My book What do I do on Monday morning? has been designed as a daily reference guide for improving the organizational performance of your business using proven Sacher Associates systems. Starting with January the 1st, What do I do on Monday morning? lays out a template for performance improvement in sequenced and practical daily actions and advice.
In the month of August, we cover the essential component of Skills/Knowledge or Competencies which is part of what we call the Performance- Linked Learning system. Below are some suggestions about what you can do, and also think about, on Monday morning the 22nd of August, and every day of this week:
Who defines competencies and competency standards?
Many organizations will already have a set of established competencies and competency standards, developed by the organization itself or by industry-wide groups. If competencies and competency standards are in place, it is a good exercise to review and update them annually (at the learning needs analysis interview) to ensure their currency and validity. If there are no competencies and standards in place, the best time to develop them is during the learning needs analysis interview, at which there is a discussion between the learner, the learner’s manager, and the organization’s learning coordinator. Although responsibility for developing competency standards lies with the learner’s manager, the learning coordinator’s assistance and involvement are essential because the development of competency standards demands considerable time and specialist skill.
Learning operational plans
The learning operational plan translates one year’s worth of the learning strategy and competency gaps into specific learning outputs, performance measures, and targets. This plan lays the foundation for the training budget and the learning and training schedules for the next fiscal year. The whole organization and each of its teams will know who needs to be recruited, managed, trained and divested for the team and the organization to ensure that the achievement of performance goals is not hampered by competency gaps. The process of developing learning operational plans takes three steps:
- Identify the stakeholders in the performance-linked learning system.
- Develop outputs, performance measures and targets for the next fiscal year.
- Plan for who needs to be recruited, managed, trained or divested.
Why the learning budget is important
Like it or not, numbers – or financials – and cost-benefit are the language of business. Numbers provide a common language for the entire business community – bankers, accountants, investors, suppliers, customers, colleagues. Many people who don’t have accounting backgrounds feel uncomfortable with the financials of their organization. Yet there is no getting away from the fact that good financial systems are an essential part of good management. This rule applies as much to learning as it does to any other part of the business. Preparing learning budgets is essential, and you don’t have to be an accountant to develop one. Closing competency gaps are typically an expensive exercise. It can account for a significant part of the payroll, whatever the size of the organization. Although the preceding steps of the performance-linked learning system will help ensure that the correct learning is being supplied, it is important to ensure that the benefits justify the costs. The learning budget meets this purpose. It is used to:
- Determine all the necessary resources and associated costs that will go into closing competency gaps(quantifying the costs of learning);
- Fund all expenditure that will go into closing competency gaps (financing the budget); and
- Monitor and control the usage of those funds.
The lingua franca of business
Learning budgets are also important for another reason. The lingua franca of business is cost-benefit. Learning expenditure is an investment: money spent now for benefits later. Learning expenditure needs to be justified and competitively compared with, for example, the marketing or production budgets. The question that will be asked is what benefits can be expected from the expenditure on learning and can the money be better utilized elsewhere? The benefits to be obtained from the learning are broadly described by the learning targets and an appropriately designed learning budget will facilitate cost-benefit decision making.
Long-term investment or short-term expense?
Managers strive to achieve given budgets within a financial calendar. They are strongly influenced by the balance sheet and short-term financial needs. Training, however, is an investment – money spent now for benefits later. Accounting practices that record expenditure on human resources development only as an expense distort income statements and balance sheets because this classification ignores the financial benefits to be reaped later. If, as a manager, you come to your office to find that you have all your plant and equipment, but no people, what would it cost to do what was necessary to develop a new group of people to a point where they were functioning with the same degree of effectiveness as the original organization? Estimates range from 20 to 30 times the annual earnings of those people and suggest that a 4% deterioration in the value of the human organization will completely offset normal profits. Its human resources are, therefore, of huge importance to the firm. Yet because organizations commonly deny the potential for growth in their human resources, and also any possibility of quantitative performance measurement, human resources are recorded on the balance sheet as a cost rather than an investment. Money spent on a computer is considered an investment whereas expenditure on training is considered an expense. If people were represented on the balance sheet as assets, then the money invested in training would be seen for what it is – appreciating the human asset. Top management and the accounting profession have bought the myth that human resources development can’t be quantitatively evaluated and that accounting for the human asset is no more than a pipe-dream. Along with the failure to acknowledge human resources as an asset, this myth has retarded the development of learning organizations. The role of the human resources development specialist in the 21st Century is to establish objective recognition of the value of human beings – the greatest productive resource in the economic system.
If you think training costs a lot, try estimating the cost of ignorance, lack of teamwork, and lack of business know-how. John P. Schuster and Jill Carpenter
You want to have some way to prove to your boss that the people have really learnt the things you set out to teach them. But let us be candid. What difference does it make to the company anyway whether the people really learned what you were trying to teach them? The payoff is not in what they learn; the payoff is in what they do with what they learn. And if what they do is not apparent to management unaided by your evaluation techniques, then all the evaluation techniques in the world will not convince them that you are earning your money.
For more information, we refer you to our publication: Performance-Linked Learning
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