster best-selling products.  

In the last 18 months, however, growth has slowed – so this organization is now looking for ways to better rationalize its spending on corporate training and other business support functions.  A few recommendations to consider, based on this organization’s situation:

1.  It’s time to build a truly federated spending model for training.  Centralize the programs and functions which are repeatable and scalable (typically these include leadership development, career development, LMS and training technology, vendor operations, and advanced e-learning.  

In this industry companies typically have strong functional business leaders in sales, manufacturing, research and development, and corporate functions.  These business units are going to have to give up some autonomy and rely on a shared services or corporate university function.  Such a move can save 10-15% or more of a company’s training spending with little or no real reduction in effectiveness.

2.  Rely heavily on informal and collaborative learning.  One of the least expensive ways to improve programs like onboarding, management and supervisory development, and career development is by focusing heavily on building collaborative programs which rely on communities of practice, social networking, and coaching.  David Mallon’s recent research (and soon to be published study in this are) shows that among all the social networking program in companies today, the most prevalent and successful are communities of practice.

Pharmaceutical research teams, sales teams, manufacturing teams, and technical teams can all learn rapidly and easily from each other.  And the L&D spending on such programs is minimal.  

3.  Rationalize external spending.  Most big companies (like large pharmaceuticals) have many suppliers.  In a decentralized L&D environment it is almost impossible to efficiently manage these contracts.  While many excellent learning solution providers deliver high value (e.g. supervisory training companies, content development firms), they also look for opportunities to sell services to multiple business units in a global company.  When you centralize vendor operations you often find 20-30% extra spending in many program and functional training areas.

4.  Consolidate the LMS and build a talent management systems strategy.  Finally, focus on the area which most companies have been focused on for a few years, consolidation of the corporate LMS.  Our research shows that almost 70% of large corporations (more than 10,000 employees) are now focused on LMS consolidation.  This process, in conjunction with the development of an integrated talent management systems strategy, will save millions in IT and technical expenses.

Today nearly every major LMS vendor also has an integrated talent management (e.g. performance and succession management) suite.  Look carefully at it, because our research clearly shows that organizations which buy their LMS from the same supplier as their talent management system are seeing 3-4X the return from those who buy them from different companies.

I know cutting costs is not always easy.  But it is something we must deal with continuously, and today it is probably one of the most important things you will be asked to do.

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The HILO 80 – Leaders in Corporate Learning

Posted on August 13, 2008. Filed under: Enterprise Learning, Organization & Governance | Tags: , , |

This week we introduced an important new set of research and recognition, the HILO 80® – the top 80 organizations we benchmarked in high-impact corporate learning through our High Impact Learning Organization® research program.

Methodology:   On an annual basis, we investigate the highest impact best-practices in corporate learning, looking at more than 50 different elements of the corporate learning strategy, organization, systems, processes, and governance.  In addition to understanding how these companies manage and implement their learning strategy, we also look at their performance:  performance in workforce readiness, in adapting to change, in talent management, and a variety of other business measures.

The result of this research is a set of modern and actionable best-practices which truly drive results.  These results are summarized in our Top 17 best practices, as well in the High Impact Learning Organization® research.  (I highly recommend you read it, it is one of the most complete research studies in this topic I have ever written.)

In addition, however, we also decided to look at precisely who these “high-impact” organizations are.  With close to 750 companies participating in this research, we had a lot of data to work with.  What we found was that there are a set of organizations that perform far above the average, and we named these the HILO 80.

How they Differ from the Rest:

If you look at these organizations, you find that they are good at many things.  They have strong executive sponsorship for enterprise learning, they invest continuously during good and bad times (but they do not necessarily spend more per employee on training!), they have adopted collaborative and informal learning strategies in addition to formal learning, and they run corporate training like a business (not like an education organization).  They have strong leadership, they hold themselves accountable to the business, and they spend money wisely, measuring the adoption and effectiveness of programs rather than institutionalizing training as an employee “benefit.”

The biggest thing I would like to point out is that they have a strong “learning culture.”  We are going to talk a lot more about what this means throughout the year, but consider the following simple chart:

Impact of Learning Culture

Impact of Learning Culture

When we ask people (employees, managers, and HR staff) how well their organizations value learning, we see a bell curve (the green area).  A small number of companies (3%) believe learning is valued at all levels, but the vast majority find it to be a “spotty” focus area.  When we look at the high-impact group, however (and impact is measured in business terms, not HR terms), you find a strong skew to the right.  These high performing companies are using learning as a business strategy (the topic of the another recent post).

If you dont understand what a “learning culture” means, consider a few of the following top 50 indicators we found:

  • Does your organization value career development as part of performance management?
  • Do people rotate into and out of training and development positions as part of their career?
  • Does your organization value error-reviews and investigation of the causes of mistakes or does it punish people associated with failures?
  • Does your organization maintain its investment in L&D during bad times?
  • Does your organization engage leaders and managers in the development process?
  • Does your CEO and COO consider employee development important enough for them to spend time on?

There are many other business processes which create a learning culture, but one thing is for sure, the HILO 80 do get it.

We built this list for two reasons:  first we want to recognize and reward these organizations for discovering the tremendous power of workforce development in their business success, and second to give our research members and readers a set of role models to learn from.  Many of the companies in the HILO 80 list will be presenting at our research conference, and many are being profiled in our case studies. 

I hope you seek them out individually as places to work, places to learn from, and organizations to emulate.

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Talent Management Challenges in the Federal Government

Posted on August 3, 2008. Filed under: Enterprise Learning, Learning Programs, Succession Planning, Talent Management | Tags: , , , |

We have been doing a lot of research and work with the Federal Government in the area of talent management.  Let me share a few interesting findings.

The United States Federal government has more than 2,7 million employees, ranging in roles from secret service agents to financial analysts to IT specialists to scientists.   These people work in a variety of federal agencies, each of which have a strong and clear mission to provide security, services, or assistance to US citizens.

Talent Challenges in the Federal Government

Like corporate America, the Federal Government is going through rapid changes in its workforce.  As many as 60% of Federal workers are eligible to retire in the coming 10 years, yet the number of Federal positions increased by 33% in the last 3 years.  Today, more than ever, young people (25 years old and younger) are strongly considering Federal employment as a “stepping stone” in their careers (61% of young workers state they would consider working for the government as a first step in their career).  This is very different from 30 years ago, when most people entered public service as a way to “retire well.”

And, like corporate America, the Federal Government has a weak and further weakening leadership pipeline.  Demographics show a tremendous gap in mid to high-level leaders, and today only 41% of government employees are satisfied with the senior leaders in their agencies and only 14% have a “high degree of respect” for their senior leaders.  (Source:  the OPM Human Capital Survey, administered to 220,000 federal workers in 2006)

This adds up to a major challenge in talent management.  Unlike corporate America, the Federal Government has another challenge:  the true measure of “success” is often less obvious.  These agencies measure their success through service levels and attainment of critical goals.  So as a result, the Federal Government has a very difficult time aligning “performance” with compensation and promotion.  In fact, only 40% of employees believe that compensation and promotion is tied to performance and only 7% believe that compensation and promotion are directly and strongly linked to performance.

What Matters?

With tremendous needs for recruiting, career development, goal alignment, and improvement of the performance culture, one may ask “what really motivates workers in Federal Agencies?”  Well the research clearly shows that people who work for the government are motivated by very similar things to those in the corporate world:

What Creates Retention in Federal Workers (and % Satisfied in these Areas)

As this data shows, people are interested in recognition, job satisfaction, career development, work environment, quality of live, and inspiration.  These are very similar motivators to the things which drive high engagement and retention in the private sector.

Unfortunately, as this data (and other data) shows, employees do not feel that they have enough career mobility, fair opportunities, or leadership.  When compared against corporate organizations, the government falls short in the areas of career development, succession management, performance management, and employer brand.

Solutions

The Office of Personnel and Management (OPM) understands these issues.  While the solutions are not necessarily easy to implement, the Federal Government is well aware of the issues.  Many agencies (The NRC and NASA, for example) have implemented highly competitive talent management, career development, and recruiting programs to deal with these issues.

But many of the large agencies have highly diverse workforces:  combinations of technical, security, administrative, support, and service roles.  We are currently working on a project with the Department of Energy, for example, to build a new set of career models for the “21st Century Energy Demands” of the United States.  Such programs can go a long way to building an integrated solution.

The bottom line, of course, is that two things really matter in talent management:  leadership and integration.  Do the leaders of the organizations understand the “Business of Talent?”  And are the organizations integrated enough to take a wholistic view of talent from end to end? 

We are working hard on research and services with the Federal government in 2008 and 2009, call us or watch for more information on this important part of all of our lives.

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Make Learning part of your Business Strategy

Posted on July 31, 2008. Filed under: Enterprise Learning, Learning 2.0, Learning Programs | Tags: , , , , , , |

One of the important lessons we have learned from our High Impact Learning Organization® research is the simple but profound fact that learning is part of a corporate business strategy.   While many HR and business leaders still believe that “training” is department which improves workforce productivity and should be treated as an expense item, our research clearly finds otherwise.  Corporate learning is a critical part of any enduring business strategy, similar to finance, marketing, sales, and manufacturing.

Consider the following:

Change is the biggest challenge organizations face:  There are five distinct phases of any business – startup, rapid growth, maturity, decline, and rebirth (or death).

Figure 1:  The Lifecycle of a Business
 

Every company we talk with is going through this cycle – whether its Apple with the i-Pod, Starbucks in Coffee, AIG with its insurance business, Fidelity in 401k, or Target in retail.  The lifecycle takes place across its entire organization or across its individual products and services.  (We will be talking much more about the way talent management strategies vary across these phases in upcoming research.)

The reason for this cycle is the nature of competitive markets.  Whenever a company finds a profitable market, others eventually find new ways to serve it.   This process creates competition and buyers become more savvy.  Prices go down, and the leaders must now find a way to climb further “up the value chain.”  Today we see this happening to Starbucks, for example.  This process of continual evolution is not something you do occasionally, in today’s rapidly changing markets you have to do it all the time!

Caterpillar, one of our best practice research companies, is a good example here.  The company has evolved from steam tractors into a highly diversified global manufacturer of engines, machines, tractors, equipment,  services, and apparel.  During its  100+ year history Caterpillar’s people have had to “learn” a lot – and the company views learning as a strategic part of its business planning and execution process.

We call the companies which succeed over these cycles “enduring organizations,” and they are the focus of a major research effort we have been working on this year.

Learning is the core of Adapting to Change.

If you accept the fact that change is one of the biggest issues a business faces, then the ability to continuously adapt to change (organizational and individual learning) is one of the most important parts of a long term business strategy.   Unfortunately, many organizations don’t internalize this.

For example:  One of the most frequent questions we discuss with L&D leaders is the question of how to measure the value of training.  They ask this question because their leaders (VPs of HR or business leaders) question the investment in L&D and want to do a “zero based budget” each year.

The critical issue here is the top finding in our High Impact Learning Organization research:  the biggest driver of impact from learning investments comes from the development of an organizational “learning culture.”

 A learning culture has many elements, including the organization’s:

  • Ability to face up to its mistakes
  • Ability to use errors as a learning process, not a punishment process
  • Ability to sustain workforce development through bad times and good
  • Ability to break things that seem to work and improve them before they really break
  • Ability to coach people (the #1 high impact talent process)
  • Ability to rotate people into development roles at all levels.

These “cultural” processes in companies go far beyond the L&D organization – they infiltrate leadership, management, operations, rewards and recognition programs, and values.  (The top 50 elements of such a learning culture are part of our HILO research.)

We are just about to announce our HILO Top 80®, the 80 Leading organizations in our High Impact Learning Organization research.  When you look at this list, you will see many iconic brand names – but you will also see many small and mid-sized companies which are highly profitable, highly successful, and owners of their markets.  These organizations realize that learning is part of a business strategy.

Learning vs. Execution Culture

Many organizations call us to ask for help in “measuring training” or “reorganizing L&D” or “building a blended or collaborative learning strategy.”  These are critically important parts of executing the learning strategy of an organization.  But the learning culture goes further – it means that you must balance learning with execution in every single business process.  And we must be careful to balance the focus between “learning” and “execution.”  Many companies think they compete against each other, while in reality they are totally aligned.

Consider the following.  Are the two columns competitive or complimentary?

 Figure 2:  Execution Culture vs. Learning Culture

One may argue that “we don’t have time for learning,” we have a job to do.  Well that is true.  But of course if you are not “learning” while you “execute,” you are likely to “execute” yourself into oblivion.  Learning and Execution go together.

Examples of Learning as a Business Strategy

Consider Toyota.  How can Toyota manage to be first-to-market in hybrid automobiles, yet still continously compete against GM in trucks, mid-sized cars, and other existing markets.  Are the engineers at Toyota smarter than the engineers at GM? 

Absolutely not.  I have met several GM executives and they are among the smartest and most focused leaders of any business.  But somehow they have not built the same culture of continuous learning which Toyota has.  Toyota has many well documented processes which build and reinforce this culture of learning:  quality programs, Kaizan, career development, experimentation, and empowering line workers to identify problems and fix them.

Consider GM.  GM, for all its challenges, is an amazing company.  As they fight their high labor and medical costs and work to trim products, they are instituting many innovative new learning programs – and I sense that their learning culture is undergoing tremendous change. 

For example, GM has recently created a program called its “JumpStart” program for younger employees.  These GenX and GenY engineers and marketeers get together and have created career paths and development strategies in conjunction with the top 72 leaders at GM.  Recently the JumpStart team created a “car of the future” and went out and purchased a wide variety of electronic devices, music players, cell phones, and PC’s to demonstrate the opportunity for GM leaders to further innovate on user design and consumer electronics integration.  These initiatives are being thrust upon the “old guard” at GM to shake up complacent thinking and encourage innovation in products like the Volt, GM’s new electric vehicle.

Consider Bank of New York/Mellon.  In this organization, as in many other strong learning organizations, there is an assigned organizational effectiveness consultant located in each major business area.  This individual monitors and evaluates all work processes to look for opportunities to measure job effectiveness, find errors, and implement new opportunities for learning and performance improvement.  In effect, this role is a “learning culture” manager.

Consider EMC, one of the most successful high technology companies ever founded.  EMC sells a wide variety of disk storage, enterprise software, and IT services.  EMC has a business manager role entitled “Director of Business Performance” who serves as the performance consulting manager in each and every major business unit.  This person reports to the corporate university structure, but their job is to help the business unit implement continuous learning in all aspects of the business — including identifying processes with errors and flaws.

Learning Culture means Honestly Identifying Errors

Once an organization considers learning part of the business strategy, they look at “execution” differently.  They rigorously measure performance, constantly looking for errors and variances, and reward and incent managers and employees to fix errors.  They empower line workers to fix things immediately, and they provide a wide variety of formal and informal learning solutions at all levels. 

Our research identifies the top 50 elements of a strong learning culture, and you find that every one of these elements is “good business.”  If you are an HR or L&D leader, you can promote and spearhead this philosophy through your programs and organization and approach.  If you are a line manager or leader, you can think about how “learnign and execution” are both different sides of the same coin, not necessarily in conflict with each other.

More to come on this critically important topic…

 

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