North American companies ‘want good, local talent, not someone trained
in North America and sent on assignment.’
—Christopher Proulx, president and CEO of eCornell
Investments in employee training are inching up following several years of stagnation. Experts say the trend should continue in 2014 as companies try to regain their footing in a turbulent global economy.
Organizations spent more than $164 billion on employee training in 2012, up 5 percent from 2011, according to a November 2013 report by the American Society for Training & Development.
Corporate training investments have been relatively steady, and lots of organizations boosted skills development even during the downturn, said Pat Galagan, executive editor for the ASTD. “The old saw used to be that when times are tough, you cut your training budget. That doesn’t appear to be true anymore.”
The increased spending doesn’t mean companies are wildly blowing their training budgets. Training providers are fielding new and different expectations than just a few years ago. Rather than making scads of content available for employees, corporate learning functions are under pressure to provide applied learning that plugs gaps in competency or knowledge.
“Top companies know that success requires more than waging a war for talent. They have to strategically develop the talent that enables them to be successful in the future,” said Sam Herring, CEO of Intrepid Learning, a professional services company based in Seattle.
Companies want to accelerate people’s time to perform because their markets are changing so fast, Herring said. “CEOs are starting to realize that learning is at the core of competitive advantage, especially the need to gain market insight and translate it to new products or ways of doing business.”
There is a noticeable uptick among companies making “purposeful” investments in workforce development, said Sharon Daniels, president and CEO of Tampa, Florida-based training provider AchieveGlobal.
“We are seeing a lot more focus on sales, because the selling process is so much more complex than it used to be. It’s one area where companies were willing to spend money, even during the recession,” Daniels said.
Sales ranks second among the top 10 hardest jobs to fill, according to Manpower Group’s 2013 Talent Shortage Survey.
Rapid development of mid- and senior-level leaders is a chief priority for most organizations of all sizes, said Christopher Proulx, CEO of eCornell, a subsidiary of Cornell University.
“Companies need to be more agile, more nimble and more focused on growth, and they need to have leaders who position them to do that,” said Proulx, whose organization provides more than 30 educational certificates in executive and professional development.
North American companies face a new wrinkle: developing leaders capable of guiding cross-functional teams that work collaboratively and remotely — preferably in their native countries. “They want good, local talent, not someone trained in North America and sent on assignment,” Proulx said.
It’s not unusual for leaders to be thrust into a situation of remotely managing globally dispersed teams. Doing so effectively requires a complex skill set. “Leading virtually is very different from sitting down in the office and having a conversation with Charlie. The training we’re seeing is around a heightened communications and setting of expectations.”
The mania behind leadership training is driven by an inexorable demographic dilemma. According to a 2011 report by the Pew Research Center, about 10,000 baby boomers — people born between 1946 and 1964 — will turn 65 each day through the end of 2029. More importantly, only about 40 million new workers are projected to enter the U.S. workforce during the same time, according to federal estimates.
That dynamic already is being felt by companies across all industries. Despite stubbornly high unemployment, skilled workers are in short supply, said Lee Klepinger, the president and CEO of Impact Achievement Group, a Redmond, Washington-based company that provides leadership, coaching and assessment services.
“Companies are staggering in their tracks trying to find qualified people,” Klepinger said.
Broadening Succession Planning
The dearth of talent is prompting renewed emphasis on succession management. “It used to be relegated to the executive suite, but in the last few years, succession planning has become an important consideration at all levels of an organization, from executives to frontline supervisors,” Klepinger said.
One aspect of this trend is that companies in some industries are preparing technical and product leaders to assume expanded responsibilities, Proulx said. “There’s a push to take functional experts and move them to customer support or account-management roles. That requires them to learn different ways to engage customers and solve problems.”
Leadership also is “no longer for the chosen few,” said John Ambrose, senior vice president of strategy, corporate development and emerging business at Skillsoft, a human resources software company.
Ambrose recounts a large multinational company that is making Skillsoft’s YouTube-like videos from leading management thinkers available to all employees. “The executives there told me, ‘We know not everyone can be a leader, but we want everyone to be thinking like a leader,’ ” Ambrose said.
Traditional leadership development programs aren’t generating the desired results, according to a joint survey of 329 organizations by Skillsoft and Brandon Hall Group. The survey found that 75 percent of organizations rate their leadership programs as “not very effective.” They also tend to invest less money: The report found that organizations that highly rank their leadership program spend about 60 percent more.
Companies that are dissatisfied usually aren’t exploiting learning technologies and remain tethered to classroom delivery or large training events, Ambrose said.
“Companies that are doing leadership development like they’ve always done it aren’t doing it well. It’s got to be a continuous journey, not a one-time process.”
Technology Makes Gains
Video-based learning, for one, is moving into the mainstream, with nearly half (47 percent) of companies surveyed using it to some degree, according to a newly released report from Bersin by Deloitte. Despite the surge in adoption, organizations’ use of video is not consistent or coordinated. Less than 10 percent of organizations “are leveraging video across the organization or even standardizing the use of video across the enterprise,” the report found.
In fact, companies have begun gravitating from static classroom training to learning that is more interactive and driven by technology. Classroom training accounted for 55 percent of learning hours in 2012, down 6 percentage points from 2011, according to the ASTD’s report.
At the same time, technology-based methods continue to make inroads, accounting for 39 percent of all training hours in 2012. That includes tools that enable social learning. “One way we’re seeing that play out is more and more learning functions switching from delivering training programs to facilitating learning. That makes them a better strategic partner to the business,” Galagan said.
Consolidation has occurred as traditional business software vendors snap up HR software companies. Exemplifying the trend are two huge deals that closed in 2012: SAP’s $3.4 billion acquisition of SuccessFactors Inc. and IBM’s $1.3 billion acquisition of Kenexa Corp.
But rather than view learning as a singular, isolated activity on a talent management wheel, Ambrose said organizations need interactive tools that make learning a “consumerized experience as inviting as Amazon or Netflix.”
“The final mile is to create rich, dynamic experiences for learners, including the many different forms of learning that occurs outside of” a learning management system course, Ambrose said.
Mobile learning will surge as more companies adopt a “bring your own device” approach, said Mike Stacy, executive vice president of sales for Aptara Corp., a digital content distributor based in Falls Church, Virginia. Aptara is doing more work on behalf of companies that want to use “responsive” Web design — a technique that makes it easier for employees to access mobile content at their point of need.
“There is big demand for helping companies figure out how they want to use mobile. I think we’ll see adoption take off this year,” Stacy said.
It’s an approach already underway at restaurant chain TGI Fridays Inc., which rolled out a cloud-based platform by Cornerstone OnDemand Inc. in 2013. A key component is the use of mobile devices to complete an “observation checklist” on how well restaurant employees interact with customers.
“It’s training on the job, in the moment, and provides for instantaneous coaching, sometimes graduating to prescribed training,” said Jason Corsello, vice president of corporate development and strategy at Cornerstone OnDemand.
Corsello said the next several years will usher in full-blown adoption of cloud-based HR systems across many sectors, including government and highly regulated industries. “Even industries that have resisted moving to the cloud are starting to see the value.”
Integration and Metrics
Arun Prakash, an executive vice president with InfoPro Learning Inc., said organizations are under competitive pressure to re-evaluate how and what employees learn.
“The old adage is that 10 percent of learning gets transferred to the job. That means 90 percent of what an employee learns happens outside of a training program,” through collaboration, coaching and mentoring, and other methods, Prakash said.
He added: “The evaluation has to be on the entire process of learning, especially user engagement. That’s the only way that learning can be meaningfully tracked.
Intrepid Learning’s Herring said companies are experimenting with new methods to encourage motivation as well, including “learning quests” and gamification to promote continuous learning, practice and application.
“The most innovative companies are not only applying these approaches for their employees — they are building the skills, knowledge and competencies of their customers, partners and suppliers,” Herring said.