Track these KPIs, Earn Your Seat at the Table
As a former PwC Consulting Principle and a veteran of more than two dozen Enterprise Transformation efforts, I find it surprising that performance metrics consistently part of my conversations with the C-suite, are not typically used by the highly essential function of L&D. It’s not for lack of awareness, attention or trying. Everywhere I turn, I read industry articles about Thinking Beyond a Seat at the Table or Learning’s Role in Innovation.
I might argue that the question is not so much what L&D’s role should be, but why Learning teams may find themselves playing a pre-determined cameo role in the first place. I believe that the answer lies in knowing which metrics really matter to the C-suite.
I submit exhibit A.
In PwC’s 2017 global CEO survey, roughly 75% of respondents ranked Availability of Key Skills as a top concern affecting their organization’s growth prospects. Only Over Regulation and Uncertain Economic Growth ranked higher. Interestingly, in PwC’s 2007 CEO survey, a similar percentage of respondents listed Availability of Key Skills as a top-3 concern for their businesses.
In the 2017 Deloitte Human Capital Trends report, over 80 percent of more than 10,000 HR related leaders globally cited Careers & Learning as important. In fact, they ranked it second in the top 10 trends in human capital management.
The implication is clear: CEOs and HR leaders recognize the crucial reliance on a workforce with the right skills. The need is especially true given the rapid advances in workplace technology and the persistent skills gap for those workers with outdated skills.
Since businesses continue to invest in learning and talent management, one can reasonably assume that these programs deliver important benefits. Nevertheless, in CGS’s research into the top priorities for L&D executives, aligning learning with business priorities and ROI continues to be a top-3 issue. This ranking indicates that the C-suite is increasingly committed to objectively measuring the impact of learning on business outcomes.
The challenge is likely due to a misalignment between what CEOs consider important and what L&D is accustomed to measuring. CEOs usually focus on specific examples of measurable business impact, whereas L&D often measures effectiveness subjectively. I experienced this during my work on over a dozen enterprise transformation engagements, all of which included a significant skills acquisition component. During these engagements, I observed that L&D was typically limited to an administrative role rather than as an integral business partner. Given L&D’s “cameo” role, it’s not surprising that the analytics collected are not completely in sync with the C-suite.
The L&D analytics are subjective because they are usually assessments from participants on the training and development program. This data can include 1) how confident they are in their ability to apply acquired knowledge and skills to their jobs, 2) their perception of the relevance of training received, 3) the effectiveness of training materials and instructor quality, and 4) how conducive training venues are to adult learning. Unfortunately, I have rarely observed an attempt to assess – longitudinally – the effectiveness of the training efforts on actual job performance.
Here’s how L&D can remain relevant and increase its influence with the C-suite:
1. Know Your Business – Global organizations are extremely complex, and it’s virtually impossible for a CLO to understand all of their company’s operations. It is possible, however, to be well-versed in the KPIs used by functional, LOB, and regional leaders. While every business is different, it’s safe to assume that these KPIs will be tailored versions of the following key business metrics. Each of these represents an important objective measurement on growth and progress.
- Revenue: sales, margin, EBIT
- Customers: satisfaction, NPS, churn, retention, error or complaint rates, waste, and defects
- Operations: scrap and defect rates, error or complaint rates, cycle times and lead times, inventory turnover, working capital ratios
- Innovation: NPI time and cost, new products/product portfolio
- Regulatory: Compliance costs, audit effectiveness
For L&D leaders, the challenge is to find out what your business leaders have on their dashboards. The table below provides some useful examples of what members of the C-suite track regularly. Depending on the industry and company, these could be on any CXOs daily, weekly, or monthly dashboard.
2. Be Proactive – Learn about your company’s 12-24 month strategic objectives and the potential skills challenges in meeting them. In most companies, strategic objectives are cascaded down and become part of most employees' development plans. Speak with plant managers, site leaders, call center managers, and managers of shared service centers. In these conversations, you can learn the objectives they need to achieve, and their teams’ skills deficiencies. Similar insights can come from structured conversations with regional sales directors, marketing directors, procurement managers, or compliance directors. What these conversations will also reveal are the special projects in their 12-24 month pipeline, and the skills gaps they’re encountering.
In my transformation work, a perennial challenge is finding the right people to undertake these strategically important projects. Given the evolving demands of any business, these projects could be with compliance, marketing, sales, operations, or HR. The best people are usually overcommitted, but there are other players on the bench who are equally capable with some support. L&D can provide the needed support and drive proactive programs that strengthen and future-proof the business. Identify these players on the bench before a pain point bubbles to the surface and assess what type of training L&D can offer. The training could be in problem-solving, interpersonal skills, emotional intelligence, creativity, or leadership.
3. Measure What’s Important – While trainee feedback on instructional materials, instructor quality, and training venues are important, it's only useful for L&D, not the C-suite. Consider putting together data collection mechanisms that measure longitudinal performance objectively. Don’t rely solely on trainee feedback that is inherently subjective. For example, in rolling out specialized problem-solving training in support of transformation programs, we have enlisted the help of the Finance organization to measure the EBIT impact of projects undertaken by trainees.
These numbers provide objective evidence of training effectiveness and very compelling ROI statistics for the C-suite. Imagine a CEO’s reaction to a training program that costs about $4k per head and delivers $100k per head in EBIT!
These are relatively straightforward steps for Learning and Development teams to take on. I am convinced that they can transform their participation in strategic projects from cameo roles to center stage in the C-suite’s eyes.
Using multiple versions of the ABCD approach- Always Be Collecting Data and Always Be Connecting the Dots, L&D will land an undisputed lead role in delivering on the business metrics that matter.