Thursday, June 25, 2009

ISD 2 Talk ROI or B DOA with NO $

After participating in my first #lrnchat session on Twitter I realized that maybe there's a topic after all that ISD'ers need my help with. Or maybe not. The question being answered is this:

How do I talk to C-Suite about $ Needed for Learning & Development? (ok, I'm paraphasing). Consider the following examples in scripted format as if you are the ISD:

THE BAD EXAMPLE:
ISD: "We need $10K for an EPSS system, because print manuals are too cumbersome."
VP: "Huh? Why can't they just look it up on the Internet?"
ISD: "That's what I'm saying. We can convert our content into html and link it, and it will only cost $10K."
VP: "Oh, sorry, I've got a phone call. Budget cuts. I come by later to talk to you. Gotta go."

A BETTER EXAMPLE:
ISD: "If we provide pricing tools just in time for the sales team, they'll be able to do their quotes on the spot. That will save a follow up meeting and wasted calls, and we've estimated it will improve our close rate by 30%"
VP: "That's $2M a year! Why haven't you done it yet?!"
ISD: "I just need your approval on this $10K investment for a Knowledge Management system that will link from their F1 key. I've already run this past IT and the Sales Managers."
VP: "I love the way you think." Signed. Done.

NOT SO GOOD NOT FOR PROFIT APPROACH:
ISD: "I think we should have a video that can be downloaded to people's IPhones. It's really cool. We can do it for $20K."
VP: "We don't have $20K. Don't you know there's a recession going on?"
ISD: "Yes, but our training - how to feed the world in 8 easy steps, needs to get out. Mobile technology is the way to go."
VP: "Find another way. The training budget was slashed this year."

BETTER NOT FOR PROFIT APPROACH:
ISD: "We've calculated that we can reach an additional 120,000 potential donors by providing our content in a mobile format. If only 2% donate, that increases our ability to provide food by 320 truckloads a year. That's enough to feed 30,000 families."
Chairman: "Do it. We'll find something else to cut from the budget. Our goal is to feed the world."
ISD: "Thank you"
Chairman: "Keep bringing me solutions like this and you may find yourself on the fast track."

BAD SOFT SKILLS REQUEST:
ISD: "We really need to do some team building around here. People are just acting all wierd since the layoffs."
VP: "What's the impact?"
ISD: "Impact? Bad morale? Stress I guess. It just needs to be fixed"
VP: "Sorry, but maybe I can write a memo or something. The last thing we need around here is more group hugs and tree climbing."

BETTER SOFT SKILLS REQUEST:
ISD: "Since the layoffs, people are having a hard time focusing, and our productivity is down about 25%. I know you don't want to cut more staff. I'm thinking you might want to consider approaching this transition in a way that will improve performance and get us back on track faster."
VP: "I'd like to tell them to snap out of it! But, okay, let's hear what you've got."
ISD: "People will get back to 'business' faster if we take a Transition Management approach that addresses their underlying fears, concerns and issues. I'd like to bring in a consultant who helped company xyz get back on their feet in about 3 weeks, saving months of lost productivity."
VP: "It's worth the money to me if we can get shorten the time it takes get productivity back on track. If we're off by even 10%, that's thousands of dollars a day wasted! Can you do it for under $10K? OK then, let's go!"

POOR PERSONAL DEVELOPMENT REQUEST
ISD: "I'd really like to learn Lectora, but the software is $2K , and I'd need an upgraded PC, Monitor and offsite training. The class is in Vegas. About $8K in all? Probably not a good year to ask, right?"
VP: "You've got that. Your PC will have to last you another year."
ISD: "Oh well, maybe next year."
VP: "Let's hope the economy turns around by then."

BETTER PERSONAL DEVELOPMENT REQUEST
ISD: "I've been thinking, we've got $120K set aside for outsourcing our elearning development work this year. I'd like to cut that amount by 80% to offset the reduced income and traffic."
VP: "80%?! I'm all ears. I was thinking to cut it by 50% anyhow and just apoligize to our internal customers. You know. We've got to do our part."
ISD: "If I can get trained on, and obtain access to Lectora, we can do the ongoing programming updates ourselves AND our development time should be faster because we won't have to ftp files back and forth to India, dealing with timelags and communication issues."
VP: "Get me the specs, and I'll walk them over to IT. No reduction in output? Great idea."

So when you want to get top-management to buy into your OD, HR, Learning & Development or any other expenditure you've got to do three things.

1) Find out what they care about. And figure out how they count it. #Customers? Comp. Store Sales? Reduced battlefield deaths? Fewer missed calls? More cases sold? More votes? Fewer teenage prostitutes? Whatever. Find it.

2) Provide solutions that fix, improve or pave the way to make the organization better. Show them that the math works by building a case to demonstrate for example, how incremental increases in X (your solution) = more of Y (organizational goal/metric/$).
  • More Webinars ($10K) = Fewer Travel $ Expended ($1.2M) <--- A true example
  • Investing in a $30K LMS will reduce $500K organization wide in OSHA fines.
  • Providing information online ($5K) to prevent 3,000 hrs wasted search time ($150,000)
  • Hiring 2 interns ($10K) to allow us to forgo one consultant ($50K) for the project
3) Then measure your progress along the way (professional project plan, expense management, milestones, deliverables) and communicate your overall results. In other words, prove it. If you're not good at measurement, partner with a grad student from a business or economics (or ISD) program to help. One SAP project I led with $2M (for training/change management) saved the organization over $10M. That's a 5x return on investment. How did we calculate that? Case studies. Horror stories. Time to productivity? Savings due to error reduction. Ever heard of Hershey? How much revenue did they lose over the holidays when their ERP didn't go off smooth and they couldn't ship products?

As Michael Hammer once said, "the soft stuff is the hard stuff". It's our job to figure out how to impact the soft stuff (people, and their knowledge, skills and abilities) and prove that by doing so, the organization is better off in some MEASURABLE way.

Got an ISD initiative you can't figure out how to measure, or sell upward? Comment or send me a tweet @PearlFlipper and I'll do my best to help you work the math.

1 comment:

Shaun Bala said...

Great read. Love the quote "the soft stuff is the hard stuff". So true. In the current economy, I need numbers to illustrate that difference productivity in not completing training prior to rollout.