What if L&D were a profit centre and how can organisations benefit?

“Learning is the very heart of productive activity.” – Shoshana Zuboff, author of In the Age of the Smart Machine.

Over USD$340 billion goes into employee learning and development (L&D) each year – over USD$1,500 per employee (on average). Is it worth it?

Employees believe it is. Fully 75% of them say it enhances their engagement and job satisfaction, and companies that offer continuing development have 12% less turnover than average. When considering job offers, 92% of candidates say L&D is a deciding factor.

HR managers agree. Nearly 90% of them say it drives productivity in their organisation and is key to navigating the Future of Work.

Business leaders also agree. Companies offering L&D have 24% higher profits than those that do not, and businesses that reskill instead of hiring new talent see 70 – 92% of cost savings.

Could it be more productive?

Yes.

I started thinking about L&D’s business model when I watched a TED talk about an innovative math-tutoring service. Parents paid the service, which then paid students when they successfully completed their assigned work. Learning and test performance followed when they did their work. After all, learning is work, too.

Although it is not generally necessary to pay employees more for their L&D time than their “day jobs”, it does open up some interesting possibilities to consider alternate business models.

First, if companies partner more closely with educational institutions, then once a student becomes aware of a concept and practices with fictional exercises, they could move on to apply the idea in the “real world”. Just like “web crawlers” that troll the internet to update search indexes, “business crawlers” could troll organisations to see if they are doing things the “textbook way”. If not, a project can be proposed, complete with cost-benefit analysis. If company practices are better than the textbook way (and are not secret), their innovation could be published, building brand value and value for all businesses.

Open innovation centres and challenges are another way to harness learning for innovation. Undergraduate students and MBAs are well-known for applying their new learning to difficult problems, sometimes producing radical, high-value solutions. Companies like Accenture, Coca-Cola, ExxonMobil, IBM, Nestlé, and P&G do this.

“When considering job offers, 92% of candidates say L&D is a deciding factor… HR managers agree. Nearly 90% of them say it drives productivity in their organisation and is key to navigating the Future of Work.” – Dr CJ Meadows, Director, i2e – The Innovation & Entrepreneurship Centre – S P Jain School of Global Management

I worked with company executives sponsored for their MBAs to learn for a term, apply the ideas in their company for a term, learn, apply, learn, and apply. It took twice as long to finish their program, but the company paid for it and was very happy with the business results.

How about launching your non-strategic, in-house training into the marketplace? BCG, Deloitte, IBM, KPMG, and others do this and (1) build their brand, (2) gain new clients, and (3) scout for talent while teaching, ensuring they have first pick before a certificate is even awarded.

And there is revenue from the L&D spinoff, too.

Finally, since meaningful work and societal impact aids recruitment and retention, why not link Corporate Social Responsibility (CSR) efforts with training needs? Employees can grow in empathy, leadership, entrepreneurial mindset, design thinking, innovation skills, and much more. In addition, if CSR is integrated with the core business, it can be the perfect innovation sandbox for new products and services for new growth markets.

HR and CSR will both want to track the resulting business value. In fact, tracking the business value of L&D (as a cost or profit centre) should aid wise investments in learning. For example, 360-degree surveys can be administered before and after learning to find out if the learner actually improved job performance.

READ MORE: FutureSkills: What sort of workforce will you need in the age of GenAI?

KPMG tracked learning ROI of a client’s optional, gamified leadership training that focused on company offerings. They saw a rise in revenues (25+%), client numbers (16%), new-client opportunities (25%), and more.

Peter Drucker famously said you cannot manage what you do not measure. But before you measure, you will need to examine:

What is the heart of your productive activity?

About the author: Dr CJ Meadows is Director, i2e – The Innovation & Entrepreneurship Centre – S P Jain School of Global Management

To talk to the author’s digital twin about your situation, just visit CJ2.personal.ai and click the “public chat” button. To learn more about the future of L&D, visit drcjmeadows.com/futureoflearning for the author’s book, Disrupting and Design Thinking Education (Routledge, available on Amazon), multimedia book The Future of Learning (Gnowbe), articles, and more.