Weak training focus carries high price tag (Guest Commentary)

Conference Board finds only modest gains in spending levels since 2010
By Claudine Kapel
|Canadian HR Reporter|Last Updated: 03/24/2014

New research tells a familiar story about organizations and their struggle to facilitate employee development while still containing costs.

The Conference Board of Canada’s Learning and Development Outlook reports Canadian organizations spent about 1.4 per cent of their annual payroll — or an average of $705 per employee — on learning and development initiatives in 2012, up from $688 in 2010.

That represents a small gain of less than three per cent (or $17 per employee). But the Conference Board notes that gain, while small, reflects a “modest reversal of the downward trend of the past two decades.” The study results reflect responses from 198 Canadian organizations.

Overall learning and development spending is still down nearly 40 per cent from its historic high of $1,207 per employee in 1993, says the Conference Board.

“Over the past 20 years, spending has declined in both the public and private sectors and in organizations of all sizes.”

But a strategic focus on learning and development is vital for a number of reasons.

Employee development is a key total rewards component that influences an organization’s ability to attract and retain talent, drive performance and ensure continued access to essential skills and knowledge.

Inadequate attention to employee development can undermine more than just an organization’s talent management strategy. Over time, it can erode the organization’s ability to compete as a business.

The Conference Board warns Canadian organizations are “lagging other nations in terms of the relative importance and consistency placed on employee skill development and learning.”

It points to the 2013 International Institute for Management Development (IMD) World Competitiveness Yearbook report, in which Canada ranked 28th out of 59 countries in terms of the importance organizations place on workforce training.

The Conference Board notes it has been concerned about the declining competitiveness of Canadian organizations for some time, reporting that “global rankings, based on a number of key performance indicators, show that Canadian competitiveness has dwindled in recent years.”

Ongoing learning and skills development are “crucial factors” in ensuring organizations have employees with the training to drive both innovation and performance, it says.

“But it appears that Canadian organizations are still struggling to keep pace with global leaders.”

The Conference Board cautions that if organizations don’t take action to strengthen organizational learning, they run the risk of falling even further behind.

“In the end, the consequences of doing nothing far outweigh a move toward investing in areas requiring immediate attention, such as human capital and skills development.”

So what does it take to translate employee training and development into a competitive advantage?

Not surprisingly, the Conference Board says it starts with strong leadership support for learning and development, which supports the creation of a strong learning culture.

“Over the past decade or so, there have been a growing number of studies investigating the link between leadership development and the business success of organizations.”

The Conference Board notes respondents who reported the overall leadership of their organization was better or significantly better than their competitors were four times more likely to have effective leadership development practices in place.

Yet, while 60 per cent of respondents indicated leadership development was a strategic priority, only about one-third felt their practices were effective.

As a result, when it comes to strengthening the approach to employee development, some organizations may find themselves stuck between a rock and a hard place.

Without leadership commitment, the approach to development may be less than robust — leaving them without the means to build the leadership capabilities needed to drive a learning culture.

To escape this chicken-and-egg quandary, organizations may need to revisit and strengthen the business case for employee development in general — and leadership development in particular. This could be done as part of a broader review of their total rewards or talent management strategies.

Some organizations may need to begin with baby steps — such as modest increases to investment levels. This would at least represent a step in the right direction. But much more needs to be done if Canadian organizations are to drive performance and innovation and successfully compete on a global stage.

Claudine Kapel is principal of Kapel and Associates, a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit
www.kapelandassociates.com.

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