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ProfitAbility Insight:
Great Learning in 2012

ProfitAbility Insight: Great Learning in 2012

The ProfitAbility Insight Survey 2012 focused on two key themes:

How much influence do HR and L&D really have on business results? More than 430 human resources and learning and development professionals completed What makes great learning? The report refers specifically to: the 2012 ProfitAbility Insight Survey. These were split predominantly between the USAo theUK, with some representation in Europe and Asia. The respondents included and impact of modality on learning effectiveness 144o training priorities in decision-makers, and 190 representatives from companies c-level and executive 2012 employing more than 10,000 employees.

Executive Summary

What makes great learning?

We received more than 400 different answers to this question which, when analysed, fell into three distinct categories: An attitude to learning The learning experience itself The business impact of learning. In the words of one respondent great learning has the ability to change lives. This may be so, but how do we turn that into something meaningful, that learning and development can execute? In order to begin answer this question, the survey went on to look in some detail at just two elements of the learning mix learning modality, and the prioritisation of learning objectives. Accelerating leadership remains top of many organisations training priorities. But the number of people that rate it as the most important has declined since this time last year. Those that commented were clear than the emphasis is shifting to ensure that managers at every level (not just the high potentials) are able to lead. 61% Looking at learning modality, the questions focused on two separate areas: eLearning, and business simulations. More than fifty percent of those surveyed had used business simulations. Yet only half of those were completely satisfied with their experience. When asked why, the reasons were clear: simulations that were oversimplified, or lacked customisation; simulations not blending with the rest of the curriculum; or simply the fact that business impact had never been measured. Those organisations that have fully customised simulations embedded within the overall curriculum have a different perspective. As one respondent noted experiential learning has certainly contributed to the results of the group. For most, eLearning still comprises only a small proportion of the L&D budget. of all companies surveyed have a high potential or leadership academy within the organisation, dropping to 30% in companies with less than 1,000 employees. For c-level executives (with responsibility for training decisions), adapting to change is most commonly cited as the top learning priority.

ProfitAbility Insight: Great Learning in 2012

How much influence do HR and L&D really have on business outcomes?

In 75% of organisations surveyed, either HR or L&D has a seat on the board or executive. This reflects a growing proportion of the L&D community that are focused on becoming more strategic, rather than operational, and who are working in partnership with the business to support performance goal achievement. L&D has a much stronger influence in the US than it does in the UK and the rest of the world, where HR more often oversees the L&D function. An overwhelming majority of HR professionals agreed that in a changing business world, human capital decisions must be aligned to the corporate strategy and vision. However, this is still not recognised at executive level in many businesses. There are signs that this is beginning to change, but it is a slow process.

ProfitAbility Insight: Great Learning in 2012

The drive for great learning

In the ProfitAbility New Dimensions user group survey in late 2011, a number of key factors (see chart below) were identified which reduce the effectiveness of skills-based business learning. When combined with the other findings from that survey, three overall topics prevailed: Motivation / attrition reducing dropout rates Retention ensuring participants remember what they have learned Transfer and use ensuring that the results of learning interventions are embedded and used and therefore impact business results. ProfitAbility increasingly works in partnerships with clients such as Roche and Siemens, to deliver a great learning service, so we were keen to understand how the HR and L&D community views great learning. As we approached the design of the 2012 learning survey, we wanted to find out what factors were considered critical to great learning and how organisations are addressing some of the issues that the 2011 research had identified.

ProfitAbility New Dimensions User Group survey, November 2011: What factors reduce the effectiveness of skills-based business learning?

ProfitAbility Insight: Great Learning in 2012

DefiningGreat Learning
Increasingly, L&D and HR professionals recognise that looking at learning interventions in isolation is not enough, and that this alone cannot deliver the desired business outcomes. With an increasing number of HR and L&D professionals represented at executive level, the emphasis is clear: training needs to prove its effectiveness on more than just individual development it must impact business results. ProfitAbilitys recent investments in collaborative and extended learning solutions* reflect the need to ensure that learning is retained and used. But clearly there is more to it than that, and different organisations vary significantly in their outlook Survey respondents talked about great learning in three distinct ways. The responses were evenly split between these three areas, though it is worth noting that senior HR and L&D professionals from organisations with in excess of 100,000 employees were more inclined than other respondents to focus on business results over and above the learning experience:

Three possible definitions ofGreat Learning

To quote respondents, great learning: is continuous learning and growth. It never ends is about being self-aware and open to learn is engaging and experiential is always an effective use of time is something that creates value changes behaviours and perspectives inspires immediate application has measureable business impact makes a permanent impression adds real long-term value to the person and the organisation is something that people want to implement activates prior learning transforms teams and their output occurs when the L&D team is aligned to the corporate vision shapes culture.

* You can find out more about ProfitAbilitys online learning platform from November 2012 on our website at www.profitability.com
ProfitAbility Insight: Great Learning in 2012

Learning retention and use

The survey also looked at how organisations ensure that learning is retained and used. In a frightening 24% of companies, learners have no structured support in taking learning back to their job. Another 24% ensure that managers and workers work with L&D to create learning and application programs designed to achieve business results, which leaves the bulk of companies trying to help trainees apply learning, but not in any formalised way. At ProfitAbility, we believe in working with clients to ensure that learning really does have an impact on business results. We believe that every employee in any business can make a difference, but only if their learning journey is carefully managed to ensure that learning is retained and the vital bit used. The responsibility for this is shared between management, departments, HR and L&D, and can be difficult to manage. However, online learning platforms, such as the one ProfitAbility launched earlier this year, can play a part in streamlining and monitoring the application of learning.

Which of these is typical in your organisation?

Learners have no structured support in taking learning back to their job and applying it

24% 51% 24%

Managers of trainees help them apply their learning Managers and workers work with L&D to create learning and application programs designed to achieve business result

ProfitAbility Insight: Great Learning in 2012

Learning priorities in 2012 - and emerging L&D trends

Company spending on learning and development has been volatile since 2008, declining and recovering in reaction to the global financial crisis and its abatement. Recently, increased economic uncertainty has again caused learning and development budgets to come under pressure. Learning organisations realise that in the current economic situation, having highly effective people will make a difference to business performance so long as learning leaders align what they are doing to the business goals. Whilst accelerating leadership and adapting to change remain overall the top priority for business skills training, 13% of survey respondents now see strategy implementation as their main priority (see table on page 9). This marks a significant shift from 2011, based on both anecdotal and specific client feedback at that time. The survey looked in detail at the training priorities and saw significant differences between different regions, company sizes, functions and vertical market needs. This demonstrates that, now more than ever, L&D functions are becoming more strategically aligned, and less inclined to buy training from a shopping list of key deliverables.

According to CLO magazine, June 2012: CLOs have passed through a difficult period, but a large number expect learning and development will continue to evolve into a stronger entity recognized as contributing to delivery of business strategies and objectives. Some see different writing on the wall and think CLOs will be under severe cost-cutting pressure unless [they] can defend the strategic and financial impact.

ProfitAbility Insight: Great Learning in 2012

The table below looks at only the priority ranked by participants as a top priority (the options included top priority, very important, fairly important, not important and completely irrelevant). Accelerating leadership was rated as top priority in the US, within companies with more than 10,000 employees, and by learning and HR professionals. However, smaller companies, and UK-based businesses, ranked adapting to change as their top priority. This reflects the continuing uncertainty in many markets, driven in part be economic factors, but also due to competition, issues of sustainability and corporate social responsibility, and the competitive nature of todays business world. The percentage split for each group is shown in the table below.

Building financial understanding

Improving the company culture

Process, supply chain or LEAN

Top priority

Strategy implementation 13% 11% 16% 11% 13% 19% 13% 10% 16%

Accelerating leadership

Strategic development

Improving cash flow

Sales and marketing

Adapting to change

ALL UK USA 100k + companies 10k + companies Less than 10k companies L&D HR Exec / c-level

19% 16% 23% 24% 20% 15% 25% 20% 19%

17% 18% 15% 11% 17% 19% 18% 18% 23%

3% 6% 0% 4% 4% 0% 4% 7% 3%

3% 5% 0% 4% 2% 0% 0% 4% 2%

9% 9% 10% 8% 8% 10% 12% 10% 10%

6% 7% 5% 4% 6% 5% 4% 6% 1%

9% 9% 8% 8% 9% 9% 7% 9% 6%

10% 9% 11% 11% 9% 12% 7% 7% 9%

11% 10% 12% 14% 10% 12% 12% 9% 11%

ProfitAbility Insight: Great Learning in 2012

Teamwork

Leadership training alone does not make great leaders

The definition of leadership within organisations is evolving. Many claiming that the emphasis now is on succession planning beyond the c-suite. As one senior HR professional put it leaders and managers across the organisation are helping all associates build confidence and drive improved results and in our business, everyone is a leader of something. This trend towards nurturing leadership qualities at every level is stronger in organisations with more than 100,000 employees, where more than 80% of organisations already have a leadership or high potential programme in place. In these businesses, which generally have a more mature leadership function, some noted the focus on HiPos has been such that leadership skills organisation-wide have simply been neglected. But companies focus on different elements of leadership depending on their requirements. Notable responses from US organisations included: Leadership is critical to culture-building, and Leadership training helps leaders leverage new behaviours in the global marketplace. Within the UK, adapting to change outranked accelerating leadership for the first time, particularly in the minds of c-suite and executive decision-makers. This reflects a growing recognition that managers and leaders of the future require a blended approach to learning. For example, building financial acumen was top priority for only 4% of those surveyed, and yet 75% ranked it as fairly important or very important. Whilst acumen or finance for non-financials is no longer top of the training shopping list, it is still needed. This is reflected in the lack of true commercial acumen (as opposed to knowing some financial jargon) in many managers across a wide range of industries. ProfitAbility works with a number of key clients including for example, GKN, DSM, Nestl and Sky, for all of whom at least one commercial acumen simulation is a critical element of the curriculum. This trend was reflected across the board, with only improving cash flow and process/supply chain rated as important by less than 50% of those surveyed.

Whilst accelerating leadership received the most top priority votes, it is interesting to note that when combining the scores for the very important and important, accelerating leadership drops down to sixth place.

ProfitAbility Insight: Great Learning in 2012

So what does this really tell us?

The results of the survey suggest a levelling-out process, where organisations are reluctant to prioritise one need at the expense of others. The difficulty, in a climate of economic uncertainty for many, is that conflicting incentives, and the challenge in accurately measuring and managing key factors are simply impossible to manage when training resources have been reduced, and lack of funding and support and not enough hours in the day. In this battle of competing priorities, a clear direction from the business is critical to sorting the wood from the trees if talent management and human capital are to adopt the most appropriate strategic priorities to help businesses build competitive advantage moving forward. This will be especially challenging for L&D departments who are split by region or siloed by department or need (for a detailed breakdown by industry sector, please see appendix 1).

ProfitAbility Insight: Great Learning in 2012

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Learning modality
Content, audience, environment and available technology all play a role in how learning is delivered. The survey showed that organisations seem to be spending on average less than 20% of their training budget on e-learning, and that 10% of businesses (predominantly those with less than 10,000 people) spend nothing at all on eLearning. eLearning spend in the USA is slightly higher than in the UK and rest of the world, as shown in the chart below.

e-learning spend as a % of total L&D budget

Businesses are getting more sophisticated in their modality choices. Classroom training remains the most significant form of training despite innovative alternatives largely because even the most effective new technologies cannot compare with real-life experience. Organisations that reduce their classroom-based information are most often driven by cost. Yet when organisations increase their use of classroom-learning, it is because of effectiveness.

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Why business simulations succeed and why they can fail

The use of business simulations is increasing, with 59% of those surveyed having used simulations and, of these, 64% are still using them. The main reasons cited for those that have not used simulations, or whose experience was less than satisfactory were clear 1. Lack of specificity to their business needs / lack of customisation 2. Perceived high cost of delivery As one learning and development director put it succinctly it must resonate with real life. Good simulations are expensive for a reason because they work. They must be embedded in the curriculum and demonstrate results. I need to know I will get real value for money, which means simulations tailored to my business needs, by an expert provider who really knows what they are doing. Learning modality should be chosen based on the learning objectives. This is reflected in the modalities ProfitAbility uses to maximise the effectiveness of learning interventions: scenario-based simulations allow participants to experiment with teams, change initiatives, strategic development and implementation, and to enhance leadership and soft skills board based simulations demonstrate the movement of money through a business online learning platforms support informal learning, reinforce the impact of training, and allow content-based information sharing, encouraging application and peer-to-peer interaction. Well-designed informal learning can improve productivity and efficiency. high quality online and mobile learning (online facilitated workshops, self-paced learning, synchronous and asynchronous simulations) used pre-and post-intervention, and to roll out learning across dispersed, time-poor teams. As organisations apply the principles of gamification, the potential amount of learning that can be absorbed is staggering. The most significant informal learning is not technology based. On-the-job experiences, mentoring, and discussions with peers continue to be considered by learning professionals to be the most powerful informal learning. Leveraging existing and informal content is increasingly vital as HR and L&D are limited by economic pressures in their content generation. The potential opportunity for customised collaborative learning platforms is in facilitating informal content generation by professionals across the organisation. ProfitAbilitys research shows that whilst many off-the-shelf social tools are not fit for learning purposes, the use of a collaborative learning platform to facilitate content sharing and peer-to-peer review can be enormously powerful. The use of rapid authoring tools is likely to plateau, as companies realise that more sophisticated, custom solutions and simulations require complicated tools and expert instructional design from companies like ProfitAbility.

ProfitAbility Insight: Great Learning in 2012

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Empowering L&D and HR

As market demands continue to change, organisational success will hinge on HRs ability to connect human capital decisions.

Executive Grapevine, June 2012

More than 95% of HR professionals we surveyed agreed with this statement. As one senior talent manager put it In the UK business for the first time this year we have fully aligned our people strategy to the business strategy outside of the corporate HR strategy, seeing it forecasted over 3-5 years with a focus on talent development, uplifting skills, workforce planning and engagement. I do agree that HR has become more critical in supporting business strategy and the results within our business are clearly demonstrating this. Organisations benefit from being nimble at change, spotting organisational efficiencies, strengths and weaknesses, and helping build leadership teams and competencies to ensure the organisation is well led and managed. An effective HR department should be playing that strategic role Head of HR international, Legal & General.

However, a significant proportion of assenters were keen to point out that whilst they in the human resources function were very clear on the critical importance of human capital decisions, in reality, we are too slow to react as a company, an business and people strategy are not really well aligned. We are undergoing extensive change but operational HR managers in particular are not being kept fully in the picture. There is also a strong argument that the focus on human capital should be critical not just within the HR and L&D functions, but in business leaders generally. As the HR business partner for a leading pharmaceutical firm put it I agree there should be a connection - but is this the responsibility entirely of HR?? My view is that we need Business Leaders with a strong HR ability.

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Executive responsibility
An increasing proportion of HR and L&D professionals are reaching board level positions, reflecting the increasing emphasis on the importance of talent and human capital decisions within successful business. Notably, as the chart below shows, both HR and L&D have greater presence within the US market. This contrasts with the emphasis in countries with head offices or regional talent functions within the UK and Europe, where learning and development can sometimes be seen as a function within human resources, rather than as an entity in its own right. As one participant put it succinctly long-timers are running the show. This makes initiating and executing change across the organization extremely difficult. A senior HR business partner at the UKs leading airline makes this comment: There is growing evidence that human resources are crucial to organisational success, and may offer the best return on investment for sustainable competitive advantage. We turn to treating human resources as a capital investment for competitive advantage. Specific attention is given to increasingly recognised human and social capital and the newly proposed positive psychological capital. We must pay attention to guidelines on how to practically manage human, social, and positive psychological capital for an organisation to gain competitive advantage

80% 60% 40% 20% 0%

% of organisations with learning and development representation at board or executive level

Experience great learning that drives business outcomes

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ProfitAbility Insight: Great Learning in 2012

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Appendix 1

Learning priorities by industry sector

Some interesting trends emerged when looking at the learning priorities by industry sector, as shown on the table below. The most important priorities are shown in pink, and the least important in green. Accelerating leadership Strategic development Process, supply chain Improving cash flow Sales and marketing Adapting to change Building financial Improving the 30% 35% 28% 45% 9% 46% 31% 38% 58% 10% 25% 50% 22% 42% 35% 27% 37% 21% 40% 20%

ALL respondents most important least important Education / training / business schools most important least important Banking and Finance most important least important Utilities / government most important least important Manufacturing most important least important Retail most important least important Media tech telco most important least important Pharms most important least important FMCG, food & drink, restaurants most important least important Logistics, transport and distribution most important least important

N = 430 61% 57% 7% 11% N = 36 72% 58% 4% 4% N = 42 72% 71% 3% 3% N = 58 65% 54% 8% 17% N = 50 59% 63% 7% 5% N = 18 60% 69% 7% 0% N = 40 53% 64% 9% 6% N = 30 52% 44% 11% 16% N = 21 65% 58% 6% 11% N = 19 63% 69% 0% 13%

56% 9% 76% 4% 80% 3% 55% 12% 54% 10% 38% 8% 53% 6% 33% 22% 60% 10% 69% 13%

55% 13% 32% 23% 69% 3% 47% 16% 64% 6% 53% 7% 58% 6% 48% 19% 64% 7% 69% 6%

54% 11% 57% 7% 52% 3% 47% 23% 59% 11% 60% 0% 59% 6% 48% 12% 50% 6% 69% 13%

51% 14% 58% 15% 51% 3% 55% 16% 46% 13% 73% 0% 45% 15% 58% 17% 63% 0% 71% 12%

42% 28% 47% 25% 31% 29% 35% 43% 52% 33% 31% 31% 41% 25% 42% 21% 47% 12% 50% 14%

40% 23% 42% 26% 55% 11% 25% 38% 50% 11% 36% 29% 58% 16% 36% 16% 58% 0% 50% 17%

32% 24% 27% 27% 33% 14% 40% 31% 32% 16% 19% 31% 36% 17% 24% 31% 45% 5% 44% 17%

(Note the caveat that these numbers are unlikely to hold up to robust statistical testing, with respondent numbers by industry sector varying from 18 to 58 people, so should be used as indicative of trends and not as concrete data)

Teamwork

Strategy

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ProfitAbility Ltd Stables 1, Howbery Park, Wallingford, Oxon OX10 8BA United Kingdom t: +44 (0) 1491821900 f: +44 (0) 1491821901 e: info@profitability.com Profitability Business Simulations, October 2012

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