How to link employee training to corporate performance
Helping employees develop skills that boost corporate performance, such as lean operations or talent management, is high on executives’ priority list, but whether the training is effective remains unclear more often than not, a global McKinsey survey suggests.
Half of the 1,239 executives who participated in the survey said building employees’ capabilities is among their top three priorities. Employee training was most important in India, where 62% of respondents listed it among their top three priorities, and in China (58% of respondents). Both regions are home to quickly expanding companies.
The majority of polled companies linked employee training to individual performance, but these metrics are proving to be insufficient, according to the survey results. Thirty-six per cent of respondents said lacking credible metrics of how employee training affects the business is a big challenge (up from 22% in 2010). More than half did not know whether the training improved corporate performance in the past three years.
“In the results from organisations that are most effective at capability building, however, are some lessons for improvement,” the survey report says.
To improve performance, companies are shifting resources from training executives, mid-level managers, and technical specialists to emphasise skill development of frontline employees.
One-third of the companies McKinsey polled used most of their training resources on frontline employees, up from 22% five years ago. At the same time, fewer companies used most of their resources to train executives (26%, down from 31% in 2010), mid-level managers (19%, down from 23%), and technical specialists (14%, down from 16%).
In 2010, 31% of executives polled in a similar survey rated training frontline employees very effective in improving business performance. Fewer executives were as enthusiastic about the effectiveness of training management or technical specialists in, for example, research and development, IT, or engineering.
The most effective skill development programmes encourage employees to keep learning; offer them tools, methods, and standard procedures; institutionalise the sharing of best practices (eg, in corporate academies); and integrate learning with human resources processes, such as performance management.
McKinsey recommended companies follow three steps to establish employee training programmes that link learning results to business performance and include meaningful, quantitative targets:
- Systematically and objectively identify gaps in the institutional and individual capabilities that promise to have the most positive impact on the business.
- Tailor the training programmes to employees’ specific strengths and needs and complement in-class learning with real work situations and coaching. Proposed leading-edge methods include digital learning, which reaches a large number of employees anywhere at once, and learning that links skill development to day-to-day work experience in a risk-free setting, such as model factories or simulators.
- Make the human resources function and individual business units co-owners of skill-building responsibilities and integrate learning results into performance management. Establish rigorous performance management systems with robust metrics and then measure progress against clear targets to identify gaps.
Related CGMA Magazine content:
“Companies Invest in Employee Training to Reduce Global Skills Gap’s Effects”: Spending on employee learning and development is rising as companies attempt to hire and train new workers and leaders alike to combat a global skills gap, according to research by Bersin by Deloitte. Read about some of the best practices in L&D, as well as mistakes to avoid.
“ ‘Leader’ No Longer Someone With Supervisor Title Only”: Organisations that equate leadership with performance, regardless of hierarchy, have higher market performance, according to a report that offers ways companies can develop more global leaders.
“Most of Tomorrow’s Leadership Talent Isn’t Ready”: Find out how tomorrow’s leadership talent is different from the old guard, how to develop a more skilled leadership talent bench, and which countries do best in attracting and developing leadership talent with global skills.
—Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.