Learning and Development – Harder to Share Than the Rest of HR?
Over the last 10 to 15 years, many organisations have outsourced portions of their HR processes to third parties (like IBM), or they have built captive shared services (similar to what ANZ Bank has done) or created a hybrid model using a bit of both (for example Rio). The types of HR processes that are either managed by an outsourcing provider or put into the Shared Services Centre (SSC) tend to be administrative in nature and include payroll, HR administration, employee service desk, benefits administration and similar repetitive activities.
The recruitment area is a hot topic for both outsourcing (sometimes referred to as RPO) and for shared services. Many organisations have gone down the journey to centralise administrative activities such as CV matching, testing, reference checks or similar. Companies are building delivery models that have some of the recruitment processes done locally, regionally and in some cases, globally from one location.
Across the HR value chain, as defined by APQC, the concept of centralising significant parts of the activities to reduce cost and increase service has been implemented by many organisations. The exception to this is Learning and Development (L&D).
Why has L&D not embraced the centralisation of activities with the same rigour as the rest of HR?
L&D has, in many organisations, centralised activities such as compliance training and testing, leadership development and other business and soft skill training. But, the centralisation is not in the same structure and solution as an SSC. The centralisation tends to be more about “HQ” building an L&D team to design and deliver centralised training, versus centralising activities that teams around the world could share.
The biggest reason why L&D has not achieved the same level of shared services delivery as other parts of HR is due to how L&D is budgeted. Unlike HR administration or even recruitment, where the budget for administering and managing the process tends to sit in one location, generally HR, in L&D budget is spread across every department and function. Yes, HR might own the budget for centralised, mandatory learning and training, such as compliance or leadership development, but the rest of the budget tends to be owned by the function. For example, the sales department will own the sales training budget, and production will own the training of factory staff, and R&D will own the technical training for members of their team, and the list could go on. Due to this fragmentation of the budget, it becomes tough to centralise and share processes in L&D. To centralise, everyone who has a learning budget would have to agree to the change, utilise the shared services and commit to the shared design for a significant period as it would be very costly for the business to change delivery models every year.
The second reason shared services has not been widely adopted is linked to the ownership of the budget. The individual functions decide on the type of learning for a particular area and also have a big say on who provides the learning. For example, the sales team would determine the kind of training they want their salespeople to receive. It might be product specific, or something to allow better use of Salesforce or it could be a sales training method such as the Miller Heiman methodology. The sales leadership will make the decision on what they believe is required to increase sales and meet their targets. The concept of someone else telling the sale management, in this example, what their people need training on, and where to get that training does not usually happen in most organisations. Because each department can decide the “what” (what training is required) and the “who” (who provides the training), there is little perceived value in centralising activities into a shared service.
The reason shared services has not been widely adopted is linked to the ownership of the budget.
The third reason is that there is never enough time or money to do the level of training and development most organisations (and most employees) want to achieve. And unfortunately, the training budget is still one of the areas that receives the biggest cuts when part way through the year reductions are mandated. These and other business drivers force learning and development to be extremely flexible. To scale the budget up and down quickly L&D needs flexibility, and there is a belief that if the processes are centralised it reduces flexibility.
The fourth reason is the L&D function itself. Most of the strategic work done around L&D tends to focus on the content (e.g. Leadership training), how the content is delivered (blended learning, e-learning, gaming, etc.) or how different audiences learn (e.g. what works best with millennials). As an example of the strategic direction for L&D, Josh Bersin for Deloitte slide show on trends shaping learning would be representative of what is the current strategic focus for L&D.
When investment is required to re-engineer the learning processes to move the work to shared services ... the saving value is hard to assess outside the traditional areas of reducing labour cost and having greater efficiencies.
And finally, building the business case for changing how training is delivered, with the right return on investment, is challenging. Within the L&D community, there has been a constant discussion and debate regarding the return on the investment (ROI) in learning. If we train our people in X, then we will get Y return. Even in the sales area, it’s tough to draw a direct line between investment in learning and the outcome. And because of this, when investment is required to re-engineer the learning processes to move the work to shared services to save X over Y years the saving value is hard to assess outside the traditional areas of reducing labour cost and having greater efficiencies.
Building a business case around the benefit of centralising content development is much harder to do, as the learning content itself has to yield a benefit to the business first. And once that value is agreed then the question is how to create the content in the most cost-effective manner. This two-step ROI process does not yield sustained business benefits except in very large organisations that have a significant amount of mandatory and compliance type training.
Is there value in building shared services around L&D? Next month's article will look at creating value in L&D using shared services. And not just for training administration but for a broader set of processes and activities in the learning area.