Training – the sustainable & cost effective enabling element for business success

Did you know…facts about training?

• The cost of training is expensive – but the cost of gaining a new customer is a lot more!
• A 2% increase in customer retention has the same effect as decreasing costs by 10% – Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy
• A customer is 4 times more likely to defect to a competitor if the problem is service-related than price- or product-related – Bain & Company.
• The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics.

Research shows that:

“It seems that Training design plays a very vital role in the employee as well as organizational performance. a bad training design is nothing but the loss of time and money (Tsaur and Lin, 2004). All these results prove our first Hypothesis which is H1: Training design has significant effect on the organizational performance.” – Khan 2011

Summary

Much of this paper is stating the obvious, but if this is the case why is it not being addressed?

• We need to focus on profit
• We don’t have time to train our people
• Training is expensive and people leave taking the skills with them

How often have we heard one or more of these statements?

These are challenges that the business needs to address head on, and fast if it is to achieve its stated growth goals.

When looking at training there are a number of challenges ever manager and leader faces. These include the perception of lost performance or productivity (short term view), increased costs and staff turnover taking the skills with them. Perhaps the best way to think about Training is like proper dental hygiene, you only have to take care of those teeth you want to keep and stay healthy.

If training is accounted as a cost rather than as an investment, then it is not valued by managers. If factors like employee engagement, customer retention and attainable increase in profits are important, then training will be a key Driver. If cost management is the key focus, then training will take a back seat, and drops in CM1, and customer retention will be the medium term effect.

Introduction

Any organisation that is looking to grow needs to balance two factors:

• Develop the Business
• Develop the People

This may seem obvious, but the reality is that few organisations do this. If not done in balance and in an aligned time frame, then the business and people impacts are wide-ranging and difficult to recover from.

At the moment there is a desire to develop the business, but little focus on strategic people development to deliver and sustain that growth. If not addressed, people will leave, and turnover will put our ability to deliver at risk and increase operational costs. As training design is fundamental to success, doing this centrally makes economic sense. Training need not be expensive, but it needs to be done well and in a timely way.

What we are doing

The profession of Organisational Development recognise three forms of training:

• Core competency
• On demand learning
• Project driven

On demand should be line management owned and driven, however Core competency should be led from the centre of the business for consistancy.

Core competency includes Customer service and leadership skills, as well as sales at all levels.

Within most organizations there are attempts to introduce a new system, and undertake to train people in these new processes and systems. This primarily impacts Project Driven needs along with an impact on Core competency of the business or organization as a whole.

One Organization

When a company desires to provide a consistent experience its customers, no matter where they are. Without a consistent and pragmatic development and training strategy and methodology, cost cannot be managed, and standards will be different. It is the lack of clearly defined and deployed Core competencies that is the missed opportunity for company as a business.

Customer Service

Who will set the standards for Customer Service? Who will define and ensure that behavioural standards are being met? Where will consistent training and development materials come from? If not done or managed centrally, each country will soon start doing things locally, undermining the global approach.

Wider development

Many organizations are recognising that centrally run management and leadership training is limited. An effective strategy is one that is centrally defined, but led locally to meet local needs

As a business, retention and growth of our key people should be a sustainable competitive advantage that we use as leverage and improvements in business results.

Proposal

To operate a LEAN central Learning & Development (or Leadership & Performance Management  or TRAINING) function that provides, and facilitated appropriate standardisation of customer service and talent development and retention throughout the business.

• For the service to be operations driven, and owned
• To set standards that are globally accepted and adopted
• To develop talent locally, and not have an expensive overhead
• To balance the people development with the business growth needed for business success.

What would this look like?

A small team setting standards, and ensuring that each region has people that are trained locally to maintain the skills and behaviours the company needs for growth. Using local people provides a double edge approach, reduced costs as most people won’t need to travel far, and career and skills development for those involved.

Based on my experience

Within projects and initiatives that invest heavily in training, this is typically successful. Often common learning points seem to include:

• Managers should be trained first and take responsibility for ensuring their people are trained
• Managers were involved more actively in any “off the job delivery” activities, and not abdicate this activity
• Effective training materials are developed for a blended approach of classroom and on-the-job delivery

We can we show returns to the business by smarter investment in training

The business is not hitting its profit targets (or even if it is but desires more). Research from many industries shows that it is better (from a bottom line perspective) to retain and upsell to existing customers than it is to acquire new customers. To retain existing customers, we need to ensure their “customer experience” is both consistent and outstanding. Only with having global standards (of products and services) and approaches we can work towards lifting the capability of our people, and retaining more of our existing customers.

“A 2% increase in customer retention has the same effect as decreasing costs by 10%”

Measuring and targeting our customer retention is a “competitive advantage” that does not cost as much as gaining new customers. McDonalds famously increased their profit margins globally learning from one person in a single outlet. They took this data and trained all staff globally and increased profit margins over night. Up-sell techniques used by retail brands the world over could be equally applied to our industry, but unless we have data and collaboration we will never innovate like this. We lack the data and the ability to communicate and up-skill.

Existing customers are easier to upsell to; we need to target this as a focus of training for maximum business return.

We need to better understand the difference that makes the difference, and develop simple approaches for continuous development of our front line and supporting teams.

How can Training effort can be co-ordinated across functions (sales training, systems training, CS training, product training, ops training etc)?

For many organizations real “training” is often in silos. Delivered by those parts of the business that value the activity most.

If any organization says it wants to offer all customers (irrespective of location or region) with a consistent and predictable service. This cannot be undertaken with the current regional/ country level decision making approach.

Having centrally agreed standards which are owned and facilitated locally is potentially a game changer.

In my experience a balance of approaches is needs, a minimum global standard and framework, with regional variances to meet cultural and local business needs.

One of the key business risks of silo driven training, is the proliferation of approaches, and the reduced ability to move people from one country to another without further training. Having central based minimum standard provides a common benchmarking or reference point for all parts of the business. It will also reduce duplication and the resulting costs.

The most effective model is when standards are set centrally, and owned and delivered locally.

Ignoring the elephant in the room

Leaving training and development to regional or country level managers will often mean that it takes a back seat. Over time each area will develop its own approach and culture, diluting the “One Business” concept and moving away from the consistent service we have been striving to attain.

This sort of strategy is not a “nice to have”, but a key and central driver for sustainable business success.

Training and development of our people is the only sustainable competitive advantage.

“What’s worse than training your workers and losing them? Not training them and keeping them.” – Zig Ziglar