Companies with Strong Learning Cultures are 92 Percent More Likely to Innovate

Q:  You have found that an agile organizational approach enables businesses to compete and deliver more effectively. Define “agility” for our readers, and talk about how HR leaders can make a substantial contribution to increasing their organization's agility?

A:  From a business standpoint, agility at the CEO level refers to the ability to adapt to changes in the customer’s needs, market, technology, and company product. If you’re Nokia, the question is how quickly can you build a phone with a touch-screen interface and bring it to market?

The problem we’ve found over the years in HR is that many of the HR practices that companies still use were designed around turn of the 20th century during the industrial economy. At that time, companies were very hierarchical, and human beings were considered resources. However, humans aren’t resources, they are appreciating assets. The more you invest in them, the better they get. They’re not like machines that wear out. 

Performance appraisal, succession management, and hi-potential identification are old ideas. As companies get flatter, and they want to operate in a more agile way with smaller, customer-centric work groups, older HR practices no longer work well. In training, it’s the same issue. If the company has a large corporate training department and you have a bunch of agile work teams coming together to build new products, solve customer problems, do customer service, and consult, the curriculum and programs may not be relevant to what these teams need. You need a more agile way of developing learning. Social learning and informal learning are essentially the discipline of capturing information from experts and using it, as opposed to bringing information into the learning department and turning it into formal training.

Q:  Why does agility matter today?  Do you think the current business climate and technology have made that happen or has agility always mattered?

A: The pace of change has increased because of globalization and connectivity on the Internet.  I’ve been in the business world since the late 1970s, and when I first went to work, most of the jobs were entry level. You would be trained for a year or two and stay with a company for many years working your way up the pyramid. 

That really isn’t the way the world works today.  Sixty to seventy percent of young people don’t want to work for big companies. They want to work for small companies, which are outperforming big companies, and then are being bought up. Information travels so fast through the Internet that your competitive advantage might be a few months. Somebody can go online and see the price of your product and compare it to your competitor’s in a few seconds. Today, the way you communicate has to be done more dynamically. 

Q:  What is role of a company’s learning culture in enhancing agility?  Does this change whether it is a small versus a large company and if so how?

A: Culture is a vague word. Recently, we’ve done research on culture. We found that regardless of the number of training programs, or the quality or quantity of those programs, if there isn’t a culture of learning, not much of it sticks very well. By culture, we mean having management behaviors and values that encourage people to stop and talk about mistakes, reflect, share information, go to training, learn, and evolve. Many companies are focused on delivery of results, performance, and output. They don’t have the culture to stop and let people learn as they go. You can look at the tech companies that have fallen behind their competitors because they haven’t taken the time to do the things mentioned above, and they don’t have the culture to do them.   

Learning sometime means taking what you have, throwing it away, and starting over. In a learning culture, people might conclude when they have a failure that a particular product is a disaster. They realize they designed and supported it poorly; they didn’t train the sales people effectively, and they realize they need to do it better next time. A company that doesn’t have a learning culture might just fire the whole group and expect the problem to go away. It’s both systemic and management-driven.

Training departments can’t affect the culture that much; it really is the business of the line managers and executives. Culture starts at the top-- the company leader has a lot of impact on the culture. I’ve learned over the years that there are two kinds of business people: those who get the talent part of their business and those who don’t. The latter will often not listen (not hear people’s issues) until a crisis occurs. That’s when they think it’s a good time to bring up these issues hoping to change into a culture that values the talent part of their business. 

Q:  Explain how learning leaders can enable agility through goal setting and performance feedback.

A:  This can be done at an individual or work-group-by-work-group level. Nobody likes getting feedback, but companies that use frequent performance feedback, and encourage the ability to give and take that feedback, are better off. If it’s done well and frequently, and isn’t personal, it’s not harmful. If you have discussion back and forth, it becomes a dialogue between the manager and employee. If they can discuss the issues, they can come to an agreement in a more holistic way. And it goes both ways: the subordinate should be able to give feedback too. 

I’m reminded of the book Start-up Nation by Dan Senor. If you’ve ever been to Israel or know Israelis, you know they argue a lot. There are a lot of heated discussions about why something is a bad idea. It’s a culture of feedback—sometimes brutal. In the book, Senor says the Israeli feedback culture is what created the largest number of stock market IPOs of any country in the world.

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Q: Bersin by Deloitte shows stock prices of organizations with high-impact talent analytics outperformed their peers by 30 percent over the last three years. Tell us why you found this to be true.

A: The analytics and measurement of people, training, and HR research was a particular area of focus. In the learning industry, measurement continues to be a challenging topic. Companies are not really sure what they should measure in their training departments, or how to measure it. 

What we found is the companies that have invested heavily in talent analytics are finding insights about their workforce that their competitors are not. Talent analytics are the collection of all sorts of data about people, bringing that data together into a common database, and looking at different sorts of data about individuals to correlate how they perform. Those companies are able to hire better people, promote people better, and move them into better jobs. Based on data, they can understand factors that might create higher levels of customer service and implement solutions based on people practices. 

Through this research, we’ve found that the companies on level four of our maturity model have a 30 percent better stock performance over the S & P than the average. If you think about it, 50-70 percent of payroll costs are people. If we can get data about what is driving effectiveness, about who are the right people in the right jobs, and what activities and behaviors are going to create the best results, we can take that huge expense and make it better.

Q:  You said, “The reality is most human resources organizations fall well short of mastering these capabilities, of using advanced or predictive analytics to solve talent challenges, and of planning their future workforce initiatives." Why do you think this is so?

A:  It’s more of a catching-up problem. There are two fundamental problems. One is that most of the data is sprinkled around in a lot of systems. So there is some technical work companies have to do to gather this data, and only 14 to 15 percent of companies have done that effectively. 

Then people need to think about the problem differently. Most HR people still think about analytics as how much money did I spend on HR, how many training hours did I deliver, and what was the average satisfaction with a course. Those are all internal HR efficiency measures. They’re interesting and useful, but not super valuable in driving business results. Ultimately the value of HR and training is what impact it has on the rest of the company, not whether it is done efficiently.  

Q: How will identifying the following factors associated with a mature organization's analytics function improve the organization’s future workforce initiatives?  These include: the skill sets of the team; data quality (the ability to "tell the story" behind the data so business leaders grasp the implications); dashboard capabilities; and the culture of the organization.

A: The challenge that most organizations and individuals have is they’re making decisions every day based on experience or gut feeling--especially business decisions such as whom to hire, whom to promote, who is a great manager, and what would make a better manager? When you get a piece of data that says the people who didn’t go to college are doing sales better than those who did, you might say that’s not true; everybody I’ve hired that was good went to college. However, your personal experience doesn’t cover everything that happens. 

Data can give you insights you don’t have. The problem is people don’t always listen to or trust data. In marketing, people have learned to trust the data, but in HR we haven’t learned how to do that yet. The data will never be 100 percent right, but with data we might be able to get it right 60 to 70 percent of the time. There is a need to translate data into tools and systems that make decisions better. 

I’ve found that learning professionals tend to be pretty technically adept in general. The learning and development profession is a highly educated one.  I think the people in learning can take the lead in a lot of these issues in their own organizations. There is a lot of opportunity for learning and development to catch hold of these trends and help socialize them in their own companies.

Bio

Josh Bersin founded Bersin by Deloitte in 2001 to provide research and advisory services focused on corporate learning and he is responsible for Bersin by Deloitte’s long-term strategy and market eminence. Josh is a frequent speaker at industry events and has been quoted on talent management topics in key media, including Harvard Business Review, The Wall Street Journal, Bloomberg, BBC Radio, CBS Radio and National Public Radio. He is a popular blogger for Forbes.com and has been a columnist since 2007 for Chief Learning Officer magazine. Josh spent 25 years in product development, product management, marketing and sales of e-learning and other enterprise technologies at companies including DigitalThink (now Convergys), Arista Knowledge Systems, Sybase, and IBM.  Josh's education includes a B.S. in engineering from Cornell University, an M.S. in engineering from Stanford University, and an MBA from the Haas School of Business at the University of California, Berkeley.