By Michael Trasatti, CEO
In a previous post, it was stated that the economy, though not boiling, is certainly beginning to bubble and is headed in the right direction. While this ‘heat up’ has lots of positive impact and is very much needed, there are significant inherent issues; mainly as business increases from a point of a virtual dead-stop, the changes the average business makes to accommodate that increase could very well ignite the demise of the organization. Last minute decisions, rapid hiring and blind customer service are historically the hallmarks of businesses after a recession. As business people you all understand how this happens and the potential negative impact that such not well thought out decisions can have. So, what can be done?
The organization can put in place a system of processes, based on training and career development, to create a Learning Organization, which was defined in the previous post as: A group of people who have woven a continuous, enhanced capacity to learn into the business culture; an organization in which learning processes are analyzed, monitored, developed, and aligned with competitive goals. A learning organization generates knowledge and learning faster than competitors and turns that learning into a strategic advantage to out market, out manage, and outsell the competition. What this definition clearly states is that training at all levels of the organization is vital not only to the organization’s success, but to its very survival! This is not to say, however, that becoming a learning organization means to create a bunch of training. NOTHING could be farther from reality.
Scheduling a bunch of training and cattle prodding staff into available slots no more makes the business a learning organization than putting a keg in your living room makes it a sports bar! The question is not, should we have training, but what training should we have? As was stated in the previous post: A learning organization moves beyond simple employee training into organizational problem solving, innovation, and learning.
Before delving deeper into the topic of what a Learning Organization ‘looks’ and ‘feels’ like, it is appropriate to present a few statistics to those individuals who say that “We don’t have time for training; we’re too busy making money!” When an organization is created, it generally goes through growing pains, assuming that it does in fact grow. At that time staff are hired, fired and some just leave.
The core group that remains, the ‘first generation’ staffers are generally the personification of Darwinism; which in this case means they are the strong ones and have overcome the problems. They are the ones that put the good strategies into practice and developed other strategies that met the needs of the previously unforeseen circumstances that have come up through time. They share ideas, express concerns and address each other generally as peers as they have survived the battle zone together.
If you have a learning organization, there is little to worry about when life happens and the ‘first generation’ team begins to move out. But, if you don’t things can get bad. Within one year of that first generation staff, assuming mainstream training practices, an organization can lose up to 30% of its overall capabilities. By year three of this string, the organization can only produce 41% of its original capabilities, which can further dwindle to 24% by the sixth year due mostly to employee movement, technology changes and the degraded or outright lack of knowledge new hires bring to the organization.
To put that in short terms, if your organization has been in business for over 10-years, what you understand as effective revenue, may only be a quarter of what could be generated! Think about that. From the above it is clear that the overall profitability of the organization depends to a great extent on retaining employees. I t also depends on those employees not holding on to that knowledge as if sharing it would cause them to melt like the witch in the Wizard of Oz, but that is a topic to be addressed later. According to the American Society for Training and Development, 41% of employees at companies with inadequate or no training programs plan to leave within a year, versus 12% of employees at companies that provide excellent training and professional development.
Is that significant? Well, a study by IBM, found that that cost of replacing a skilled employee ranges from $75,000 to $450,000. That does not include the new employee’s salary! It is the cost associated with bringing in the new employee, the lost time as that employee digs through what the previous staffer left undone and trying to figure out how that employee got to ‘Z’ from what appears as the ‘A.’ It includes the lost revenue from shrinkage (theft) because the new employee does not know to watch out for employee X and their sticky fingers if left unattended.
To summarize, the ROI on creating a learning culture within your organization has a compounding positive effect on your business both financially and culturally. Don’t wait another day, get started on creating YOUR learning culture TODAY!