Their Reality Should Be Your Training Reality
Generally, leaders view training (yes, I refer to it as “training” not “learning” since this is how stakeholders refer to it) from one of three perspectives. Each of these perspectives depends on the intent and the requirements to be fulfilled by your learning efforts. The three generally accepted perspectives stakeholders will evaluate your request on include:
- Necessary, or expected, training
- Part of a major initiative or effort
- Investments into learning infrastructure
Most practitioners believe stakeholders instinctively evaluate each perspective based on financial expectations. The simplified belief is about having costs correlating directly to a positive financial outcome. This thought is simplistic, and it often undermines a learning practitioner’s already fragile and precarious credibility. Yes, stakeholders evaluate everything financially as a starting point, and in some instances this simplified belief is true, but for those instances, your training effort isn’t the only relevant factor. Most evaluations of costs and investments are somewhat more involved.
The one evaluation criteria often left out of the discussion, however, is performance. Yes, practitioners try to align to business performance but it’s often done incorrectly, or, like the proverbial dog and squirrel, they slide into the financial discussion and ultimately get shot down by key stakeholders.
It’s generally accepted that financial impact and performance outcomes work together. But how each effort is accounted for depends on how a department is classified…and that’s about whether it’s a profit center, cost center, or investment center. For this article, the focus is on training as a “cost center,” which is the most common financial classification for training. Referring to training as a cost isn’t meant to be disparaging, which is how many practitioners tend to take it; it’s an actual accounting classification. Let’s look at each one of these categories in more depth.
Training Categories
1. Training (Learning) As Necessity
I’m guessing that my stating your business leaders and stakeholders consider training a necessity just blew your mind. I’m also guessing you’re probably mumbling to yourself, “yup, this guy doesn’t know my leaders!” Well, before you move on to another article, hear me out. I’ll demonstrate why they do consider some training efforts a necessity.
Most stakeholders recognize that their employees need to continuously learn, especially in the current environment. It’s true that there are many instances where your stakeholders will try to make do without training, but they also know that there are instances of nonnegotiable activities requiring your support. Consider obvious requirements like bringing on and onboarding new staff, training employees on new equipment, methods, or techniques, and the always-expected compliance training.
I’m now guessing you’re now seeing the necessity. In these instances, stakeholders will rarely require you to seek out their explicit approval or support; they expect these training tasks to be done. You don’t have to beg for funding to get these things done, though, mind you, at times they may reduce your budgets, but they’ll never eliminate it.
Now, I’m not saying you have a blank cheque to do what you want. Naturally, stakeholders expect you to make the best possible effort with the funds they’ve set aside. They expect you to maximize the budget and will adjust it depending on economic conditions (e.g., more money during growth, and a reduction during slow periods). The one thing they expect and will ensure funding for is ensuring all of this training remains relevant and current.
Here the training necessity focuses on performance outcomes, and not necessarily on financial expectations. Stakeholders accept (reasonable) justified costs for these training initiatives. What they expect is to have skilled employees who are able to perform in ways that eventually lead to positive financial outcomes, like increased efficiencies, productivity, and even increased revenues. So, your focus is on performance metrics, not on financial ones.
Regretfully, these are often the training areas where practitioners become complacent. It’s not that they’re lazy; however, these elements are not the most exciting training activities. But just like a child’s formative years, onboarding new employees, while entrenching foundational knowledge, sets the tone, culture, and future behavior within the organization. Let that weight rest on your shoulders.
2. Training As Part Of Major Initiatives
The exciting part of developing training initiatives is when it involves major business and operational efforts. You know what I’m talking about. It’s the training initiatives you develop as part of operational efforts, such as new product introductions, market expansion, purchase of new technology and equipment, and the implementation of new processes or methods, to name a few.
This is where stakeholders focus those intimidating financial calculations and we begin to hear the phrase Return On Investment, or ROI. Now, this ROI is not “training ROI;” remember, stakeholders never measure the financial ROI of cost centers. This ROI is all about measuring the efforts, or the project’s, financial return, or project ROI.
Your stakeholder’s financial “questioning” applies to all project costs, with the objective of maximizing project ROI through cost reductions. Okay, so what relevance does this have on training? I won’t bore you with the details, but your training contribution is a “project cost,” as is every other operational support requirement.
Simply put, they’re not measuring the ROI of your efforts but rather assessing the relationship between the project training cost with the expected value it contributes to the overall project. Even when the project is expected to deliver a positive ROI, they’ll still come and ask you to reduce your costs. What they’re trying to accomplish is to further improve the ROI by minimizing valueless activities.
But it’s not personal; they’re asking that of every operational project cost. It’s your responsibility to offer an honest assessment of the training effort, and look to reducing costs without undermining its expected contribution. If you can’t, they say no with valid reason.
In leader-speak, a positive ROI is about maximizing cash inflows (the revenue or cash the project is expected to generate) while minimizing specific internal activity costs, all the while maintaining the value expected from the project. Their goal is to maximize project profitability or ROI, not the ROI of the internal costs.
Allow me to share an example. One of our clients launched a new medication. They asked us to develop a training program to educate their sales team and medical professionals. Now, our training was one of many other internal activities required to bring the product to market. Even though our costs were reasonable (in their words), they asked if we could achieve similar outcomes more economically. They were asking us, quite simply, to focus on the most relevant training for the lowest cost.
3. Investments In Learning Infrastructure
There is some really interesting and innovative learning technology available. So, it comes as no surprise that practitioners would like to get their hands on these, only to get a solid “no” from their stakeholders. It seems like these stakeholders are always saying “no” and never want to spend any money.
Well, that’s not entirely true. Stakeholders are always looking to buy, or rather invest in, necessary operational infrastructure, and are willing to spend the money if there’s a case to do so. A possible reason they keep rejecting your requests is that you didn’t present a clear business case for the purchase.
Here’s why having some financial literacy is exceptionally useful. First, please respect that your stakeholders possess formal business and financial education. This education isn’t necessarily up for interpretation, as with many learning concepts.
They learn early on the clear delineation between costs and investments. There’s even a difference between costs and expenses. In short, an actual training activity–you know, the training itself—is considered a one-time expense. Whereas the supporting requirements, your learning infrastructure requirements and what stakeholders call assets, are seen as long-term investments. Naturally, stakeholders financially evaluate each of these differently.
Not long ago a learning department of a major corporation reached out to us to evaluate the purchase of a Learning Management System (LMS). This is considered a technology asset to last for many years, so we wrote a business case demonstrating how the LMS would benefit the company over its life, including its purchase cost, and ongoing support costs, and itemized the expected qualitative benefits it would bring to the company compared to their current situation.
To be fair, we insisted that their learning practitioners work closely with their finance and IT teams to develop the business case. You’re not expected to be financial and technology experts; you weren’t hired for expertise in either area, and your company has people for that, so get to know them and solicit their support for your next learning investment.
Your Next Steps
It impresses me how many practitioners don’t practice what they preach to others. Don’t be those people; be the L&D example for others and develop your basic business and financial literacy. So, before pitching your next training initiative consider how your leaders will see it. Doing so will allow you to better position your next training proposal and how it fits within one of these three leadership perspectives. There may be nuances to each perspective, but knowing how your efforts fit in with your stakeholder’s needs will save you time and help build credibility.
Please share your thoughts and feedback with us. We would enjoy hearing about your efforts. And who knows, it may be the topic of our next eLearning Industry article. Also, please check out our LinkedIn Learning courses to learn more about developing business credibility for your learning efforts. Please share your thoughts and remember #alwaysbelearning!
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