Many companies face the question of determining the value of investing in organizational learning.
Consider this: A four-year study by the American Society for Training and Development (ASTD) shows that firms that invest $1,500 per employee in training compared to those that spend $125 experience on the average 24 percent higher gross profit margin margins and 218 percent higher income per employee.
While those impressive statistics may occur over a long period, it is also possible to evaluate how learning contributes to the performance of your company in a more immediate manner. Some measures are directly quantifiable, but intangibles can also provide indicators of organizational learning. It is important to recognize and track a variety of measures, from the global down to the specific, the tangible to the intangible by considering the following.
1 - Meeting Business Goals and Objectives.
A recent client wanted greater penetration into key markets, but the sales department lacked the necessary. They invested in a new sales analysis system alongside direct training in data analysis, presentation, and negotiation skills. Their clear measure of success was in hitting financial and business goals.
2 - Measuring Effectiveness of Employees.
Metrics include skill testing, competency certification and surveys. The client described above revises and repeats its sales force skills survey annually to determine whether employees have remained up to speed and up to date.
3 - Valuing Speed of Decision Making.
Perhaps the best indicator of the continuous progress of organizational learning is continuous reduction in the time it takes to make business decisions.
4 - Sharing Best Practices.
The most successful companies track the sharing and implementation of internal and external best practices. This lends itself to both process and business improvement measures when a practice is adopted.
5 - Retaining Future Leaders.
Your most talented employees and future leaders want to gain new skills, meet new challenges, and earn recognition and rewards. Another clear indicator of [lack of] learning is how many of these talented individuals choose to leave in a given time period.
6 - Recognizing the Cost of Not Learning.
Calculate the lost productivity from failing to use best practices known elsewhere in the corporation. Or the cost of delay in everyone recognizing a marketplace shift of delays in bringing a new product or service to the market. If you repeat mistakes, how many customers do you lose? What is the impact to the bottom line? These measures can be more anecdotal than systematic, but they can reveal a pattern and thus implement processes to advance organizational learning.
“If it’s worth doing, it’s worth measuring.”
“That which is measured improves.”
Do not let the breadth and types of potential measures become a barrier to action. People will often use the argument that results are too hard to quantify in order to resist making an investment in learning. Once you make the commitment to be a learning organization, the willingness to measure results will shift. You will find new ways to track the effectiveness of initiatives, allowing you to learn better and faster the next time. The need to prove the business value of learning will also diminish as people will be involved in their own learning on a daily basis. You will positively entrench the concept of organizational learning.
What is a Learning Organization?
David Garvin, Harvard Business School professor, captures the essence of a learning organization in his book, “Learning in Action”:
An organization skilled at:
Creating, acquiring, interpreting, transferring, and retaining knowledge
Purposefully modifying its behaviour to reflect new knowledge and insights.
With a culture which…
Stimulates, tests, and adopts new ideas
Encourages and rewards skills development
Recognizes and accepts differences
Provides timely, accurate feedback
Encourages appropriate risk-taking and learns from mistakes
Shares knowledge widely and rewards collaboration
Do you have a learning organization? Ask yourself the following questions:
- Do you have a defined learning agenda?
- Are you open to unfavorable feedback?
- Do you avoid repeating mistakes?
- Do you lose critical knowledge when people leave?
- Do you act on what you know in a timely fashion?
- Do you view organizational learning as vital to growth?
Organizational Learning in Context
Peter Senge recognized that many organisations suffer from “learning disabilities” and to cure this disease, he proposes the learning organization as a practical model. He further asserts that the heart of the learning organisation is the shift in mind-set from seeing ourselves as “separate” from the world, to being “connected”. Organizational learning needs to become as important as the Mission and Vision, and driven from the office of the CEO, with necessary buy-in from all employees.