Perspectives
Budgets Are Getting Squeezed-
Time to Invest in Learning?
Frank P. Bordonam, HR Consultant
If you believe a tough economy can spur creativity, this is the
best time in the past 10 years to rethink, refresh, and revitalize
your learning strategy. Place your company on a faster track
toward the future while dealing with financial constraint.
For many organizations, no area will be hit harder during
budget time than learning, and many of you may have already
entered a period of tight or declining budgets. CEOs began tight-
ening up on expenses somewhere between early 2001 and early
2002. Regardless of where you may mark the beginning of your
own funding squeeze, you will probably agree it has arrived, and
will continue at least into 2004.
Training magazine, in its last annual issue covering training
investments, reported that the rosy spending plans collected in
spring were followed by cancellations and retrenchments through-
out the industry. Training estimated, for example, that a third of
the leadership sessions planned were "simply not held." In its
October 2003 survey, the magazine reports employers' expendi-
tures were down again, marking the first two-year consecutive
decline since 1982. Given the tendency of our function to trail
broad investment indicators like capital spending and the stock
market, we can expect to be wearing tight belts for some time.
Thinner "actuals" in the current year will signal to budget
reviewers that next year's plan should be even leaner. Ponying
up a fair share of expense reductions is only right, but do not
assume a defensive posture while doing so. Without new think-
ing, one is backed awkwardly into a lame position: "Well, the
company survived just fine without doing the things we pro-
posed a year ago, so this year we are re-proposing last year's
stuff, scaled down."
Is There A Better Approach?
We can gain confidence from recognizing that learning has
matured from a discretionary curiosity into a viable function of
business. Lean budgets have slowed its breadth of application, but
not its innovative edge. Tough times have forced a new sense of
discipline, moved the action closer to the customer, improved the
measurement of return on learning, intercepted and incorporated
recent advances in technology, sharpened the quality of choices in
the outsourced world, and infused the field with a keener sense of
accountability for the success of the business. By tapping into this
tougher, new learning, our plans can be a breath of fresh air, rather
than a pale, downsized version of the recent past.
HUMAN RESOURCE PLANNING
Here are four suggestions for staging a lean-but-exciting new
year, one your clients and top management can look forward to:
1. Link learning to the company's future. Declare immediately
that your new learning plan will not be the faded edge of a diffi-
cult downturn, but "Year One" of a new three-year cycle of
increased innovation and positive impact on the company.
Set aside the debates among economists, pollsters, and
investors, over the timing, strength, and speed of the recovery.
These are details. Assume the recovery is not only happening
now, but is beginning to impact your business. Ask: "How will
our company be different in the improved economy? What
investments will we have made in the business to make us
stronger against competition? What new abilities as a total orga-
nization will we have demonstrated three years from now?"
Make it a top priority to become literate on the best senior-
management thinking on these questions, and tell everyone your
strategy is to make management's job easier in getting where
they want to go. If, after trying hard, you can't get these answers
from management, say so, and make getting them to the answers
your priority. Write the opening slide of your plan today, declar-
ing it the first of three annual installments in service to those
three questions.
2. Take the offensive: Throw out some "comfortable habit"
investments and figure up the savings. This step requires a
mindset adjustment. It is not necessarily wise to lead with your
strength if "strength" is defined as the initiatives that are the
least controversialor most acceptableto the organization,
your staff, or yourself.
That middle management course on leadership skills the
company started seven years ago and the COO loves?
Cancel it for two years and see if there is any measurable
impact on the business.
Finally succeeded in getting half your training offerings on
line? Cheap but bad is no value. Take a close look at those
e-courses and be prepared for a possible quality letdown.
Pare back bad courses, renegotiate and find new sources
if necessary. Postpone online offerings that don't meet stan-
dards. Begin a three-year ramp-up of newer, better courses.
That open enrollment course on "finance for non-financial
managers" still getting glowing ratings from all attendees?
Scrap it. Accounting literacy is not business literacy, and
measurement means little if your people don't know their
place in the recovery.
Your learning back office received a customer service
award this year? Consider outsourcing the operation to a
Learning Management System shop.
 Make your own list of opportunities. Identify your top four
or five comfortable habits and run scenarios in which you no
Ionger perform them.
3. Reallocate your spending. Fund your own new ventures,
committing to some things you have never tried. My recent tour
of some learning hotspots reminded me how poorly innovation
conforms to economic expansions and contractions in the economy.
The recent slump has turned the lights out on some promising
projects, but has also spurred new thinking and, with it, tests of
new tools and methods. Besides, the adaptation process is rapid
in a recovery; anticipate that today's wild new experiment will
quickly become tomorrow's competitive standard.
A Nimble Giant. Residential real estate giant Century 21,
with 88,000 brokers, knows all about the challenges of running
a complex learning support system. Before they reinvented their
field training, a staff of 4,500 trainers swarmed the 6,600 office
operation, running classrooms of franchisees through manuals
produced by a large central staff. Today the same massive task
is handled by just 150 "roving master" trainers who collaborate
with local manager-coaches and a handful of central-office
designers. The learning load grows daily. To compete, brokers
need skills in Power Point, digital photography, web-based
advertising, and wireless office management, to name a few.
Century 2 r s svelte system handles it all.
How do they do it? First, the company figured out which
content was absolutely crucial in order for brokers to produce
income. All learning content and objectives were then geared
to that simple goal. Media selections were made with an eye to
optimum value and ease of distribution, rather than maximum
use of the latest, leading-edge technology (no streaming video
where tapes will do). The learning group made access easy,
offering 120 hours of free online learning, holding online, live
classes and making virtual classroom learning at home an attrac-
tive option for many.
Century 21 's financial results are hard to fault. Attrition, the
cost monster of all storefront-based businesses, was cut in half
in the first two years of the new operation, while agent income
grew by 16 percent. All of this saw the firm through a 145-per-
cent expansion of the agent population, a growth hard to con-
template under the older, higher-turnover conditions. Cost of
training? This ran above prior years in the inaugural cycle, then
dipped below historic levels and has stayed there. Doing more
with less? I'd say so.
Action Learning in Defiance of Distance. Xerox, determined
to hang onto its next-generation executive talent and faced with
tightening budgets, challenged the Center for Creative Leadership
(CCL) to help it revise its development of emerging leaders. A
couple of years ago CCL, which has built its reputation in the
face-to-face world, joined Xerox to take a firm step into cyber-
space. CCL recast the classic "action learning" model into a
blend of learning modalities. In-person interactions were reserved
for problem selection, team building, online workspace practice,
and presentations to management. Online work was sandwiched
between the face-to-face sessions. Self- assessment tools were
repurposed for desktop use, and most of the project work was
performed online by the geographically dispersed teams.
By orchestrating the modules for mutual support and providing
coaches and tutorial help, the new model achieved efficiencies.
The six-month elapsed program time replaced an earlier two-
year version, while delivery and tuition costs were reduced by
60 percent. Encouraged, Xerox expanded the effort to Europe,
where the second iteration in that region, involving 14 countries,
is underway. The company is refining such features as problem
selection and sponsorship, while conforming closely to the origi-
nal design. Meanwhile, CCL continues to strengthen its foothold
in blended learning.
Taking Aim at Productivity. Pepsi, First Data, J.P. Morgan
Chase, and Midwest utility Ameren are among a few pioneering
companies that have used learning to help their people improve
performance at the immediate point of action. All are clients of
Root Learning, Inc., the innovator in visual-based business literacy.
Root once believed that their core tool, the learning "map,"
should be used only in small table sessions with a live coach.
Today, a quick tour of their headquarters reveals a beehive of
artists, course designers, and computer whizzes huddled around
PCs. They are creating maps for the desktop with interactive
features so learners can double click their way through intercon-
nected layers of material, testing their mastery as they go.
Supplemental and spin-off tools include simulations and games
that help teams make on-the-job choices that better manage
resources or build business.
Pepsi and First Data both faced the post-purchase challenges
of getting employees to use their new, automated performance
management systems. With Root's help, members of each firm
now navigate a combination of desktop and tabletop learning
aids that make the action points, interconnections, and utility of
system parts vividly clear. Users access specific practice mod-
ules online as situations arise, gaining rehearsal time in the hours
before actually applying a piece of the performance system.
Among J.P. Morgan Chase's priorities has been the harmo-
nization of separate business units as they affect the customer.
The company is now using a number of work-unit-specific maps
on desktops to help teams see joint opportunities, hook up, and
make decisions about customer contacts and services.
For Ameren, "close to the business" translates into a strategic
priority, getting associates to take day-to-day actions that maxi-
mize free cash fiow. For that purpose. Towers Perrin and Root
teamed up to equip Ameren's business units with computer
simulations that calculate the cash fiow impact of specific
decisions being considered. Supporting tools provide insights
about the economics of the business, so associates grasp the
larger context of their actions.
Employee-Centered Tools Get a Business Edge. Among
the two strongest traditions at Johnson & Johnson are its value-
based management style and its marked decentralization. It is
hardly surprising that they encourage a common mindset
HUMAN RESOURCE PLANNING
through strong management training and regularly survey their participated in certain learning initiatives, the effect of those
employees. Recently, J&J has seized upon technology advances initiatives on employee attitudes, and hence attrition, could be
to enhance each effort. calculated. Add known cost-of-attdtion figures, and you have a
For management training, the company adapted Basic Blue, measure of yield. It's many millions, by the way!
IBM's much-publicized computer-based management course. In its new broker training. Century 21 pulled off a nifty
Supplying their own curriculum framework, J&J began by reverse of the usual "let's do a pilot first." They switched every-
challenging their "next generation" executives to process and one over to the new system at once, except for a relatively few
integrate a combination of standard content, data management brokers who were used as a control group. Measuring both old
tools, and existing company initiatives. The total format extends and new results for one year, the company had a quantitative
over a year. Inverse to the Xerox format, the intense face-to-face appreciation of the change in revenues and retention. Learner
sessions occur between periods of online work. They have since satisfaction? When participants are making money by following
expanded the learning well into middle management ranks. a regimen designed to help them do it, satisfaction with "the
J&J's purpose is more than increasing managers' skills: They training" hardly needs a mention.
expect the increased distribution and use of common tools
and messages to foster the Johnson style through successive Shift in Thinking
generations. Blended learning has given them a faster, more Much of the future gets invented in stingy circumstances.
economical way of doing that. In scarcity, people have to confront the limitations, and hidden
The employee opinion survey has taken an intriguing turn strengths, of their businesses. For executives, learning profes-
into some new territory: business performance. J&J is now sionals, and consultants alike, this message is all about using
asking line managers to select survey items they deem critical the coming year to try something new. Learning's credibility,
for meeting business objectives. A similar sorting is done for sense of purpose, and value to the business can actually increase
innovation. The company expects that this link to operating during tough budget times. It just requires a shift in thinking.
concerns, combined with their new, more powerful analysis
tools, will help them see which conditions of employee work Frank P. Bordonaro was chief learning officer at Prudential
life actually impact the business. Local managers and company Financial. He previously held similar positions at McDonnell-
strategists will then be able to devise follow-up initiatives in the Douglas and S. C. Johnson Wax, and is currently consulting on
confidence that those actions are on a path to create greater learning strategies.
value and more profitable growth.
J&J is only in the midst of its first try, but the sentiment
behind the effort is praiseworthy. Our national business culture
too often views surveys as strictly about "morale" and "atti-
tudes," which assures that any solutions are viewed as costs.
The change is refreshing.
4. Measure for true business impact. Drop your management
reports on learning activity. Start using new measures. While
some believe learning should not have to be measured (its value
being intuitively obvious), the business of calibration is ever
being refined. Pfizer's work in the past couple of years is worth
some study for those wanting a fresh look at the topic.
Start with the Johnson & Johnson employee survey example.
To economize, the employee survey might be postponed, or
spaced out. But that merely teaches the organization to live
without it. Isn't it more in keeping with the times to insist
on modifying the survey to add useful operational questions,
designate two business units for year one, and go for it?
Another survey-based measurement opportunity is in the
realm of employee retention. Even in a downsizing world, core
skills and management intangibles will eventually need replace-
mentand it will be expensive. Now that surveys are delivered
and analyzed electronically, the financial yield of many learning
initiatives can be more easily quantified. Prudential Financial
was able to locate the survey items known to predict actual
attrition. By simply tracking which people had, and had not.

8 HUMAN RESOURCE PLANNING