Chief Learning Officer- September 2008

The only possible conclusion is that when it comes to measuring value created, it is not about the motivation, prioritization or even availability of cash that blocks the efforts. The issue is how to measure the value created. Research is being funded by the Bellevue University Human Capital Lab, which is founded on the development of management models, language and data — knowledge designed to represent training and education expenditures as strategic investments rather than current period expenses. The lab is supporting research on measurement at a growing list of companies including Chrysler, Citi, ACS, Sun Microsystems and others. As a result of the work being done on value creation with these and other organizations, there are three key elements related to the “how” of the value measurement issue. They are: 1. What outcome should we measure? 2. How do we know the measured outcomes are directly related to the learning intervention and not the result of all the other things going on in our rapidly changing world? 3. What will it cost to measure? Let us begin with the easiest of the three: cost. In this case, this refers to the cost to measure the value created. At the lab, we have documented studies that the cost to measure ranges from 1 to 5 percent of the cost of the learning intervention. To put this in perspective, let’s apply these ratios to the ASTD-reported expenditures for 2006. Had the learning industry spent between 1 and 5 percent on measuring value, it would have meant that it expended between $1.296 billion and $6.48 billion to measure the value created by the $129.6 billion actually spent. The fact is there was not anywhere near $1 billion dollars expended on measuring value in 2006. Why should we be surprised that we do not have measurements of the value created? We have not committed the resources to do the analysis. Items 1 and 2 are more complex, with 2 being the greatest departure from current practices. Once again, let’s begin with the easier of the two: deﬁning the outcomes to be measured. When it comes to measuring outcomes, metrics should revolve around outcomes critical to the executive suite. Surveys of senior executives deﬁne what turns out to be a rather short list, a kind of 80-20 structure in which 20 percent of the outcomes address 80 percent of executive priorities. These include: • Growth in revenue. • Employee engagement. • Retention. • Productivity. • Innovation. • Customer satisfaction. • Cash ﬂow. The striking thing about this list is that, with the exception of innovation, most organizations already are measuring these outcomes. The primary variation Chief Learning Ofﬁcer • September 2008 • www.clomedia.com 47 http://www.clomedia.com

Table of Contents Feed for the Digital Edition of Chief Learning Officer- September 2008

Chief Learning Officer Editor’s Letter Contents Connections Imperatives Selling Up, Selling Down Strategies Take Five Lifestyle Learning: Improve the Bottom Line With Behavioral Education Tracom’s Social Style Model CLO Profile IOL: Determining the Impact of Learning Communicating With the Boss About Impact Mission Accomplished? Measuring Success of Corporate Universities Borrowing Measurement Practices From Investors Value Creation With Human Capital Investment Business Impact Analysis at Chrysler Learning or Performance Enhancement: Which Is It? Best Practices in Global Project Management Training Case Study Business Intelligence Advertisers’ Index Editorial Resources In Conclusion

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