Not too long ago, at some business or networking function, I was seated next to a gentleman who was a former President of a local bank in Florida.
As we chatted, he told me that his bank issued a good number of boat loans, which, being Florida, made sense. But he told me, his bank developed a rule-of-thumb formula for approving boat loans. It was not an applicant’s ability to afford the payments that mattered, but an applicant’s ability to afford the required upkeep. “We figured it took twenty-five percent of the boat’s value every year just to maintain it,” he said. “And if they could not spend that, in addition to the cost of the boat itself, we didn’t approve the loan.”
While spending a quarter of the boat’s value every year just to keep up with it, sounded extreme, it made sense because I had no doubt people tended to overlook that substantial part of being a part-time sea captain.
That innocuous exchange has stuck with me for a few years now because I think it applies almost perfectly to HR and talent development.
Collectively, businesses are pouring literal billions into new technologies such as machine learning and AI, data collection and management, SAAS systems, cybersecurity and upgrades to even the most basic communications and product management platforms. And that’s great. Unlike buying a boat, those purchases aren’t optional, they’re essential business investments.
Where the boat analogy holds though, is that too many corporate executives and HR leaders are buying the boat without considering the maintenance costs – not the costs of running IT or managing software applications, but the cost of properly training employees how to use it. Or rather, how to use the technology properly, get the most out of it.
Just like a boat, if you don’t invest in training your employees how to use the technology you buy, it will just sit around and rot, losing more value every day.
As the CEO of the largest and most established technology training provider in the world, here’s a rule-of-thumb akin to the boat maintenance one: for every dollar a company spends on new technology, they should spend two on training. Call it the BOAT rule – Best to Onboard AND Train. Without training, a technology project can sink pretty easily.
Thinking about a ratio of training to technology can be tricky because it’s difficult to say precisely how much businesses are spending on their technology acquisitions, upgrades and deployments. Many companies keep those things under wraps and the needs and investments vary widely by sector. But one thing is certain – business technology investments are not slowing down.
Corporate training, by contrast, is.
According to the most recent 2019 Corporate Training Report, U.S. training investments declined 5.3% compared to 2018. And the 2018 Corporate Training Report showed a drop of 6.4% over 2017. Those spending estimates include, “payroll and spending on external products and services.” It’s worth noting again – that includes payroll. That’s a problem.
A 2019 report by Harvard Business Review found that two-thirds of business leaders said they planned investments in predictive analytics as a priority and 73% of business leaders said they expect predictive technology to change the job functions of their existing workforce or create new jobs.
Yet the same report bluntly found that “Talent is Scarce; Confidence in Training Programs is Scarcer.” As examples, some 58% of those same business leaders “disagreed or strongly disagreed they had training programs to build AI or work alongside AI” and two-thirds of them, “disagreed or strongly disagreed they had a reskilling program to support employees impacted by AI.”
In other words, businesses know tech changes such as AI are coming, they’re even planning to invest in them. But they’re openly skeptical, even dismissive of the idea that their training programs are ready to handle them. Again, that’s a problem.
Maybe it’s that some training programs or providers aren’t delivering well enough or quickly enough. That’s possible. But it’s also possible that many corporate and HR officers are undervaluing the essential nature of technology training, even on what can be considered entry-level office software.
According to a survey of more than 1,500 business leaders and IT professionals that New Horizons commissioned last year, less than 40% of companies said they have organized an IT training system in place at all. And nearly 60% of business IT professionals say they cannot find time to get their employees needed training.
What’s the old motivational adage about failing to plan turns into planning to fail? It fits. You don’t have to outsource your employee training. But cutting it or putting it to the side while continuing to invest in technology is planning to fail. It’s applying for a boat loan while overlooking the costs and commitments to ongoing maintenance – just not a good investment.
Mikell Parsch is the CEO of New Horizons Computer Learning Centers which has provided workforce and workplace training to more than 30 million students since the 1980s and now runs training programs in 35 countries.
*The above article was originally published at HR Professionals Magazine.
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