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"Learning and development are critical drivers of future productivity,
innovation, and competitiveness which underpin our sustainable prosperity."
Conference Board of Canada
Canada's productivity is lagging - deteriorating significantly over the past twenty years. Our ability to spend and support the economy is sliding with it. The average Canadian's lifestyle is suffering falling far behind our US counterparts. Our organizations are becoming less innovative at a time when we have to be more globally competitive. We are dropping to the back of the class.
Learning and development have been linked to improving overall productivity. Yet, in Canada, our investment in our employees' knowledge and skills has declined by a whopping 42% since 1993. We only spend $787 per employee for learning and development In the US, it is about 40% higher and their productivity growth rate is double that of Canada. Even more troubling, in Atlantic Canada we invest the least in our people - only $611 per employee. Those numbers have dropped even in the last two years!
What is wrong with us?
How can we possibly expect to compete in a more global, knowledge-based, economy by investing less in developing our employees' skills?
Honestly, we deserve to be at the back of the class with that type of thinking.
Organizations should make the investment (let's stop calling it spending and name it for what it is) in the training and development of skills in our employees a priority - and, even more, actually do it!
But before writing the cheque, we need to do it right. We've had enough stimulus spending to fix things that didn't need to be fixed. Let's invest for an actual return. A further global study recently reported that more than 80% of organizations planned on increasing training and development as a strategy to build productivity. The second part of the study findings makes your stomach drop - for most of those companies looking to make the investment, the greatest percentage did not have a plan as to where and how to spend the money. Less than 7% had an plan to measure the outcomes.
The new people investment strategy seems to be throw a pile of money at the wall and hope something sticks. There must be a better way.
First, let's agree that investing in the development of skills in our employees is a critical investment that can turn around our declining productivity. The next step should be to make the right investment decisions.
There are a plethora of training options available in the market - everything from one-day workshops, to e-degrees and full university degree programs. All have reasonable outcomes; but are they the outcomes that you want?
My past as an investment analyst centered on the question of outcome first. Define the return on investment you expect and make sure the investment can deliver those outcomes before putting the money on the line. I firmly believe the fundamental principles of investment management apply to investing in people. Start with the end in mind. The Oracle of Omaha, Warren Buffet, would cringe and cry if he knew that most organizations take a very ad-hoc approach to investing in people development.
We need to be strategic to capture the best return. We accept that the investment needs to be made, the next question is what type of investment to make.
For organizations large and small - and also for individuals investing in their own development - the process is relatively simple and strategic.
- Start with the end in mind. Think out five years and describe the organizational strategy that will create the results and outcomes you want to realize at that time. What specific results do you want for your organization?
- Once the results are clear, define the type of activities that will be pivotal in supporting the achievement of those results. What do you have to do well as a firm - or individual - to perform competitively or better in those key activities? What skill excellence will shift your game?
- With the results clear and the activities defined to create those results, what are the defining skills that will provide people with the ability to perform those pivotal tasks? What skills are most needed now and in the future to achieve the results you want?
- Following the identification of the needed skills, assess and benchmark your people - or you - in terms of your competency in those skills. Is there a gap? Do some of the skills not even exist? The gap analysis identifies where training is needed to strategically achieve the results you want in the future.
- With clarity of result, activity, and skill level, you can then select programs that will develop those skills on a measurable basis (it has to be measurable). You also select the right people for the investment. In this regard, I do not believe fair is even investment in all - some positions will have a greater impact than others and that is where the investment needs to be concentrated.
- Invest in the right programs for the right people and measure your results and you gain a competitive edge through increased productivity in the right areas.
Agreeing to tuition reimbursement for academic degree programs or investing in conferences and team building events sounds positive but do they actually create a return to your bottom line? Most short-term events generate only a 6% shift in behavior after one month! Helping employees gain well-recognized degrees may be much applauded but is it a good return-on-investment? Did that multi-thousand dollar investment create greater profitability and productivity for your organization? I question if the organizations footing the bill didn't even know what to measure to see if there was a return.
When we invest we want an increasing dividend - one that shows sustainable shifts in behavior to get us to where we want to be.
Investing in the development of our people is the critical strategy Canadian organizations must take before we fall to the bottom of the barrel and wallow in our mediocrity. Investing the right way in the right people will make the real difference.
Fundamental investment principles are the key concept to making our people our greatest assets. We need to build a strong people portfolio that grows over time.
Let's be strategic and make the right investment. We should be tired of accepting second, third, and fourteenth place and make a smart investment in the right people and skills that will bring us a competitive edge. We may be surviving due to our enormous resource base and solid banking industry, but let's not lose sight that we are sitting in a sinking ship unless we make some smart investments to not only fill the holes but build the elements that will get us moving.
Our people are our greatest asset - we just need to invest in them as if they are.
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