is l&d an expense or an investment in today's climate?

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Is L&D an Expense or an Investment in today’s climate?

The business challenge in all times

• It takes an outsider 4 years to reach the same level of performance

• It takes an insider 7 years to reach the same salary levels

The expense is higher on an outsider, while the investment is longer on an insider… yet…

Today’s Climate

• Going up

i. Speed of change

ii. Business ambitions

iii. Individual aspirations

iv. Technology & Innovation

v. Business complexity

• Going down

i. Time to learn

ii. Ability to manage complexity

• Customer expectations

• Economic climate - fiscal austerity measures of developed countries are first retrenchment of spending, and then revenue collection. The same is true of organizations.

• Industry climate – competitive

• Workforce climate – impatient, has money to spend

• Corporate climate – ambitious

• Social climate – networked

The Gap that Nobody Knows

“Execution”, the book that hit the world in 2002, began with the discovery of the Gap that Nobody knows! The gap between what the CEO wants and what the organization achieves.

“The gap nobody knows is the gap between what a company’s leaders want to achieve, and the ability of their organization to achieve it.”

- Larry Bossidy, Ram Charan

Strategy Ability Performance

How Competencies Contribute to Business

• Revenue

• Expenses• Costs

- SolutioningVal Proposition

- Work Methods- Competencies

Business Results Operations

- Work Products-Services

- Running Costs- Fixed Costs

- Research & Innovation

- Processes- Recruitment

- Trg & Dev, PMS

Delivery

Outcomes

Strategic

Plans

Execution of

Tactical

Plans

EXECUTION

Results

Strategy

DOMAIN

CONTENTSales & Mktg

Core Processes Must Integrate for Execution

People

Strategy Operations

Customer

ProcessesCompetencies

Skills

Understanding Expense vis-à-vis Investment

# Expense Investment

1 Relatively small Relatively large

2 Close to the point of benefit Earlier than the point of benefit

3 Predictable benefits/returns Unpredictable benefits/returns

4 Relatively small time period Larger time period

Expense

Benefit( )

Investment

Benefit( )X R

Time

It is clear that anything that is spent on people’s future improved performance will have to be an investment in this moment.But it can be considered differently.

Performance Result

So What’s the Problem in Making an Investment in People?

Is it that we do not have the confidence that people will perform to their capacity…

Or

Is it that we do not have the confidence that we will be able to get them to perform to their capacity…

The Difference Between Managing & Leading

• When you see it as an expense, you can only manage the cost of the benefit, not its value. You work towards results, not necessarily benefits.

• When you see it as an investment, you work towards a return from the investment, leading to greater performance. You work towards benefits, not only results.

Results

Benefits(Investments)

(Expense)Costs

Time

Manage

Lead Results

Is L&D an Expense or an Investment?

For Managers it may be an Expense

For Leaders it is an Investment

How to protect investments in L&D

How can we be more certain of the returns from investments in L&D?

Consider the factors that link L&D Investments to Performance, and how much we know of them:

Returns

Performance

Implementation

Skills

CompetenciesMotivation

Understanding of Process

Rigor/Commitment

Value Proposition

Thank you!

Mukul Saxena

mukul.saxena@sifycorp.com

Sr.Vice President

Sify Technologies Ltd.

Chennai-Delhi (India)