The Role of Learning & Development in Digital Transformation
More than ever, the alignment of executive leadership and HR practices is crucial to success.
Some organizations see technology as an investment and others see it as an expense, and a failure to invest in the future could lead to mediocracy or business failure.
Value creation can be measured in an organization by evaluating the combined cohesiveness between the mission of the company and its relationship with its employees, stakeholders, and customers.
Global business is rapidly changing and the competitive landscape is more saturated than ever. Industry 4.0 is upon us and digital technologies are quickly becoming the centerpiece of HR and business strategy. More than ever, the alignment of executive leadership and HR practices is crucial to success. In respect to the successful implementation of a digital transformation (DT) strategy, HR should first assess what skills are needed, identify training objectives, and then analyze what the best means for acquiring those skills may be. For many companies, this will be a blended strategy of hiring, upskilling, and reskilling.
The pandemic accelerated DT projects causing an increase in demand for resources. Unfortunately, the labor market is not upskilling or reskilling workers at a fast enough rate, which is accelerating this talent gap. HR and business leaders have a choice to make. They could develop talent internally, pay premium rates for talent acquisition via recruitment agencies, or outsource required skills by partnering with technology vendors or their network of verified authorized resellers (VARs). Ultimately, business value needs to be the center of DT and it can be measured by evaluating the combined cohesiveness between the mission of the company and its relationship to its employees, stakeholders, and customers.
According to a recent email study conducted by Dun & Bradstreet cited in Training Magazine (2022) that generated over 142,000 responses, the average training time allocated on a per-employee basis has increased over the past six years. With larger budgets and more resources at their disposal, large organizations (10,000+ employees) have increased their average training hours over the past two years (2021-2022) compared to the three years prior to the COVID pandemic (2017-2019) by 43%, whereas smaller organizations have only increased training time by 14% in the same time period. Smaller organizations with limited resources and capital likely prioritized revenue-generating or support activities that were more impactful to their top lines. The largest variation in training time allocated was with midsize companies (1,000-9,999 employees), where training time increased by 71%. One could infer that through a cost-benefit analysis, midsize and large companies realized that optimal profitability and sustainable growth could be best achieved through training and development.
In 2022, the average spend per employee for training was $1,207 up 12% from 2021. Training costs per employee are significantly higher in small organizations than midsize organizations due to a higher ratio of staff per 1,000 learners. Small companies averaged a learner-to-trainer ratio of 12:1, whereas large companies averaged 5:1. Large companies spent 2x more in training per learner in 2022 than in 2021 with many respondents citing an increase in salaries for trainers. The largest increases in training budgets were reported in the retail/wholesale industry and manufacturing. These increases were to support a wider scope of training, additional training staff, an increase in the number of learners, and new technology/equipment. Reported budgets that decreased were mostly due to COVID-19 budget cuts or a reduction in employees.
Projected Funding for Learning Areas Next Year
The training topics most likely to receive more funding in the future included management/supervisory training, onboarding, and interpersonal training. While impactful, these training topics do not address the technical skills that are lagging behind demand. As reported in Global Tech Trends (2022) the most in-demand tech skills now and in the future are IT technicians, cloud computing, AI/machine learning, and data analysis. Five of the top ten skills in demand are all related to data protection or security, and executives have recognized that cyber security is the number one strategic priority and threat to their businesses in the future. This is precisely why DT is accelerating so quickly and why businesses need to prioritize advancement in technology. The largest investments in DT as reported by Mehta & Senn-Kalb (2023) are seen in the industrial manufacturing industry with over $318 billion allocated to these projects. The chemical process ($289B) and retail consumer goods ($214B) industries are the second and third-highest investors in DT.
Until the technical skills gap starts to shrink, HR will play a pivotal role in employee development as DT efforts storm ahead. As technology evolves, so too will the people, and continued investment in the growth of people will result in greater business success, happy customers, and job fulfillment.
