Companies with a dual focus on developing human capital and managing workers well have the edge in performance and rank among the most profitable firms in their industry, new research from the McKinsey Global Institute showed. Those employers also are earnings resilient and successfully attract and retain talent, McKinsey said.

Top employers have several practices in common, the research found: They create opportunities for employees to keep learning and reinventing themselves, such as by providing more than 70 hours a year of training per employee, and by making promotions and internal transfers readily available. They also deliver a better day-to-day work experience. In addition, they promote a culture of “intrapreneurship,” where employees can collaborate and share expertise and ideas across functions. They also set the standard for inclusivity by, for example, having the lowest gender pay gaps.

Strong performance management starts with clarifying expectations and incentives and using a dynamic approach to achieving them, the report said. Companies also should have mechanisms for recognition, such as financial rewards and gestures that can make employees feel appreciated, it added. The transition can be a “difficult undertaking that requires sustained engagement and a willingness to change familiar patterns,” the researchers cautioned. “But companies that do shift in this direction have a lot to gain,” they said.

Beyond formal training programs, the top performing companies also emphasize on-the-job coaching, according to McKinsey. “Ongoing coaching and continuous feedback are key to helping employees resolve challenges and adapt the way they work as needed,” the report observed.

Employers get the best results from managers who stay engaged and give feedback in the moment, always with an eye toward goals and by encouraging employees to achieve more than they thought possible, the report explained. But many managers, especially those who have been newly promoted, lack the training to do this, experts consistently point out.

Because of this, employers should invest in coaching for managers as well, particularly if they are relying on managers to shepherd employees and company initiatives through a potential recession, various sources have said.

To equip its managers with the proper leadership skills, one company started a training program focused entirely on inclusive management. If managers are to become a positive force for change, they need practical tools and guidance that deals with real-life issues, a company spokesperson previously told HR Dive. 

A culture of learning and development is also a critical retention tool, according to an MIT Technology Review report from September. For companies that have started “labor hoarding” in response to an unprecedented talent market and looming recession, a culture of learning and development may be one way to keep workers on board, other reports have suggested.

Employees are looking for the next great work opportunity, even if their employers don’t know it, Udemy’s 2023 Workplace Learning Trends report, released in late 2022, indicated. They’re brushing up on customer management and nonverbal and business management skills, among others, according to the report.

But creating the means for trusted employees who already know the business’s practices to grow and add new skills can directly address this, the McKinsey report suggested: The companies with the performance edge also had moderate rates of attrition, it found.

After reporting success with its returnship program in select cities, PepsiCo Beverages North America will expand the offering to include 12 to 15 positions in supply chain, sales and commercial fields — more than double the number of positions available in 2022, the company announced.

The program provides returners professional development, networking and mentor support. Successful participants may also receive a full-time job offer upon completion; 80% of program participants in 2022 accepted such an offer, the announcement said.

"Across PepsiCo, the first cohorts from the Returnship continued to impress us throughout the program. Their previous experience translated into meaningful contributions to the business and informed our decision to make a particularly high percentage of full-time offers," PBNA South Division President, Heather Hoytink, said in a statement.

In recent years, returnships have emerged as one way to bring caregivers — especially women who take time off to care for children — back into the workforce. PepsiCo’s program specifically targets women with at least five years of work experience who have taken at least two years off for caregiving.

Various companies, including Amazon, IBM, Microsoft and Schneider Electric, offer some form of returnship, many of them specifically targeting women. Many women were driven out of the workforce during the pandemic amid the closure of day cares and schools, putting immense pressure on caregivers to stay at home. 

But many of those women who left want a way back into the working world, various studies have shown. While 1 in 5 women left the workforce during the pandemic, according to a study released in 2021 by Metlife in partnership with Rainmakers CSI, nearly two-thirds of those who left planned to return. Returnships give women a chance to recoup lost time, experts previously told HR Dive, and give employers an opportunity to fill talent gaps with skilled workers.

Sponsored content

By Visier

Since an organization’s most expensive line item on the balance sheet is its workforce–and L&D has the responsibility to lift the capabilities of the entire organization–it has never before been this important for learning leaders to show the impact their programs have on business goals.

Unfortunately, many learning leaders are still struggling to tell their ROI story. According to the Association of Talent Development (ATD), only 35% of the learning and development community believed their efforts were helping their businesses meet goals. Additionally, only 36% of learning professionals evaluate business results from learning, while the other 64% of learning leaders aren’t making the effort at all to measure the result of learning programs on the overall business goals.

Forget about Kirkpatrick’s Model for Learning Program Evaluation

A common way of assessing program effectiveness and value is to use the pervasive Kirkpatrick’s four levels of training evaluation. This model was created 50 years ago and outlines four levels of evaluation:

• Level 1: Participant reaction
• Level 2: Testing for new learning
• Level 3: Assessing for changes in behavior
• Level 4: Impact the training has had on the business

With the exception of level four, all of these are lagging indicators, meaning they capture what’s happened after the training has occurred. 

Unfortunately, it’s difficult to go beyond level one: participant reaction.

This is because L&D professionals need a combination of their learning management system, their HRIS data, engagement scores, learning assessments, and feedback surveys. Once this data has been pulled from each system–a process that can take weeks, if not months, of manual work–there’s still a question about the direct correlation learning activities have on company-wide goals since there are other people initiatives beyond learning that need to be considered.

Pulling all this data together for analysis can seem daunting, but there are some sophisticated learning analytics solutions that seamlessly bring all the data in these systems together, enabling you to focus on answering your most critical L&D questions.

Assess ROI by Going Beyond Learning

In order for the learning function to be a trusted strategic partner, we must show broader employee development and correlation to business impact over time. To do this, answer questions that look just beyond L&D, such as:  

1. Does learning impact retention?
2. What are our future certification requirements? 
3. Can we forecast training needs? 
4. Do we have compliance risks?
5. When will new hires be fully ramped?
6. Does learning impact promotions?
7. Do training programs drive productivity?

These are the leading indicators that help draw a direct correlation to how learning is impacting the business going forward–not looking back at evaluations on training events that have already happened.

Answering these questions goes beyond Kirkpatrick’s model, providing a broader picture of employee development over time, as well as valuable insight for future forecasting and planning to ensure targets are met and the business is not at risk.

The Way Forward

Is your desire to help people be the best they can be–while aligning with business goals? If you’re relying on anecdotal feedback, or a stack of completed forms to show how impactful your initiatives are, history—and decades of experience from your peers—prove that the status quo is not going to lift your role to a strategic level.

As we continue to slide into an economic downturn and L&D spend continues to be significant, delivering learning program impacts to business leaders will not be optional—it will be the cornerstone of true L&D strategy.

HR pros have to pitch budgets just like everyone else. And while employee learning and development seem like a given, especially in a tight labor market, it’s not always a slam dunk.

There are ways to sway a CEO, sources say, including pointing directly to how a program will meet a business need, using data the right way and finding influencers within the company to help you make your pitch.

Tie the request to a business need

The good news first: many L&D budgets have survived the pandemic. According to a joint TalentLMS and Society for Human Resource Management survey, more than half of 356 HR managers said their L&D budgets increased in the early years of the COVID-19 pandemic, and 67% said they expected this trend to continue.

But “more than half” still isn’t everyone, and L&D doesn’t exist in a vacuum, especially when working for a C-suite that’s skittish about a potential recession. That’s why the projected results of a proposed L&D initiative should point to how it will strategically push forward a business need, or solve a business problem, said Megan Dillon, senior manager in learning and development at Q-Centrix.

“Oftentimes you can point back to the mission and vision of the company,” she said, and how the proposed ask will strategically work towards those core tenants. Or get more granular about connecting the proposed actions to how the company is doing and where the company’s leaders want it to be, she said. So if an L&D initiative would save costs, say it. If it would generate revenue, say it. And show how.

That’s especially true for any L&D initiatives targeted at employee recruitment and retention, said Doug Coffey, assistant teaching professor of human resource management at the Rutgers School of Management and Labor Relations.

CEOs look at L&D as a way to invest in employees, he said, they “use it as a retention tool or to gain competitive advantage.”

“Building succession management and a consistent workforce are more important now in this setting,” Coffey continued; any return on investment that can be attached to employee attraction and retention can give it an extra boost in a CEO’s eyes.

Use data, but tell a story

Putting numbers behind your ask can help a CEO justify your budget request. What those numbers should depend on is the specific initiative and industry sector. So if an L&D program will generate revenue or increase a company’s specific KPI or increase productivity, say so in the request, said Dillon.

“Maybe you’re solving a problem, like X amount of folks are doing something that is a potential hazard or creating additional cost spending for an organization,” she said. “Show that your learning initiative is going to decrease the amount of times that folks are doing this thing they shouldn’t be doing, and how you’re going to save the company money that way.”

And when you have numbers about that specific initiative, report back. “Businesses care about numbers. You need to showcase and tout [success] just like someone on the operations side would do,” Dillion said.

Whatever statistics you use though, they’re usually not enough to stand on their own, said Coffey. He teaches students who are good with number crunching but “they present it more like an elevator analysis,” he said. “That’s not really telling any kind of story.”

Instead, think of your L&D budget request as a movie, with the story of why you want that fund as the leading actor and the data in a supporting role. “You have to articulate it in words, but then you support it with data,” he said.

Influence more than just the CEO

While a CEO may make the final call, they’re often not the only one who will be giving input on a final L&D budget decision. Those managers whose departments will be affected by any L&D program also should be on board.

“It’s really important for L&D folks to know and understand who the stakeholders are and who is influenced by them,” said Dillon. Making sure you know what these managers truly need, and getting their input on any proposed learning and development initiatives, can help HR make a push to a CEO as a team.

Influencers may not be tied to the ask either, she added. “Maybe they’re not going to be the ones who are spending money to get training off the ground. Maybe they’re going to be partners with HR and another business unit or function,” she said. HR and L&D pros should “have a better understanding of the level of influence,” and see how they can “cheer you on and support your initiative” where appropriate.

Workers rank professional development and training opportunities highly among their list of criteria for evaluating prospective employers, but comparatively few say their employers are helping to improve their skills, according to the results of a recent survey by The Harris Poll for the American Staffing Association.

Slightly more than one-third, 39%, of the 2,042 U.S. employee respondents said their employers were doing so, while 80% said they considered professional development and training offerings to be important when accepting a new job. A majority of respondents across age groups said they considered such opportunities when accepting a new job.

Additionally, more than one-third of respondents said they were concerned that automation would cost them their jobs. This share of employees affirming this concern was higher among millennials and employees who identified as Hispanic or Latino, ASA said.

The survey's findings present an opportunity for employers given recent research into the talent attraction and retention benefits of a robust training and career development program.

For instance, an October report published by TalentLMS analyzing the job preferences of technology industry employees found 91% of survey respondents wanted more training opportunities from their employers. That came alongside the company's other finding that 75% of employees said their employers placed more focus on attracting new talent than investing in current talent. The problem may be even more acute for younger workers; a joint report this month by nonprofit Jobs for the Future and the Taco Bell Foundation found that only a small contingent of young adults in the U.S. had jobs that offered opportunities for advancement.

It is not necessarily news to employers that such opportunities can build strong employee-employer relationships. More than half of manufacturing employees under the age of 25 in a survey last year by the Manufacturing Institute's Center for Manufacturing Research said they stayed in their jobs because of training and development opportunities.

But sources who previously spoke to HR Dive have noted that such opportunities need to be accompanied by real career paths, including opportunities for advancement internally, as well as forward-looking conversations between workers and their managers. Employers also have expanded the range of subjects employees train on by pursuing strategies like cross-training.

Employers are using formal coaching programs to prepare workers for management positions, according to Nov. 28 research from the Association for Talent Development.

While only 38% of respondents to ATD’s survey said they use formal coaching, others expressed a plan to adopt such programs during the next two years.

Employers with formal coaching programs said they primarily use them to improve workers’ leadership and management skills. The next most-frequently cited benefits were improved performance and improved job satisfaction.

Respondents said they were most likely to offer internal coaching to employees in the leadership pipeline as well as to high-potential employees. External programs were most often used for executive coaching.

Employers without such programs told ATD a number of barriers that stand in the way. Among other things, respondents cited time and budget constraints, knowledge on how to administer a program and a lack of support from leadership.

While learning and development budgets have generally remained strong during the pandemic, the predicted recession could put a damper on HR’s plans. Sources recently offered HR Dive details on three steps to pitching an L&D budget: point directly to how a program will meet a business need; employ strong data; and find influencers within the company to help make the pitch.

Family members of JetBlue employees can now tap into the airline's resources with the "Gateway Families: Flight Ops" program. Building on foundations of previous L&D programs, this recruiting initiative gives children and step-children, spouses, siblings and parents of JetBlue crewmembers an expedited path to become a JetBlue first officer. 

Overall, JetBlue's upskilling approach touts education for both internal and external audiences. These programs were all born from Gateway University. Founded in 2008, this pipeline initiative allows college students to secure experience, a direct path to JetBlue officership and a mentor to aid them in the process.

In 2021, the airline added its first historically Black college or university, Hampton University, and its first Hispanic-serving institution, Inter American University of Puerto Rico to the JetBlue Gateways program. 

Although JetBlue has been helping careers take flight for a while, the company's continued investment in learning and development is a reminder to talent acquisition professionals: upskilling can be one answer to a company's talent problem. 

In JetBlue's case, 12% of pilots newly hired in 2021 were funneled from a JetBlue Gateways program. The company's upskilling and retention efforts are noteworthy, particularly because the airline industry has also been plagued with a labor shortage due to COVID-19.

American Airlines CEO Doug Parker testified before Congress back in December 2021, telling the Senate Commerce, Science and Transportation Committee, "We need people to want to pick up additional shifts." Speaking to the slew of flights canceled due to winter storms, the CEO explained that American Airlines had enough pilots and staff to run operations under normal circumstances – but not with inclement weather conditions. 

Scott Kirby, CEO of United Airlines, said his company was more cautious with scheduling flights, due to the lack of resources. He explained that pilot hopefuls typically spend $150,000 to receive training – six figures that aren't typically covered by student loans, he added. The two CEOs, as well as Delta and Southwest leadership, told Congress they're all taking steps to train more pilots.

"We know that there is no single route to a career in aviation, but we do believe there should be a path available for anyone with the aptitude and passion to pursue it," JetBlue CEO Robin Hayes said in the March 2022 press release. "Our Gateway programs have been removing many barriers of entry that often ground talented individuals before their dreams can even take flight.|

One expert told HR Dive last year that a culture of learning is crucial for hiring and retention. For example, job listings that ask for "self-starter" candidates or those that can "hit the ground running" can often scare away desirable candidates. In essence, if those buzzwords are red flags for job candidates, green flags look more like an inclusive company culture and a clearly demonstrated interest in employee development.

The cost of recruiting, vetting potential hires and onboarding the new employee can be steep; nurturing the career aspirations of existing employees may end up being more cost-effective for HR departments.