The MTP Business Learning Blog

This blog is produced by MTP for senior professionals highlighting relevant and interesting books and articles on business, finance and strategy, and the opportunity to comment on them. It also contains news of MTP and its clients and, from time to time, extracts from MTP publications.

Thursday 15 April 2010

Benchmarking Training, Personnel Today, 16th March 2010

This is a brief article which requires only a brief review; it is yet another reference to the holy grail of learning evaluation. It summarises a survey by the market research agency IRS, covering 55 organisations employing 145,000 people.

It confirms what is mentioned in the review of the Massy article above; that the biggest constraint on evaluation is the lack of buy-in from managers. Yet you often hear line managers saying that one of their major reasons for not buying in is the lack of proof of benefits! Breaking this circle must be one of L&D managers’ greatest challenges and benchmarking surveys of this kind will help by enabling comparisons with others.

The challenge is confirmed by the survey’s result that 52% of learning managers struggle to prove added value and 17% have tried and failed to evaluate training successfully. Those who have successfully engaged line managers in evaluation have used links to appraisals, collaborative goal setting and follow-up meetings. One encouraging sign is that 61% feel that they have successfully engaged line managers - more than I would have expected from anecdotal evidence.

One interesting question in the survey was - how do you use evaluations? - and it is interesting that measuring ROI was at the bottom of the list. More important to respondents was using evaluations to improve content and methods and to identify learning gaps. This is a much more fruitful and positive route that does not need the complexities of level 3 and 4 evaluation. It’s good to see that a practical approach is the norm.

To read this article go to:

http://www.personneltoday.com/home/default.aspx

‘Winning the self-managed learning war’ by Robin Hoyle, Training Journal, March 2010

The author is clearly an advocate of e-learning and this article has to be judged in this context. What makes it better than most on this topic is that he acknowledges that much of the investment will not work unless there is attention to the way in which e-learning is positioned and sold. However there are still instances where he allows his enthusiasm to get in the way of objectivity and I will try to redress the balance in my comments.

One point we agree on is that e-learning is a lonely business and a key reason why this method often fails is because it is ‘self-learning’. However our solutions are different. He advocates the more resource intensive solution of a coach for each learner; I accept that this solution is desirable if it is possible but I would also encourage twos and threes to learn together, something which seems to happen all too infrequently. It concerns me that the widespread use of the term ‘self-learning’ seems to exclude this possibility.

The article places great emphasis on the need to communicate the benefits of e-learning to the user. The point is made that, though many trainers stress the benefits of face-to-face communication compared to e-learning, a similar argument can be made the other way round; more flexibility of timing, greater consistency of content, the ability to adjust to your own pace etc.

This seems sensible, though I not convinced that communication of benefits alone would make a big difference to the often disappointing levels of take-up that are typically found after e-learning launches. And some of the other advice provided - ask learners to set time aside in short chunks, tell them to enter time in the diary - comes across as patronising. I would have expected to see more emphasis on the benefits of e-learning as part of blended solutions rather than stand-alone, which seems a much more likely to improve take-up levels.

The article would also have been more balanced if the author had been more objective about e-learning’s limitations. There is a brief mention of the fact that it is most effective when knowledge acquisition and retention is the main goal, but nothing about the limitations when the objectives are skill development and application.

Advocates of e-learning would be far more credible if they also accepted the advantages of face-to-face sessions; the interactions between groups, the ability to ask and discuss questions on key issues, the greater flexibility to tailor material and change direction as necessary. This might encourage them to see that there is a middle ground - the development of interactive virtual classroom sessions - which gives you the best of both worlds without major investment. This virtual approach, together with the use of blended designs, is the direction in which MTP, driven by the needs of our international clients, is clearly heading.

To read this article go to:

http://www.trainingjournal.com/tj/2787.html

‘Building a company without Borders’, by Bart Becht, Harvard Business Review, April 2010

You have to be an exceptional CEO to be allowed to say how good you are in the HBR and Bart Becht, who runs Reckitt Benckiser (RB), is that good. Eleven years ago he merged a small Dutch company (Benckiser) with a boring UK consumer goods company (Reckitt and Colman) and has since created a global powerhouse that has outperformed competitors like Unilever and P&G. Even in the recession hit 2009, RB achieved 9% sales growth while other global companies struggled to grow at all. The products - the best known are Dettol and Airwick - are still boring but the sales and profit performance is not.

This performance is particularly interesting for those in HR roles because Becht says that RB’s success is mainly due to personnel policies and corporate culture, which is probably how he gets an article in the HBR. He says that his success is due to the fact that his company is one of the few that is, by his criteria, truly global; it encourages and allows the maximum possible global mobility for its top 400 managers.

With a few exceptions, RB does not appoint managers to run businesses in their countries of origin; they have managers from 53 countries operating in 40 other countries and any match of country to origin would be a coincidence. They do not make expatriate appointments; there is one global salary structure which makes transfers between countries easy and speedy; he talks about days rather than weeks to achieve a move. Also, there are no return tickets from one country to another; the next appointment could be anywhere.

It was at this point that I had a few doubts about this philosophy, knowing how much global transfers create problems for spouses’ careers and children’s education. There is no mention of this issue, apart from a brief reference to the company’s generosity around paying for education; and an interesting comment that this strategy is ‘not for everybody’. This made me wonder what happens to those who refuse moves and whether divorce rates among RB managers would be an interesting statistic!

The other key factor in the culture is open communication; English is the company language with no exceptions, even when Frenchmen and Italians talk to each other. Conflict is encouraged but it must not be allowed to cause delay in decision-making; those who cannot get their ideas accepted globally are encouraged to try them on a small scale and make their case again.

Only at the end does Becht mention the other key success factor that is, I suspect, as much to do with RB’s success as these cultural factors. They focus on power brands that have global potential and invest heavily in innovation. I am sure that Becht would argue that their competitors try to do this too; he seems to believe that only a truly global company with fully mobile international managers can deliver global marketing.

This is a thought provoking article that all HR people in international companies should read. They should decide for themselves whether the RB approach would work for them and whether the price of success is worth paying.

To read this article go to:

http://hbr.org/2010/04/how-i-did-it-building-a-company-without-borders/ar/1

‘Learning with horses’ by Beth Duff, Training Journal, March 2010

This review follows another article a few months ago when the use of horses was recommended to support recruitment decisions; now the benefits are being suggested for learning, particularly around leadership skills.

I must admit to some personal bias here because I am just about the only member of my extended family who is not obsessed with horses and the obsession of my fellow family members has left me (financially) poorer than I otherwise would have been. But I tried, despite some initial prejudice against the idea, to be as objective as possible. You might come to the conclusion that I failed!

The author has, as you might expect, adopted a ‘TLA’ to justify the concept - EAL, Equine Assisted Learning. The impression is given that this learning approach is relatively routine, even if it is admitted that some managers who attend EAL workshops have some anxieties at the outset. My reaction was that it would be cynicism rather than anxiety that would greet such an idea, particularly as it is made clear that actually riding the horses is not part of the workshop activities.

The claim is made that handling and communicating with a horse will develop lateral thinking, team working, leadership and increased self-awareness. One theory is that, like people, horses respond to a collaborative rather than autocratic approach and that this will help the learner to adapt behaviour back in the workplace.

This may sound feasible but it makes two questionable assumptions. Firstly it assumes that the lessons are transferable from one species to another. But are people who are good with horses always good with people and vice versa? I suspect not. Secondly will all horses respond to a collaborative approach? In fact the article later answers the second question by saying that all horses are different. Perhaps that is the real lesson that should be drawn; that just like people, horses are all different and you need to understand each one to get the best out of them. But do we need an EAL seminar to prove this obvious truth?

One omission from the article is the issue of cost. My experience is that anything to do with horses is likely to leave you out of pocket so presumably EAL workshops are not cheap. So the question that has to be asked is - will you get more value from an EAL course than a well run conventional leadership seminar? Because of all the reservations mentioned above, I doubt it.

To read this article go to:

http://www.trainingjournal.com/tj/2783.html

‘Going back to the start with ROI’ by Jane Massy and ‘Learning to think like a CFO’ by Neil Twogood, Training Journal, April 2010

I have combined these two articles because neither was worth reviewing on its own but together they provide a sharp contrast and raise interesting issues.

At MTP we briefly worked with Jane Massy, when she presented at one of our joint workshops on training evaluation; we had heard of Jane and of Tom Phillips following their work on the ‘ROI’ approach which was creating interest at the time. We remained unconvinced about the originality and depth of their approach to evaluation, perhaps because, as an organisation with a strong finance orientation, we did not see the ROI methodology as sufficiently rigorous to justify that label.

This article does nothing to change that view, indeed if anything it strengthens it. There is some good advice but it is countered by much that is theoretical and difficult to apply. There is a statement early on with which we would very much agree; the belief that the role of participants’ line managers is critical to any evaluation of training and its credibility. However there is little advice about how they can be engaged; it is often difficult enough to get managers interested in supporting the training, never mind the extra commitment necessary for consistent evaluation.

At this point we move over to the second article by Neil Twogood. His approach is much more pragmatic; he believes that, in most organisations, the CFO is the person you need to understand and influence if you are to gain agreement to major investment in training; you need to present it as a business case because that is the way that the CFO will see it.

The initial thrust of the article is that the key need is to form a good relationship with the CFO, to use the right language, to lay out clearly the assumptions and to anticipate the challenges and questions that he/she will come up with; for instance the main risks and sensitivities, the alternatives, the links to strategy and business objectives. The checklist of questions on the final page of the article is impressive and comprehensive; in particular the question - what will be the impact on the business if we don’t invest? This is just the way that a good CFO will think.

But just as I was thinking that this was a welcome practical contrast to the Massy article, it fell into a similar trap by recommending that the CFO be given a crude ROI calculation to justify the investment. Much as I understand the desire to make such calculations and realise that they can look good to less sophisticated audiences, the CFO is the last person you want to give a simplistic ROI evaluation. He is likely to ask awkward questions like:

• Is this the incremental cost or the full cost and why?
• Have you included the cost of the time of participants?
• How do you know what would happen if the course does not run?
• Have you taken into account the cost of capital?

Unless you are confident to answer these questions and believe that such a discussion will add value, you should keep ROI evaluations well away from the CFO. He/she is much more likely to be impressed by an understanding of the broader business implications and the need to deliver changes in behaviour, rather than questionable financial calculations.

To read these articles go to:

http://www.trainingjournal.com/tj/2831.html

http://www.trainingjournal.com/tj/2832.html

‘How the Mighty Fall’ by Jim Collins, published by Harper Collins

It is perhaps a feature of the ‘schadenfreude’ in my make-up that I am more convinced by books and case studies about failure than success. Thus I was less than convinced by Jim Collins first book - ‘From Good to Great’ - and by the all time management best seller ‘In Search of Excellence’ because, however well they are researched, such books can be subject to simplistic post rationalisations, particularly where glory seeking CEOs are supporting the research.

For this reason, I looked forward to Collins’ follow-up and I was not disappointed; certainly it was much more convincing than his earlier work (particularly as that trigger of the financial crisis - Fannie Mae - was one of his ‘great’ companies) and a much easier read too.

The book is built around a framework that is easy to relate to and to associate with your own experiences; it has five stages, summarised as follows:

• Hubris
• Undisciplined pursuit
• Denial
• Grasping for salvation
• Capitulation

The hubris occurs because of arrogance and encourages managers to keep doing the same things even when the world is changing; the top team attribute all the success to their own excellence and do not accept that luck and a favourable environment may have helped. This causes them to believe that everything they do will turn to gold and leads to stage 2 - the chase for growth that triggers expansion into the wrong areas where competitive advantage is less certain. As with his previous book, Collins emphasises discipline above everything else in the achievement of success.

During the third denial stage, the top team tends only to notice positive data and blames uncontrollable factors for any decline; they cannot see the risks and the dangers involved in sustaining their initial success. The grasping for salvation usually takes the form of the recruitment of a high profile CEO or a dramatic major acquisition, often of a company that is in the same kind of trouble. This can work if luck is on their side but more often than not makes the situation worse and leads to the fatal stage five.

The case studies of companies quoted are generally impressive, though it would have been good to see a more international selection, rather than mainly USA. It was interesting to see Hewlett-Packard among the mighty fallen, when the stock of this company (and major MTP client) has risen dramatically since its nadir of a few years ago. Collins explains this by saying that companies can rise again after stage 4 if they have the resources; my interpretation is that sometimes the grasp for salvation doesn’t work but sometimes it does. Collins suggests that HP's acquisition of Compaq did not work but does not go into detail about how the new CEO led such a magnificent recovery.

A good test of a book of this kind is how many times you say to yourself - yes, I can recognise that danger or that feature in my own company or in those that I know well. By that test, it is an excellent work and improves Collins’ reputation as one of leading contemporary management thinkers.

The Big Short; Inside the Doomsday Machine, by Michael Lewis, published by Allen Lane

I confess to choosing this book - despite its unattractive title - because of the excellence of Lewis’s previous offerings, notably his brilliant first book ‘Liar’s Poker’ and more recently ‘The Blindside’ (Excellent film too). It turned out to be far less readable than his other books but, in many ways, much more illuminating.

This is not just another book about the financial crisis; it is one that shows a different dimension. It covers the few people who really did see the crisis coming (rather than claiming so afterwards) and who made fortunes by selling short, by betting against the market.

Fascinating though the stories of these individuals are, the book suffers from the fact that the detail of what they did is highly complex, even when explained in the mainly simple terms that Lewis uses. And though I probably understand more about these things than the average reader, I found myself skipping large chunks of detail to get back to the story. Fortunately this did not adversely impact my enjoyment and my broad understanding.

The few individuals who saw what was coming had to be strong characters to withstand the pressures from the many parties who did not want to know the truth - CEOs, credit rating agencies, regulators, even journalists. It is interesting that these strong characters were all different varieties of oddball who liked to go against the crowd and defy conventional wisdom.

This was a book that provided me with a lot of insights and answered a lot of questions, as follows:

• The origin of the crisis was long ago, when the principals of the major investment banks moved from partnerships to public companies and were no longer gambling with their own money
•  The two companies who were probably most at fault - Lehman Brothers for making the biggest bets on the US housing market and AIG for acting as long stop insurer - were run by autocratic CEOs who did not tolerate dissent
• The credit rating agencies who provided misleading debt ratings were mainly focussed on growth and employed low level people, thus making them easily influenced
• The basic problem was the assumption that US house prices could not all fall together and when this happened, what was left was effectively a ‘Ponzi Scheme’

If these insights interest you and you would like to know more, this book is for you, provided you are prepared to skip the detail. I was however surprised not to find an index at the back, which would have been appropriate for a serious book of this kind.