Rethinking Development Budgets
It is an annual challenge: Choosing priorities and creating budgets for developing employee capability and performance. There is some core, basic training that needs to be done. There is coaching, executive education and other development for leaders. And there is often a sum set aside for identifying and developing potential future leaders.
For the most part, the challenge comes down to what to prioritise and how to do as much as you can with the resources you have. New research, however, has discovered something radical. That these development budgets would be better used, delivering more return for the investment, if less of them were spent on actually developing people. Sound strange? Read on…
Struggling for impact
There is no doubt that in places there is some highly effective development work going on. But across the board, the general effectiveness of most developmental activities is pretty low. People may enjoy them and feel that they have gained, but in the long run behaviour does not tend to change and performance does not tend to improve. The statistics are on this unequivocal and make grim reading. Even the most wildly optimistic estimates of how much learning from training is transferred into real performance improvement back in the workplace do not go beyond 34 percent.[i] Only 19 percent of HR professionals believing that that the coaching going on in their business is effective.[ii] And less than 10% of leaders believe that development activities lead to lasting change.[iii]
What makes these statistics really sobering is when we remember just how much is spent on all this activity. The training market alone was estimated to be worth over $135 billion in 2013.[iv] So even if we take the most optimistic success rates of 34 percent, that still means $88 billion invested with not much to show for it – every year. And that does not include the coaching and broader development market.
Cause for hope
What is more encouraging is that over the past few years the reason why success rates are so low has become clearer. Increasing evidence has emerged pointing at one factor more than any other as the key issue: Context – or what happens outside the training or coaching room. In fact, researchers have shown that contextual factors are actually more important in ensuring development activities work than the quality of the training, workshop or coaching itself.[v] So if you want to develop someone, change their behaviour, or improve their skill at something, then you need make sure that the environment and situations in which they operate supports their development. Because if it does not, then there is little chance that any development activities will pay-off.
So what counts as a supportive environment? The key element is undoubtedly individuals’ line managers, and whether they get involved in their people’s development, and encourage and coach them. Other elements that been shown to improve the success rates of development activities include better and more behavioural action plans, the use of rewards, and creating accountability for development.
The technical word to describe elements like these that can support development is scaffolding. And despite all the evidence showing that they are the single most important factor in determining the success of development activities, most organisations do pay little – if any – attention to them. This is a large part of why development activities can struggle so much to have real world impact. And it is why rectifying the issue, and paying more attention to scaffolding, is the single biggest opportunity most organisations have today to improve the impact of development activities.
What organisations need to do
So what has all this got to do with how organisations spend their development budgets? Well imagine a firm has £1000 per person to spend on development. Rather than just spending all of it on the individual, organisations would be better off spending £700-800 on development activities for the individual, and £200-300 on putting scaffolding in place to support these activities. Or imagine a development programme where the budget is £100,000. Rather than spending all of it on designing the content and delivering the workshop events, firms would get a better return on the investment if they spent just £700,000-£800,000 on the workshops, and the remainder on putting scaffolding in place. In other words, it’s time to fundamentally re-think how we spend development budgets.
As for how scaffolding can help, consider these examples from organisations we have recently worked with.
Scaffolding for coaching. Typically, when external coaching is provided for individuals. their line managers’ involvement is limited. They attend to first session to agree objectives, and the last session to hear what progress has been made. But with one large bank, we have been experimenting with involving managers more, without taking up lots of their time. We did this by scheduling a 5-10 minute call between coaches and managers at the end of each coaching session. During this, the coaches describe the key actions the coachee has committed to during the session, and suggest ways in which the manager can support the coachee. These mini-sessions thus act as a kind of coaching for the manager in how they can better support their people’s development. The process adds very little to overall cost, but it brings managers far more into the coaching process. And initial results show that it significantly improves the proportion of coachees showing genuine behaviour change.
Assisted development planning. The problem with development plans is that they do not tend to be very good. They may not be taken seriously. They may contain too many goals or insufficiently specific ones. Or they may over-rely on training programs or coaching as solutions. With one organisation, though, we have created some scaffolding to make development plans more effective. Seeing that one of the key reasons why plans tend not to be good is that individuals tend not to be very good at writing them, the firm engaged coaches to spend one session helping a group of their top talent write better plans. Coaches sat with leaders over a laptop, discussed options and wrote the plan together. And not just with the coaches constantly saying ‘what do you think?’; but playing a very active role in making suggestions about potential behavioural actions the individual could try. The result has been a fall in the amount of training and coaching cited as required activities, an increase in the number of behavioural solutions cited, and a significant increase in the proportion of plans actually being completed. And although development planning sessions added cost, overall cost was reduced as less training and follow-on coaching was required than in previous years. So impact up and cost down.
Supporting Executive Education. Big Executive Education courses can be great. But how do you make sure they lead to genuine performance improvement? One firm we worked with has added a coaching and action planning session, similar to the assisted development planning described above, after all Executive Education courses. Individuals are given the opportunity to reflect on how they want to do things differently back in the workplace as a result of what they have learned, and then helped to form an action plan for how they are going to do it. To check the impact of this, the firm asked the line managers of people attending an Executive Education course whether their direct report had noticeably improved as a result. And the managers of individuals receiving the additional action planning session reported significantly higher impact than those not receiving this extra session.
[i] Saks, Alan M. and Belcourt, M. (2006). An investigation of training activities and transfer of training in organisations. Human Resource Management, 45 (4), 629-648.
[iii] Kinley, N. & Ben-Hur, S. (2015) Changing Employee Behavior. London: PalgraveMacMillan
[iv] O’Leonard, K. (2013). The Corporate Learning Factbook 2013. New York: Bersin & Associates.
[v] Rouiller, J. Z., & Goldstein, I. L. (1993). The relationship between organizational transfer climate and positive transfer of training. Human Resource Development Quarterly, 4(4), 377-390.
Tracey, J.B., Tannenbaum, S.I., & Kavanagh, M.J. (1995). Applying trained skills on the job: The importance of the work environment. Journal Of Applied Psychology, 80(2), 239.