About $162 billion was spent in 2012 in the United States on corporate training—in what Harvard Business School Professor Michael Beer calls the “the great training robbery.”
Beer, the Cahners-Rabb Professor of Business Administration, Emeritus, says money pumped into leadership and management training typically doesn’t yield the return on investment in improved organizational effectiveness and performance that companies expect.
“Individual development has to take place in the context of a larger change process motivated by the senior team”
“It’s a huge amount, and some of it works, and a lot of it doesn’t,” Beer says, citing the example of an oil company that built a $20 million safety training facility but still suffered several fatal accidents nonetheless.
“Part of it is a fad. Everybody’s doing training. Everybody’s got (corporate) universities. Everybody’s got leadership development programs,” Beer says.
Some studies have shown that only 10 percent of corporate training is effective, he says. It’s not that the content of the training programs is necessarily bad; rather, it’s that companies are not laying the proper groundwork to get the most out of what is being taught.
The Great Training Robbery, a working paper based on case studies conducted by Beer, Magnus Finnstrom, and Derek Schrader, as well as decades of research on training effectiveness, will be the focus of a Harvard Business Review article this fall. Finnstrom and Schrader are partners in the Burlington, Mass.-based management consulting firm TruePoint Partners, which Beer co-founded and on which he now serves as a director.
Most training programs focus on developing and changing behavior of individuals and teams. Beer and his colleagues say the problem needs to be examined through a broader lens.
“Our collective practice has led us to understand that the individual development has to take place in the context of a larger change process motivated by the senior team. Just calling HR to say we have a strategy, we want to be more safe, do training, is not going to work,” Beer says.
In other words, the context matters.
Take the example of Swedish industrial conglomerate Cardo. The CEO commissioned a training program for managers in two business units. The goal was to teach managers how to lead change that improved performance. One unit dramatically boosted its performance while the other did not. The difference? The readiness of the senior team and the environment for change.
The unit with poorer results already had been relatively profitable, but the CEO thought it could do much better. The unit manager didn’t share that sense of urgency so didn’t organize the senior team around fixing the issues—training for that unit wasn’t going to stick.
“The overall argument [we make] is that the system of organizing and managing is so powerful that individuals and teams returning from training will not be able to be more effective unless the system enables them to apply their learning,” Beer says. “So, efforts to change the system must come first.”
PREPARING THE SOIL
How do you prepare the soil, as Amy Edmondson and Anita Woolley have called it, for training to take root? It starts with the leader and senior team taking a hard look at management or organizational barriers, including the senior leadership team itself.
To do this, they must enable truth to speak to power. But Beer says that even when honest conversations in organizations are enabled, his group found six managerial barriers that hindered communication from lower levels getting to the top, among them ineffectiveness of the leadership team. “Unvarnished employee and stakeholder feedback is key in uncovering those barriers so that change in them will create the fertile soil needed for learning and development.”
“The important point is to avoid the wrong pattern—investing in training without first identifying and beginning to remove barriers that block system effectiveness”
Training and development should be nested in a larger organizational change driven by the senior team. Changes in the way people are organized and managed—the roles, responsibilities, and relationships—must be made first. Helping individuals and teams to learn how to enact new roles through real time in-vivo coaching is the most effective next intervention. That allows employees to become more effective in their new roles and creates the motivation and readiness to learn from knowledge and skill training that they can now enact.
“These are not lockstep things. These are overlapping steps, but the point is don’t take training and put it at the head of the line,” Beer says. “Every situation is different so you have to make judgments about the extent and timing of the overlap depending on the circumstance. We are recommending a sequence that our research and experience show leads to more rapid and cost effective change. The important point is to avoid the wrong pattern—investing in training without first identifying and beginning to remove barriers that block system effectiveness.”
Because large corporations are made up of many subsystems—business units, global functions, regions, and operating units—across-the-board corporate programs are rarely the right answer. Corporate transformations should be thought of as unit-by-unit processes with each unit employing training at the right time in their subsystem’s organization development effort.
NOT A NEW PROBLEM
The “tragedy” of the great training robbery, Beer says, is that the shortcomings have been known for decades. He points back to the 1980s, when the companies he studied scrambled to boost quality in response to the competitive threat posed by Japan.
“In many of the cases [companies] employed experts in improving quality,” Beer says. “These experts … ran vast amounts of training initiatives and rained them down on the company in the hope that quality would improve. And we found that, in most cases, these were false starts.”
Managers saw the importance of quality but did not have the insight that starting a training program without first addressing other serious issues would undercut the results. The same is occurring today with the push toward lean manufacturing. Beer cites a manufacturing company whose CEO was committed to improving quality and launched a lean training program in multiple plants. The effectiveness of that training was hampered in plants where leadership teams were not managing in a way consistent with the lean philosophy.
“When you do this across the whole company, you’re wasting an awful lot of resources, not getting your return, [and] creating some cynicism among employees in whatever number of plants are not ready for this,” Beer says. “There’s a readiness question here. Training works when the organization is ready both in terms of the systemic culture and pattern of management that exists.”
Too often CEOs turn to HR to create a training program when faced with a problem. The CEO avoids opening a Pandora’s box of larger organizational flaws, and HR is happy to comply because it puts the function more at the center of things and avoids a risky conversation with the CEO about why training might not solve the problem.
“It is threatening, which is why most people don’t want to go through what we call an honest collective and public conversation about what’s really going on here,” Beer says. “So training becomes an easy way to try to fix the problem, even though it doesn’t fix it.”
Although Beer and his colleagues at TruePoint have worked with senior executives in hundreds of organizations to enable honest conversations and assisted them in system transformations, top executives willing to do the necessary self-examination are still in the minority, Beer says.
“Organizational transformations around the world would be more rapid and cost effective if executives were willing to create the context for effective management training by starting with honest conversations about the system and changing it first.”