Get In The Driver’s Seat: L&D as a Profit Driver Rather Than A Support Function

L&D pros often suffer from a bad rap. Or a case of underappreciation. Or both. Isolated from the business, without a proper seat at the table, we focus intensely on our own learning goals, waiting for an invitation to discuss the business.

Whether that’s accurate is somewhat beside the point. What matters is how we overcome the misconception of serving as a support function and position ourselves as a profit driver. How do we prove the impact that we make? How do we get a seat at the table? How do we demonstrate that we love getting our hands dirty with things like strategy, profitability, and business objectives? How can we make the case that we are the ones that, in part, prepare personnel to take on the demands of hoisting up the company in order to meet and exceed expectations?

Proving the Point

First, we have to prove the point. Once you have their attention, the stats are on our side:

Companies investing in employee training report a 24% increase in profit margins compared to those companies that don’t invest in training.

Robust training programs result in higher income per employee, to the tune of 218%, compared to competitors. The resulting employee retention translates into deeper engagement, more effective performances, and better overall results.

Byproducts of that deeper engagement include fostering a culture of continuous learning and building resilience for the future of the organization. Because our collective business landscape is constantly evolving, resilience is critical. Organizations that adapt skillfully to that change are poised to excel.

More stats:

• A Deloitte study found that companies that regularly invest in employee training are 92% more likely to innovate and remain market leaders.
• Organizations that provide quality L&D and continuous learning opportunities experience a 37% higher employee retention rate, a big number considering how retention reduces recruitment and onboarding costs as well as time spent getting new hires up to speed.

But There’s a Problem

Yeah, the stats look convincing. But how do you prove that these big numbers apply to your company? Can you make those numbers relevant?

When it comes to investing in L&D, the challenge has always been proving it, substantiating ROI. Outcomes from L&D don’t often bear immediate fruit. They become clear months or longer down the road. A recent LinkedIn “Workplace Learning Report” showed that 90% of business leaders believed learning and development programs were key to closing skill gaps. However, only 8% of CEOs in the report said they understood the business impact of L&D programs and even fewer (4%) saw a clear ROI.

Obviously, this doesn’t mean there wasn’t any ROI, just that it’s very difficult to prove. In fact, only 33% of business leaders believe L&D impacts their business’s bottom line, and fewer consider the function to be relevant. This results in something of a vicious cycle, one we’re all too familiar with; less tangible ROI means smaller investments in L&D. And there goes your idealized, learning-centric corporate culture.

Sure, we can all admit that there’s waste. Employees don’t apply what they’ve learned on the job, or don’t believe in it enough to see the benefit. Or maybe they leave and take their education with them. For traditional L&D departments, those that still depend heavily on an instructor-led classroom-based model, it’s tough to measure anything but participation. And for others who allow employees to learn on their own time and on their own devices, well, good luck measuring that.

Still, it’s critical to connect training to business objectives to demonstrate the most meaningful impact of what we do.

Four Ways We Directly Impact the Bottom Line

How can L&D teams measure their worth to corporate leaders? In the learning market, there are three criteria used to evaluate the results of any course or program. These immediate gauges include:

The likability of the training

• The number completing the training
• Did training enable employees to meet objectives

But, with a little more patience and persuasion, there are bigger points to make.

• Performance: Is your sales staff nailing it? If so, grab some of those accolades. Are your people performing better in general? Are they better presenters, better communicators, or better marketers? If that sounds like your organization, take a little credit for those performance improvements. L&D can be critical needle-movers in that space.
• Engagement: When employees burn out and check out, they cost you money. According to a recent study, a disengaged employee costs an organization $3400 for every $10000 in salary. Disengaged employees cost the American economy up to $350 billion/year in lost productivity. When retention rates are high and employee satisfaction increases, L&D deserves at least some of this credit. As I said above, and it bears repeating, orgs with a quality L&D program enjoy a 37% higher retention rate.
• Preventing Burnout: If you offer personalized learning paths, resources, and support for particular groups, such as remote workers or high-stress departments, then you’re contributing to burnout prevention. If your company has a high retention rate, it could be for several reasons, but one is related to how L&D managers ensure that workers have the resources they need for virtually any situation.
• Innovation: Innovation in L&D is not just about upskilling, reskilling, or adapting to technology. Innovation happens when a space is safe for taking risks. Innovation is about knowing when to apply creative thinking or brainstorm new approaches to solve sticky problems. With a license from higher-ups, your L&D programs can create that kind of workplace, where challenges are welcome and even embraced. If your corporation is viewed in the industry as innovative or has even the hint of a reputation for being a “trailblazer,” take a bow. You’ve helped to nurture that reputation.

L&D Is Not a Support Function

First off, it’s important for L&D to brush off the stigma and stop thinking of ourselves as a support function. Are we profit centers? Not directly, but indirectly and in many ways. L&D is central to creating and enhancing future revenue streams while enhancing employee engagement, retention, and satisfaction. These factors all strengthen ROI and help to solidify the brand.

Sure, it’s essential to be aware of the results of your own analytics. But you also need to create another layer of measurement more closely tied to the success of your organization. If you can focus on these areas, the conversation, when you finally manage to take a seat at the table, is much easier to frame, and your argument becomes much easier to make.