Increasing the Value of Learning Management
INCREASING THE VALUE OF LEARNING MANAGEMENT May 2017 Author: Zachary Chertok Research Analyst, Human Capital Management
Report Highlights p1 Industry Leaders are 3.5 times more likely than Industry Laggards to recognize that they need to improve how they train internal talent to competitively fill emerging competency and skills requirements.
p4 Employees at Best-inClass companies are 50% more likely than All Others to join and stay with the organization because of transparency of corporate goals and objectives.
p6 Companies using adaptive content analytics are 2.1 times more likely than those not using them to see performance improvements in line with greater achievement of management goals and objectives.
p7 Companies using adaptive learning are 52% more likely than those using just an LMS to see continuous improvements to labor performance.
Three quarters of Industry Leaders use learning management systems, but they are 71% more likely to find that they have low impact on the quality of internal labor and talent development. In this report, we will look at how changes to the quality of the workforce are pushing Industry Leaders and the Best-in-Class to think differently about how they design and implement learning management to make it more relevant to employee development.
2 Employers have lost the ability to develop internal talent to deliver results in line with management expectations. In 2017, Best-in-Class companies are focusing on improving the value of learning management to fill the growing skills gap.
Increasing the Value of Learning Management
Heading into 2017, employers are facing the reality that they have lost the ability to develop internal talent to deliver results in line with management expectations. In a 2017 survey, Aberdeen found that Industry Leaders are 19% more likely than Industry Laggards (44% vs. 37%) to be unable to recognize their inability to develop internal talent to fill emerging skills gaps. In Improving Performance: Resources and Recognition are Must-Haves (February 2017), Aberdeen found that as Baby Boomers age out of the workforce, they are increasingly being replaced by the youngest generations available. While these younger workers have the latest training in hard skills coming out of university, exiting Baby Boomers have three decades of additional soft skills development that are leaving the workforce with them. Employee Development Today In Employee Wellness: Individualizing Productivity (January 2017), Aberdeen found that organizations have transitioned to a ‘selfmanaged’ workplace. In the report, Aberdeen noted that within this management style, employees are responsible for guiding their own development as well as charting their own careers and contributions to organizational growth. As the generations change, the Best-in-Class are becoming all too aware that their skills gaps are widening, and that younger generations are not willing to pay for external training to cover the difference. As companies assess their greatest bottom-line challenges, Best-in-Class companies are 24% more likely than All Others (61% vs. 49%) to find that one of their interim process challenges is the growth and persistence of this skills gap. Industry Leaders are 3.5 times more likely than Industry Laggards (56% vs. 16%) to recognize that they need to improve how they train internal talent to competitively fill emerging competency and
www.aberdeen.com
Improving the Value of Learning Management
3 skills requirements. Seventy six percent of Industry Leaders, however, find that they lack management-driven career tracks inside their organizations. Figure 1: Plans to Increase Training Spend in the Next 12 Months
Best-in-Class companies are 32% more likely than All Others to be expanding their rewards and recognition strategies to stimulate engagement and innovation.
As Figure 1 shows, organizations have been gradually decreasing spend on training resources, content development, and program management year over year. While the results are consistent with the push for a self-managed workforce, as it turns out, driving employees to manage their own development leads to a lack of fulfillment, contributing to increasing disengagement. Today, 55% of Best-in-Class companies suffer from elevated employee disengagement with time. As the Best-in-Class shrink their focus on learning management, they are increasingly investing in incentivized performance improvements. Best-in-Class companies are 32% more likely than All Others (25% vs. 19%) to be expanding their rewards and recognition strategies to stimulate engagement and innovation.
www.aberdeen.com
4
Increasing the Value of Learning Management
Despite the increase, 65% of the Best-in-Class still consider low employee engagement to be a top pressure, up from 57% just two years prior to today. Table 1: Reasons Employees Join and Stay with the Company Pressure
See Relevance of Their Work Competitive Growth Opportunities Transparency of Corporate Goals Can Develop a Career Track Consistency of Role Definitions Employee-Manager Relationships
Best-in-Class
87% 75% 75% 71% 73% 68%
All Others
59% 52% 50% 51% 48% 46%
Source: Aberdeen Group (October 2017) n = 204
Heading into 2017, 62% of Best-in-Class companies are using more than two learning management solutions.
As Table 1 shows, the leading reasons employees join and stay with their employer are related to opportunities for growth and development. Employees are seeking competitive growth opportunities with companies that invest in their career development and advancement, providing them with some form of return for their investment in corporate growth. The shift away from training and development has contributed to a rise in employee turnover. Today, 48% of Best-in-Class companies have seen labor turnover rise in the last 12 months. Rebuilding the Learning Infrastructure Heading into 2017, 62% of Best-in-Class companies are using more than two learning management solutions. At the same time, while 75% of Best-in-Class companies saw the quality of performance reviews improve within the workforce, only 25% saw the improvement coincide with higher rates of achieving management goals and objectives. Employees at Best-in-Class companies are 50% more likely than at All Others (75% vs. 50%) to join and stay with the organization because of transparency of corporate goals and objectives. www.aberdeen.com
Improving the Value of Learning Management
5 Best-in-Class companies are 42% more likely than All Others to consider learning content analytics to be vital to turning around their LMS deployments.
Looking ahead, the Best-in-Class are looking to improve how they unify data systems and improve resource visibility to the average employee. Best-in-Class companies are 18% more likely than All Others (73% vs. 62%) to be focused on improving management effectiveness and improving corporate communications. Among their strategies is improving content directives and unifying employee developmental goals. The Best-in-Class are building out a hierarchical set of objectives that extends from the c-suite, and integrates departmental objectives on the way down to the individual employee. To that end, Industry Leaders are 3.1 times more likely than Industry Laggards (56% vs. 18%) to be investing in expanding visibility into the content repository. Industry Leaders are also 3.5 times more likely than Industry Laggards (56% vs. 16%) to focus on developing internal talent to be equally competitive to external talent when filling the skills gap. In other words, while they are not necessarily expanding the breadth or employee development resource, as shown in Figure 1, they are investing in shoring up the resources they do have to make them more effective. Today, Best-in-Class companies are 42% more likely than All Others (68% vs. 48%) to consider learning content analytics to be vital to turning around their LMS deployments. Learning content analytics enable managers to direct employees to the right content, programs, or developmental agendas based on the results of competency and skills assessments, and their own personal goals and objectives. In this way, employees are driven to relevant materials that will help them advance in their careers. Driving employees to relevant career development tracks is having a positive impact on organizational growth and development.
www.aberdeen.com
6
Increasing the Value of Learning Management
Figure 2: Business Impact of Adaptive Content Analytics
Companies using adaptive content analytics are 6% more likely than those not using them to have realized increases in revenue per FTE in the last
Figure 2 shows how the use of content analytics impacts changes in revenue per FTE and employee performance. Companies using adaptive content analytics are 2.1 times more likely than those not using them (68% vs. 32%) to see performance improvements improve in line with greater achievement of management goals and objectives. Furthermore, companies using adaptive content analytics are 6% more likely than those not using adaptive content analytics (35% vs. 33%) to have realized increases in revenue per FTE in the last 12 months. Remedying the LMS means making a significant investment in rebuilding the resources that already exist in the organization. While Best-in-Class companies are shrinking their LMS investment, they are homing in on the system components that work, while deploying analytics that tie the LMS to performance and competency data. In this way, they are connecting employees to the available career paths that are most likely to engage them in growth and development. Today, companies using adaptive content analytics are 50% more likely than those not using them
www.aberdeen.com
Improving the Value of Learning Management
7 (60% vs. 40%) to find that more than 50% of their employees are highly engaged. Figure 3: KPI Benefits of Using Adaptive Learning
Companies using adaptive learning are 16% more likely than those using a generic LMS to experience a decrease in voluntary employee turnover.
Companies using adaptive learning are 52% more likely than those using just an LMS to see continuous improvements in labor performance.
Figure 3 shows additional KPI benefits of using adaptive learning versus using an LMS content repository. As Figure 2 alluded to, there are significant operational benefits to using adaptive learning and content analytics. Companies using adaptive learning are 52% more likely than those using just an LMS (50% vs. 33%) to see continuous improvements to labor performance. Remember that Industry Leaders are 3.5 times more likely than Industry Laggards (56% vs. 16%) to focus on strengthening the value of internal talent toward filling the skills gap. Adaptive learning is proving to have a stronger impact on that developmental goal beyond implementing the LMS as a content repository. Companies using adaptive learning are also 16% more likely than those using a generic LMS to experience a decrease in voluntary
www.aberdeen.com
8
Increasing the Value of Learning Management
employee turnover. Remember that 48% of the Best-in-Class experienced an increase in employee turnover in the last 12 months? And remember that employees are looking to work for companies that directly invest in their career growth and development? Adaptive learning sets individual employees on their own development courses that feed their ambitions and give them a reason to pursue further growth initiatives at the company. Consequently, companies using adaptive learning are more likely to see their voluntary employee turnover rates decrease. Beyond reduced turnover and increased performance, employers using adaptive learning capabilities are also realizing higher engagement rates and an overall higher-quality workforce, leading to increased revenue per FTE, paralleled in Figure 2. Connecting the Dots As Industry Leaders focus on remedying their skills problem, they are 3.5 times more likely than Industry Laggards (56% vs. 16%) to be increasing spend and focus on strengthening the competitiveness of their internal talent. Similarly, the Best-in-Class are waking up to recognize that they cannot drive value out of the workforce by forcing employees to manage goals and development on their own. While year-over-year planned investment in learning management systems is decreasing, Industry Leaders and the Best-in-Class are increasing their investment in getting smart about developmental content and resource delivery. While about half of today’s Industry Leaders using an LMS admit that it has a low impact on improvements to the quality of internal talent, 53% are focusing on improving the relevance of available content and programs to ensure that employees are directed to growth opportunities that will pay off for them.
www.aberdeen.com
Improving the Value of Learning Management
9 Today, 50% of Industry Leaders find that the skills gap presents a significant challenge to their organization. Industry Leaders are also 3.5 times more likely than Industry Laggards (56% vs. 16%) to be increasing spend and focus on equally considering internal talent to external talent when trying to fill the skills gap. Key to improving the quality of the workforce is investing in developmental initiatives that will partner the employer with the employee to develop career tracks that are equitable for both. To do this, employers are moving beyond the LMS as a content repository, to engage in adaptive analytics for directed content and development programs, while stacking their LMS with vetted and relevant content. The strategy change is fulfilling a reduced investment in learning management, while empowering and engaging employees to generate higher returns for the organization.
www.aberdeen.com
10
Increasing the Value of Learning Management
For more information on this or other research topics, please visit www.aberdeen.com. Related Research Total Performance Management: Mapping Performance to Equitable Talent Selection; February 2017 Tomorrow’s Management Today: Incentivizing Workforce Innovation; January 2017
Pre-Hire Assessments: The First Test to Understanding the Candidate; February 2017 Analyze This: Workforce Productivity; September 2016
Author: Zachary Chertok, Research Analyst, Human Capital Management
About Aberdeen Group Since 1988, Aberdeen Group has published research that helps businesses worldwide improve their performance. Our analysts derive fact-based, vendor-agnostic insights from a proprietary analytical framework, which identifies Best-inClass organizations from primary research conducted with industry practitioners. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision-making and improve business strategy. Aberdeen Group is headquartered in Waltham, MA. This document is the result of primary research performed by Aberdeen Group and represents the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group.
www.aberdeen.com 16247
Report Highlights p1 Industry Leaders are 3.5 times more likely than Industry Laggards to recognize that they need to improve how they train internal talent to competitively fill emerging competency and skills requirements.
p4 Employees at Best-inClass companies are 50% more likely than All Others to join and stay with the organization because of transparency of corporate goals and objectives.
p6 Companies using adaptive content analytics are 2.1 times more likely than those not using them to see performance improvements in line with greater achievement of management goals and objectives.
p7 Companies using adaptive learning are 52% more likely than those using just an LMS to see continuous improvements to labor performance.
Three quarters of Industry Leaders use learning management systems, but they are 71% more likely to find that they have low impact on the quality of internal labor and talent development. In this report, we will look at how changes to the quality of the workforce are pushing Industry Leaders and the Best-in-Class to think differently about how they design and implement learning management to make it more relevant to employee development.
2 Employers have lost the ability to develop internal talent to deliver results in line with management expectations. In 2017, Best-in-Class companies are focusing on improving the value of learning management to fill the growing skills gap.
Increasing the Value of Learning Management
Heading into 2017, employers are facing the reality that they have lost the ability to develop internal talent to deliver results in line with management expectations. In a 2017 survey, Aberdeen found that Industry Leaders are 19% more likely than Industry Laggards (44% vs. 37%) to be unable to recognize their inability to develop internal talent to fill emerging skills gaps. In Improving Performance: Resources and Recognition are Must-Haves (February 2017), Aberdeen found that as Baby Boomers age out of the workforce, they are increasingly being replaced by the youngest generations available. While these younger workers have the latest training in hard skills coming out of university, exiting Baby Boomers have three decades of additional soft skills development that are leaving the workforce with them. Employee Development Today In Employee Wellness: Individualizing Productivity (January 2017), Aberdeen found that organizations have transitioned to a ‘selfmanaged’ workplace. In the report, Aberdeen noted that within this management style, employees are responsible for guiding their own development as well as charting their own careers and contributions to organizational growth. As the generations change, the Best-in-Class are becoming all too aware that their skills gaps are widening, and that younger generations are not willing to pay for external training to cover the difference. As companies assess their greatest bottom-line challenges, Best-in-Class companies are 24% more likely than All Others (61% vs. 49%) to find that one of their interim process challenges is the growth and persistence of this skills gap. Industry Leaders are 3.5 times more likely than Industry Laggards (56% vs. 16%) to recognize that they need to improve how they train internal talent to competitively fill emerging competency and
www.aberdeen.com
Improving the Value of Learning Management
3 skills requirements. Seventy six percent of Industry Leaders, however, find that they lack management-driven career tracks inside their organizations. Figure 1: Plans to Increase Training Spend in the Next 12 Months
Best-in-Class companies are 32% more likely than All Others to be expanding their rewards and recognition strategies to stimulate engagement and innovation.
As Figure 1 shows, organizations have been gradually decreasing spend on training resources, content development, and program management year over year. While the results are consistent with the push for a self-managed workforce, as it turns out, driving employees to manage their own development leads to a lack of fulfillment, contributing to increasing disengagement. Today, 55% of Best-in-Class companies suffer from elevated employee disengagement with time. As the Best-in-Class shrink their focus on learning management, they are increasingly investing in incentivized performance improvements. Best-in-Class companies are 32% more likely than All Others (25% vs. 19%) to be expanding their rewards and recognition strategies to stimulate engagement and innovation.
www.aberdeen.com
4
Increasing the Value of Learning Management
Despite the increase, 65% of the Best-in-Class still consider low employee engagement to be a top pressure, up from 57% just two years prior to today. Table 1: Reasons Employees Join and Stay with the Company Pressure
See Relevance of Their Work Competitive Growth Opportunities Transparency of Corporate Goals Can Develop a Career Track Consistency of Role Definitions Employee-Manager Relationships
Best-in-Class
87% 75% 75% 71% 73% 68%
All Others
59% 52% 50% 51% 48% 46%
Source: Aberdeen Group (October 2017) n = 204
Heading into 2017, 62% of Best-in-Class companies are using more than two learning management solutions.
As Table 1 shows, the leading reasons employees join and stay with their employer are related to opportunities for growth and development. Employees are seeking competitive growth opportunities with companies that invest in their career development and advancement, providing them with some form of return for their investment in corporate growth. The shift away from training and development has contributed to a rise in employee turnover. Today, 48% of Best-in-Class companies have seen labor turnover rise in the last 12 months. Rebuilding the Learning Infrastructure Heading into 2017, 62% of Best-in-Class companies are using more than two learning management solutions. At the same time, while 75% of Best-in-Class companies saw the quality of performance reviews improve within the workforce, only 25% saw the improvement coincide with higher rates of achieving management goals and objectives. Employees at Best-in-Class companies are 50% more likely than at All Others (75% vs. 50%) to join and stay with the organization because of transparency of corporate goals and objectives. www.aberdeen.com
Improving the Value of Learning Management
5 Best-in-Class companies are 42% more likely than All Others to consider learning content analytics to be vital to turning around their LMS deployments.
Looking ahead, the Best-in-Class are looking to improve how they unify data systems and improve resource visibility to the average employee. Best-in-Class companies are 18% more likely than All Others (73% vs. 62%) to be focused on improving management effectiveness and improving corporate communications. Among their strategies is improving content directives and unifying employee developmental goals. The Best-in-Class are building out a hierarchical set of objectives that extends from the c-suite, and integrates departmental objectives on the way down to the individual employee. To that end, Industry Leaders are 3.1 times more likely than Industry Laggards (56% vs. 18%) to be investing in expanding visibility into the content repository. Industry Leaders are also 3.5 times more likely than Industry Laggards (56% vs. 16%) to focus on developing internal talent to be equally competitive to external talent when filling the skills gap. In other words, while they are not necessarily expanding the breadth or employee development resource, as shown in Figure 1, they are investing in shoring up the resources they do have to make them more effective. Today, Best-in-Class companies are 42% more likely than All Others (68% vs. 48%) to consider learning content analytics to be vital to turning around their LMS deployments. Learning content analytics enable managers to direct employees to the right content, programs, or developmental agendas based on the results of competency and skills assessments, and their own personal goals and objectives. In this way, employees are driven to relevant materials that will help them advance in their careers. Driving employees to relevant career development tracks is having a positive impact on organizational growth and development.
www.aberdeen.com
6
Increasing the Value of Learning Management
Figure 2: Business Impact of Adaptive Content Analytics
Companies using adaptive content analytics are 6% more likely than those not using them to have realized increases in revenue per FTE in the last
Figure 2 shows how the use of content analytics impacts changes in revenue per FTE and employee performance. Companies using adaptive content analytics are 2.1 times more likely than those not using them (68% vs. 32%) to see performance improvements improve in line with greater achievement of management goals and objectives. Furthermore, companies using adaptive content analytics are 6% more likely than those not using adaptive content analytics (35% vs. 33%) to have realized increases in revenue per FTE in the last 12 months. Remedying the LMS means making a significant investment in rebuilding the resources that already exist in the organization. While Best-in-Class companies are shrinking their LMS investment, they are homing in on the system components that work, while deploying analytics that tie the LMS to performance and competency data. In this way, they are connecting employees to the available career paths that are most likely to engage them in growth and development. Today, companies using adaptive content analytics are 50% more likely than those not using them
www.aberdeen.com
Improving the Value of Learning Management
7 (60% vs. 40%) to find that more than 50% of their employees are highly engaged. Figure 3: KPI Benefits of Using Adaptive Learning
Companies using adaptive learning are 16% more likely than those using a generic LMS to experience a decrease in voluntary employee turnover.
Companies using adaptive learning are 52% more likely than those using just an LMS to see continuous improvements in labor performance.
Figure 3 shows additional KPI benefits of using adaptive learning versus using an LMS content repository. As Figure 2 alluded to, there are significant operational benefits to using adaptive learning and content analytics. Companies using adaptive learning are 52% more likely than those using just an LMS (50% vs. 33%) to see continuous improvements to labor performance. Remember that Industry Leaders are 3.5 times more likely than Industry Laggards (56% vs. 16%) to focus on strengthening the value of internal talent toward filling the skills gap. Adaptive learning is proving to have a stronger impact on that developmental goal beyond implementing the LMS as a content repository. Companies using adaptive learning are also 16% more likely than those using a generic LMS to experience a decrease in voluntary
www.aberdeen.com
8
Increasing the Value of Learning Management
employee turnover. Remember that 48% of the Best-in-Class experienced an increase in employee turnover in the last 12 months? And remember that employees are looking to work for companies that directly invest in their career growth and development? Adaptive learning sets individual employees on their own development courses that feed their ambitions and give them a reason to pursue further growth initiatives at the company. Consequently, companies using adaptive learning are more likely to see their voluntary employee turnover rates decrease. Beyond reduced turnover and increased performance, employers using adaptive learning capabilities are also realizing higher engagement rates and an overall higher-quality workforce, leading to increased revenue per FTE, paralleled in Figure 2. Connecting the Dots As Industry Leaders focus on remedying their skills problem, they are 3.5 times more likely than Industry Laggards (56% vs. 16%) to be increasing spend and focus on strengthening the competitiveness of their internal talent. Similarly, the Best-in-Class are waking up to recognize that they cannot drive value out of the workforce by forcing employees to manage goals and development on their own. While year-over-year planned investment in learning management systems is decreasing, Industry Leaders and the Best-in-Class are increasing their investment in getting smart about developmental content and resource delivery. While about half of today’s Industry Leaders using an LMS admit that it has a low impact on improvements to the quality of internal talent, 53% are focusing on improving the relevance of available content and programs to ensure that employees are directed to growth opportunities that will pay off for them.
www.aberdeen.com
Improving the Value of Learning Management
9 Today, 50% of Industry Leaders find that the skills gap presents a significant challenge to their organization. Industry Leaders are also 3.5 times more likely than Industry Laggards (56% vs. 16%) to be increasing spend and focus on equally considering internal talent to external talent when trying to fill the skills gap. Key to improving the quality of the workforce is investing in developmental initiatives that will partner the employer with the employee to develop career tracks that are equitable for both. To do this, employers are moving beyond the LMS as a content repository, to engage in adaptive analytics for directed content and development programs, while stacking their LMS with vetted and relevant content. The strategy change is fulfilling a reduced investment in learning management, while empowering and engaging employees to generate higher returns for the organization.
www.aberdeen.com
10
Increasing the Value of Learning Management
For more information on this or other research topics, please visit www.aberdeen.com. Related Research Total Performance Management: Mapping Performance to Equitable Talent Selection; February 2017 Tomorrow’s Management Today: Incentivizing Workforce Innovation; January 2017
Pre-Hire Assessments: The First Test to Understanding the Candidate; February 2017 Analyze This: Workforce Productivity; September 2016
Author: Zachary Chertok, Research Analyst, Human Capital Management
About Aberdeen Group Since 1988, Aberdeen Group has published research that helps businesses worldwide improve their performance. Our analysts derive fact-based, vendor-agnostic insights from a proprietary analytical framework, which identifies Best-inClass organizations from primary research conducted with industry practitioners. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision-making and improve business strategy. Aberdeen Group is headquartered in Waltham, MA. This document is the result of primary research performed by Aberdeen Group and represents the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group.
www.aberdeen.com 16247
