Value-minded

HIGH-DOLLAR,

With electronic learning tools like computers and the Internet, along with more outsourcing and more judicious use of pricey corporate retreats, the amount of training and development nationwide appears to be rising without a corresponding increase in spending or classroom time. In fact, spending on training and development has been flat for the past few years, according to statistics from the American Society for Training and Development.

"We are saving money in so many areas that, so far, overall budgets are not increasing," says Brenda Sugrue, ASTD's senior director of research. In its annual State of the Industry report on workplace training and development, the organization found that average spending per worker on training and development actually decreased by a few dollars, from $826 in 2002 to a projected $812 in 2004.

The organization's survey sample covers corporate, nonprofit and government organizations. At the same time, learning hours received per employee rose from 27.9 in 2002 to a projected 29.8 in 2004.

A large part of the cost reduction has come from the shift to e-learning. In 1999, 80 percent of all training took place in the classroom. The projection for 2004 is that classroom time dropped to about 63 percent, while e-learning, the fastest-growing alternative, climbed to more than 29 percent.

"Coming together in a classroom is not dead," says ASTD vice president of content Pat Galaghan. "But virtual classrooms are the coming thing."

Training and development is a broad field ranging from executive MBA classes to diversity compliance training to job safety instruction. It can take place in a community college classroom, a corporate meeting room or at an employee's computer workstation.

But wherever it happens and whatever the content, the common theme is that organizations want training to meet very specific and defined goals-to produce a measurable return on investment.

Quantifying training returns in dollars and cents is vexing, but can save considerable amounts. Though startup expenses to create and install e-learning programs are high, the payback usually comes quickly and can be dramatic.

Several consultants and researchers report cost savings of about 50 percent through e-learning. Caterpillar Inc. of Peoria, Illinois, reports even greater savings.

Paul Walliker, Caterpillar's online training manager, says the company's spending for online training programs is about one-third as much as traditional classroom methods because of savings on classroom instructors, course materials and travel to classes for employees.

For a course aimed at a total of 100 employees, Walliker says e-learning is 40 percent less expensive than an instructor-led course ($9,500 versus $17,062). The savings rise as students are added. For a course with more than 40,000, the savings jumps to 78 percent ($1.1 million versus $5 million).

Caterpillar has a system of regular, ongoing training for its 70,000 workers around the globe.

"I cannot imagine trying to do any of this the old way," Walliker says.

One of the biggest changes in recent years is a sharper focus on defining problems and matching solutions to needs. That requires training and development professionals to analyze systems and craft custom solutions rather than simply offering standardized classroom training.

"In the good old days, people in our business were mostly about the podium, either getting onto the podium or hiring the right person to get to the podium," says Allison Rossett, professor of educational technology at San Diego State University. "Now it is much beyond that. Now there is a strong belief that an effective training professional has a certain amount of skepticism. They look at 'What is the challenge? What are the causes?' Then they generate solutions where training might be just a piece of the story."

Rossett, an author and training and development consultant, published a book on the new orientation, Beyond the Podium: Delivering Training and Performance to a Digital World,

In this new environment, success is not always measured by how many workers can be processed through a seminar but rather how well a particular problem or issue is addressed.

Roger Kaufman, an author, consultant and professor of educational psychology and learning systems at Florida State University, says that sometimes it makes sense for organizations to forgo a training program entirely. Studies have shown that 80 percent to 90 percent of traditional workplace training programs have little or no effect on overall job performance, he says.

Poorly designed and executed classes can anesthetize workers; they either quickly forget or ignore lessons. "I have seen organizations that have spent megabucks on training and things don't get any better," Kaufman says. "How can we be sure all the training we do matters at all?"

The answer, Kaufman says, is to understand why an organization requires training in the first place. As an example, Kaufman says he was hired by a multinational corporation to train its South American workers in the company's core values. He began by asking: What are those core values?

It turned out to be standard information such as valuing customers and maintaining high standards. He probed deeper. He asked if those values were different from the rest of the industry. The answer: not in the least. So the answer to the question 'Did the company believe that it had hired legions of workers in South America who were oblivious to basic principles that were universal in the industry?' was no.

Kaufman's recommendation was that the company not waste its money on values training. But if there are specific skills your workers lack, focus on that, and also reward performance, he told the company.

"We had a very short consultancy," Kaufman says. "They were very thankful. They hadn't looked at the difference between the means and the end."

Elliott Masie, who heads the Masie Center Inc., a think tank in Saratoga Springs, New York, that focuses on learning research, says the changes under way in training and development make traditional classroom courses less and less important.

"The delivery unit for learning has historically been the course," Masie says. "It has a beginning, an expert and maybe a test at the end. That is deconstructing pretty rapidly."

In its place are systems that offer bits and pieces of knowledge on demand. Instead of sitting in a classroom for several days to learn how to do a job, a worker now might have a quick orientation that includes a discussion of how and where to get information. That worker then gets to the job and, as questions arise, goes out and finds answers-perhaps through an online database, a network of experts or, if it's needed, a training class.

But even formal classes have changed. Masie, who also works as a training consultant, says that formal classes he offered five or six years ago typically lasted five days. Now, classes tend to last one day.

"Go into most places of business and ask, 'How did you learn to do your job?' " Masie says. "Most people don't learn from courses. They learn from a manager or a peer or by watching somebody do something. A lot of learning already doesn't happen in formal courses. So let's get on the side of the angels."

The other trend Masie sees is what he calls extreme training-programs that are especially intense and compressed. Often these programs take the form of simulations in which managers are asked to solve difficult problems. Then they are graded and counseled on their performance. Much of the work constructing and delivering alternative training systems has fallen to outside consultants. Masie and others in the field note that outsourcing is on the rise as companies and organizations looking for both innovation and cost savings turn to outside vendors.

One sizable field of learning that uses a combination of old and new methods is compliance training-knowledge or skills required of workers, often by law or regulation. Compliance ranges from diversity training to workplace safety to financial disclosure rules. Standardized content works well as a delivery method, and so does e-learning. And most subjects are available from a variety of vendors, saving companies the cost of creating their own programs.

But even in the controlled world of compliance training, clients insist on results. Charismatic motivational trainers are still in demand, but even they have to match their popular routines with proven results: improved sales, better customer service, fewer mistakes, more dynamic leaders.

"Great trainers used to be defined by great delivery," Rossett says. "They were magnificent in the classroom. Nowadays, they have to be magnificent in the results."

IBM builds a new business on its training program

When it comes to training and development, IBM likes to have it both ways. The company maintains one of the world's largest internal training and development programs, last year spending a whopping $700 million. Big Blue estimates that its workers will log 15 million hours of training in 2005.

But IBM takes training and development a step further. It resells some of its successful learning programs to outside clients-with a markup in price, of course.

"Part of our strategy is harvesting what's going on internally," says Steve Rae, a vice president at IBM Learning Solutions. Programs "are provided to IBM at cost and to clients at retail."

At IBM, training and development represents a key element in an overall corporate strategy aimed at repositioning the company. After decades as a computer hardware supplier, IBM has been aggressively moving into the service and consulting industry. In December, it sold its personal computer division to the Chinese company Lenovo.

"It used to be that we sold products with services attached," says Ted Hoff, IBM's vice president of learning. "Now the people of IBM have become what we deliver to clients."

IBM expresses its new focus through its marketing slogan, On Demand, which refers to the company's goal of meeting clients' needs exactly when they want it, a particularly daunting task in the rapidly evolving world of information technology. For IBM to match its slogan with results, its personnel must stay abreast of all the latest changes.

For IBM to back up its On Demand promise, its people must be able to anticipate what clients need and be ready with answers. That has required the company to devise ways of rapidly training and developing inhouse talent.

To figure out what skills and knowledge its employees need, IBM surveys targeted workers. It has cataloged the skills of about 100,000 employees. That database, in turn, is used to connect employees who have questions to others with the answers, using the Internet and instant messaging. The company estimates that 80 percent of what it considers "learning" falls outside of traditional classroom instruction.

Rae offers as an example a recent case in which an IBM consultant in Atlanta who was developing an instructional course for a client encountered a problem at 11:30 on the night before the final product was to be presented. The worker sent out a frantic message for help. On the other side of the world, an IBM worker in Sydney, Australia, saw the message, had the answer and immediately sent a reply.

Problem solved, and the Atlanta worker gained knowledge that could be used in the future.

Does that interaction count as training and development? IBM says it not only counts, it's the essence of modern learning: real-time workplace interactions that deliver key pieces of knowledge when and where needed.

"We are going to enable people to learn through their work, not just with statistics and data," Hoff says. "I think this is the future of learning."

If Hoff is right, IBM may be creating not just a powerhouse internal training and development program but also a learning system that it can sell to other companies around the world.

Simulation games score with trainees

E-learning, the use of electronic tools like computers and the Internet to deliver content, has emerged as the fastest-growing segment in the field of training and development. And one of the hottest tickets in e-learning is computer-aided simulation.

The military pioneered computer simulation for its pilot and weapons training. Now simulation has invaded the corporate world and is being used to create workplace mockups that test and help enhance an employee's performance.

At Enspire Learning of Austin, Texas, CEO Bjorn Billhardt believes that the more engaging the simulation, the better. So he adds an element of fun to learning programs.

His company's 50 employees include a group of film and electronic game specialists who work on custom-designed training programs that can include animation, film clips and game-like experiences for the "players." He says the creative team works "at the intersection of online entertainment, film entertainment and education."

Billhardt was a trainer for a software vendor before enrolling in the MBA program at Harvard Business School in 1999, where he says he was inspired by his professors and courses. He moved to Austin in 2001 to launch his company. Revenue was less than $1 million the first year but has soared by 80 percent. Enspire now has a list of clients from Fortune 500 companies and from the military and universities.

As Billhardt sees it, successful training programs traditionally relied on charismatic teachers who might use humor and anecdotes to make course work come alive. When e-learning came along, early offerings consisted of converting slide presentations to computer files that students could access.

"People thought that all we have to do is put a PowerPoint presentation online and that it would be as effective as a skilled trainer who knows how to use humor, how to wake up an audience," Billhardt says.

Static online training courses are plagued with low completion rates and poor retention. Yet people who can't make it through a simple online slide presentation will sit for hours watching a movie or playing an electronic game, Billhardt says.

His notion of a way to liven up electronic learning was to borrow ideas from the entertainment industry. "We really are trying to create a very engaging, fun experience," Billhardt says. "We want to make sure that when people watch these online courses that they really are entertained and motivated to learn more."

For one, Enspire created a leadership training program called Executive Challenge. Groups of corporate executives are divided into teams of eight to 15 players. Each team is given a virtual company with information and scenarios tailored to different positions within the company. A sales manager sees one series, a production manager another.

Players work on computers through tasks that are presented in story fashion with colorful images. A player might start as CEO, make some bad choices and be demoted back to midlevel manager. As they work their way through the game, players are tested on leadership skills, teamwork and the ability to make their virtual companies successful.

Pitney Bowes Inc. of Stamford, Connecticut, recently used the system for its managers.

With engaging programs, retention is higher, Billhardt says. Players tend to talk about their experiences for months afterward. Whether game simulation actually produces better managers is much harder to measure, but that's the case with just about any management training program, he notes.