We heard at the IPA Commercial Conference that there is a strong correlation between investment in talent and business success - so we know that training works.
IPA CPD Gold submissions require agencies to prove that training had an impact on their business success, and the annual CPD submissions must demonstrate that the training is directly linked to business objectives.
But good training programmes don't just create themselves; they need a commitment from the very highest levels of the organisation, they need to be focused on addressing businesses issues and they need some form of evaluation.
A good training programme starts with business objectives - what is the business looking to achieve?
The key here is to have complete agreement on the aims to be met. In a group-owned or network environment, this is often driven by parent company requirements and therefore fairly clear - some measure of top-line and bottom-line growth, often both.
Owner-managed businesses, unless they are clearly focused on an exit strategy, often find it harder to unite behind a cohesive ambition.
One area, however, that is common to pretty much all agencies is the need to improve commercial skills. The link between commercial skills and better business performance is self-evident.
Businesses may also have more specific needs such as digital upskilling, presentation skills or people management.
A full suite of commercial training would include:
- Selling and negotiation skills
- Project and budget management
- Budgeting and forecasting
- Staff utilisation, write-off and client profitability
Clearly, it is not practical to put the entire agency through a training programme covering all of the above - for one thing there would be no clients left to service by the time they had all come back from the course.
So it is a case of prioritising, of establishing the lowest hanging fruit and getting the biggest performance bang for your training buck.
Say over-servicing is an issue; you have data to establish how and where it is occurring, but staff don't feel confident talking to clients about it. This suggests that the biggest return would come from negotiation skills training for account handlers. The problem, however, could also be poor budgeting due to lack of financial skills - if so, a very different type of course is needed.
The key is to identify the true underlying problem, one way of doing this is by using the 5 Whys approach until you uncover the real cause; if you are going to spend money on fixing a problem, make sure it's the right one.
Once there is agreement on the issue to be addressed, the next challenge is to define what success looks like.
This is as conceptually straightforward as establishing the current level of performance and setting a target to be achieved and a timeframe. The real-world difficulty lies in putting figures on a target and timeframe - for several reasons:
- Behavioural change always takes longer than one feels it should.
- People will always work towards a target they are given, sometimes by hiding the problem elsewhere.
- There is a risk of people blaming other factors for their failure to achieve a target (“dog ate my homework”).
- It is harder to put targets on an activity you have never done before; you don't really know what might be possible.
Given this, the management team may find it easier initially to set a general, all-agency target of simply creating a demonstrable improvement within a reasonable time, e.g. a sustained reduction in the monthly over-servicing rate of at least a few percentage points within 6-12 months.
En route to achieving a measurable hard financial outcome, you may also wish to consider softer behavioural outcomes, e.g. an increase in the number of conversations with clients about over-servicing, as measured anecdotally.
The softer behavioural measures will give you an early indication of whether you are on the right track - you may want to ask some questions of an account handler who has been on a negotiation skills course but who is not visibly negotiating more with clients.
Ultimately, however, you will need to add up how much money you have invested into training and see whether you made a profit.
As an example, say you spend £3,000 sending a couple of account handlers on a negotiation skills course whose run-rate of over-servicing is 15% on a client portfolio of £1m, or £12.5k per month.
Reducing the average write-off rate to 12% would give you an extra £2.5k income per month - this means that after just five weeks the training has paid for itself and the agency is seeing a positive return on investment.
For a more holistic picture, you should include all direct and indirect costs, e.g. management time in selecting training providers and agreeing the course specifications, a day's lost productivity for those attending the course, the cost of travel and subsistence for attendees and so on.
If we make an assumption that all-in this comes to £10k and the same results are achieved, then the costs would pay back in four months.
Even allowing two quarters for the training to kick into effect, this would be a £5k profit in the first year and a £30k profit from year two onwards.
And finally, trained staff need to be retained within the business so that the skills are not lost through churn – but that’s a whole other topic.
Top FD tips
- Align training objectives to business objectives
- Make sure you identify drivers that will really make a difference
- Set a mixture of hard and soft measures for success and monitor progress regularly
- Be realistic about how quickly you will see results (neither too impatient nor too sanguine)
- If budgets are tight, look for things that will give the biggest, quickest results for the lowest outlay
- Use the finance department's skills to help capture all the costs and monitor the hard metrics for success
The IPA has courses on planning a training programme and evaluating training, online and free: http://www.ipa.co.uk/page/free-online-modules#.Vd76uZdnQUp
The IPA Commercial Certificate is available online and free: http://www.ipa.co.uk/cpd/onlinelearningdetails.aspx?qualificationid=17