Archives for November 2013

On the Money at Western Union

Western Union sent its last telegram in 2006. Since then, the 162-year-old company has become the world’s largest money transfer company, and is changing its culture, competencies, and business model to stay competitive in the tough global remittance market. Its digital money transfer operations are the fastest growing part of the business, and its product line now includes such tools as stored-value cards and e-wallets.

Hikmet Ersek has been CEO of Western Union for three hectic years, during which he made big investments to grow the company’s consumer-to-consumer business and go deeper into international business-to-business payments. In 2012, the company moved more than $160 billion between consumers and businesses around the world. With long-term shareholder value always in view, Ersek has not been afraid to shake things up, nor to use employee learning to the fullest.

We spoke with Ersek at the Denver headquarters of Western Union.

Western Union has been through a lot of change during your tenure as CEO. When you’re in a situation that requires tremendous change to succeed, what do you expect from the learning function?

We’ve been through a lot of change, driven by our customers, whose needs are changing constantly. Not many companies are as global as we are. We face changes happening in different parts of the world, at different speeds, in different ways. Adapting our business model to deal with those global changes is difficult, especially if you are growing like we are.

So we had to take some big, bold, risky steps to help the company survive and to drive long-term shareholder value. The challenge was how to make Western Union a customer-centric company when historically it had been a transaction-based company. One thing I said to my learning organization was that this couldn’t be driven from the top. Becoming customer-centric had to be understood and embraced by everyone.

Every employee, every year, has to have at least one customer experience, and many do a lot more than one. Even our leaders have to experience real transactions in the marketplace. I’m on the road 200 days a year. Sometimes I jump out of my car and go into a Western Union location to talk to the frontline associates and customers. I do this to set an example about putting the customer first. We teach this at WU University as well.

Many CEOs start their meetings by having the CFO review the numbers. That’s normal, but I don’t do that. I start every meeting by having one of my top executives tell about last week’s customer experience.

Recently I sent my most senior team to Turkey to experience what it’s like to send money from a different part of the world.

The most famous customer in this company is my father. He lives in Turkey. Every time I send him money, I ask him to go to a different location to pick it up. He’s a 90-year-old guy and he is my best mystery shopper.

So how do you know that the learning function is succeeding—are there any particular metrics you evaluate?

I’m a metrics-driven person. Before I joined Western Union, I studied at GE with Jack Welch. I’ve also had Six Sigma training, so I’m very metrics-focused. These initiatives we’ve implemented to change the company must have a financial impact. They must drive shareholder value.

Our organization is structured around business lines and growth enablers. I tell HR, which is a growth enabler, “You are going to be measured just like any of the business lines. One of my key concerns is top-line growth, so your training and development focus needs to be on revenue generation.”

The changes to our company also have been implemented in our scorecards for all 9,000 of our employees. Targets and bonuses are determined by whether the changes we need are happening or not. It’s hard to make a serious change without such metrics. You need metrics for every action that affects the change. I look at these metrics daily and I dig into them.

Today, our stock is back at about $18. There is also more trust among the shareholders. So success is already happening.

Can you isolate the influence of training on other major initiatives?

One example is compliance. When I first took over, the general counsel was walking into my office every five minutes to tell me about another compliance issue. I quickly realized that compliance could be an opportunity instead of a challenge. If we invested in creating a culture that

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excelled at compliance in over 200 countries, that investment might have a short-term impact on results, but it would ultimately improve results in the long term.

All 9,000 employees went through a learning curve to understand regulatory compliance, how it impacts the company, and most importantly, how it is an opportunity for us. We had 11 training sessions on compliance.

We also brought our top 100 leaders to Washington, D.C., for a two-day training program on compliance. We brought in experts from our industry and other industries—from the competition, from banks, and from the government. These were not just U.S. experts but global experts. This was a big step in helping us create a culture that supports compliance. Some of our people used to think of compliance as a necessary evil but now they see how it’s going to differentiate us from our competition.

I hate bad money. I want only good money. One bad transaction can destroy our reputation. And we do 28 transactions a second.

I feel very confident that long term, our compliance will be best-in-class.

Western Union is moving into more technology-based ways to transfer money. Although the digital business is only about 3 percent of the company’s $5.6 billion total revenue, it is the fastest growing. What are the training implications of this change?

In our business, every transaction has two customers: a sender and a receiver. That means each transaction might involve two different technological environments, two different regulatory requirements in two different countries, and two customers with very different needs.

Someone from Gabon working in Silicon Valley might want to send money back to his family in Gabon using his iPad. But the person receiving the money in Gabon might want cash to pay for a doctor. Figuring out how to meet those two different needs became an important thing for me, and it’s another thing that differentiates us: offering our customers choice in how they want to move money.

To help make progress toward that goal, we opened an office in San Francisco. Every company that uses technology opens an office in San Francisco. That’s a slam dunk; the best technical talent is there. However, I asked the head of our African operation, a Moroccan who built our business in Africa, to go to San Francisco and build our technology innovation center. It was very important to have a person there with international leadership skills. That office now has almost 200 employees. It generated more than $150 million in revenue last year, and transactions were up 60 percent in the first half of this year.

What lessons from the technology center did you take back to headquarters?

The San Francisco office is almost nothing like the classic offices we have in Denver. There are almost no walls. Everyone can see and hear what’s going on. The open plan creates a special dynamic. When I visited, people were very engaged in their work. One guy was so engrossed that when I said hello, he just reached out and gave me a fist bump while he kept on working.

We decided to bring some of those ideas back to the headquarters environment. But headquarters offices are the hardest to change. There is the bureaucracy. There are processes that people want to follow. There are people like me who say no to things and ask for additional documentation.

So we started by changing one floor in Denver where we combined marketing, products, and technology to create the synergy to take products to market more quickly.

We also are going to open a learning center here in Denver. It will use many forms of new technology to help us deliver learning to our 520,000 locations around the world.

What lessons have you learned from the experience of leading Western Union through some major changes in just a few years?

The first lesson is that everything starts with the customer and you must understand what the customer needs. It’s more than a theory. You have to live it.

The second lesson is to empower your people to deliver what they are supposed to deliver and then trust that they will.

Lesson number three is to surround yourself with people who are smarter than you are. This is a good tip for CEOs who have big egos because if you surround yourself with people who are better than you are, they make you shine.

I think that knowing your weaknesses and talking about them openly is a leadership skill for a CEO. I am not shy about admitting my shortcomings. For example, my English is not good and I’m not the best communicator. But our chief communications officer, Luella D’Angelo, coaches me. We don’t have formal mentoring programs, but I am constantly coaching people on my team about how to stretch themselves. And they in turn can coach me.

I have to say that I’m not an easy person to coach. I wouldn’t want to report to me. I’m tough and I know the business, so when people come to my office they’re pretty well-prepared.

The fourth lesson is to believe in your heart that the work of your organization has value in society. I’m fortunate to run a company where every transaction has the potential to change a person’s life. Every time we send money for someone, there is the possibility that it may be life-changing. That has opened my view of our work. If you understand that, the rest is easy.

Another lesson I’ve learned is to keep things simple. Although people say our business is very complicated, I try to keep it simple. You can’t put a product into the field that you think is cool but is so complicated the customer has no idea what it is.

What else about learning’s impact on the business do you think is important?

I believe in promoting people from within. And I also believe that internal promotion can only be achieved by learning. The learning curve takes time. It’s not a matter of taking a few courses. It’s about implementing learning on a day-to-day basis and measuring the results that learning produces.

Learning cannot be isolated. It has to be integrated into business processes. Many companies get that wrong. They consider their training budgets in isolation from the integration of learning into work. Good training pays for itself in results.

Do we have a culture that offers perfect learning experiences? No. Are we getting there? Yes.

What behaviors does a large, global company need to bring about big cultural change and business growth?

Most corporations create behaviors from the top. The leaders say, “Here are our values. Here are our preferred behaviors. Implement them everywhere.” But everyone has to live them to make them work.

It is particularly hard to do that in a large global company. How are you going to implement the same behavior in India, Morocco, Istanbul, London, and Panama, for example? You need leaders with extreme cultural competence or the capacity to learn. Our cultural competency is very high compared to other companies, but are we there? No. Are we sometimes seeing the world with a U.S. view? Yes. Do we believe that behaviors created in Denver will work in China? No.

That’s why we spent time working with our employees around the world to create a set of behaviors that reinforced one of our most powerful assets: our globally diverse people.

We launched the “WU behaviors” last year, and they have had significant impact on driving culture change within the company.

Reprinted from T&D Magazine

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Affordable Care Act Accelerates Decline of Retiree Health Benefits

The steady deterioration of health care benefits for retirees is accelerating under health care reform as employers begin sending retired workers to private insurance exchanges for coverage.

The Affordable Care Act “has made retiree coverage more expensive for employers,” said Steve Wojcik, vice president of public policy for the National Business Group on Health in Washington, D.C.  “That’s one of the hidden realities of the ACA.” He said that health care reform “is making profound changes” in the retiree health landscape.

In September, IBM Corp. and Time Warner Inc. announced that they are moving retired workers to a private health insurance exchange, giving them money to buy their own coverage. Starting Jan. 1, 2014, the companies’ Medicare-eligible retirees will purchase health insurance through Extend Health, a private exchange owned by consulting firm Towers Watson & Co. The Utah-based company has signed up about 300 employers, including Caterpillar Inc. and DuPont.

More than 60 percent of employers are re-evaluating their long-term retiree health strategies because of health care reform, according to a recent Aon Hewitt survey of 548 companies.

Health Benefits Data November

And of those firms that have decided to make changes for Medicare-eligible retirees, more than 40 percent will move them to a private insurance exchange. But it doesn’t mean that employers “are throwing retirees to the wolves,” according to the survey, which shows that 66 percent of companies plan to provide expert guidance to retirees shopping for coverage on an exchange.

Aon Hewitt runs two corporate health exchanges, one for active employees and one for Medicare-eligible retirees called Aon Hewitt Navigators, which serves about 50 employers, according to a company spokesman.

“Until now most retirees only had to worry about a couple of health care options,” said John Grosso, head of Aon Hewitt’s retiree health task force. “Now employers are explaining that there are a wide variety of options in a post-reform environment that could be a better fit. There are many more choices in plans, greater competition and federal subsidies to offset costs. Most employers are looking to preserve the value of their benefits. It’s a change, but it doesn’t have to be for the worst.”

Health Benefits Data2 November2013

But communicating these changes to retirees is a challenge.

“Employers going in this direction are embarking on a fairly comprehensive communication strategy,” Grosso said. “They are giving employees far more choice in designs, premiums than are available in a group plan structure. They need to explain the merits of the subsidies and the flexibility to be had in an exchange. There needs to be communication before, during and after enrollment.”

While retiree health benefits for new hires are becoming a thing of the past, longtime retirees are not likely to see any changes to their coverage, Wojcik said.

“That’s the last group of people employers want to make changes for,” he said. “The longer you’ve been retired and the longer you’ve been on the plan, the less likely your former employer will change your coverage. It’s much easier for an employer to eliminate retiree health benefits for new hires. For those close to retirement it’s a little harder, but easier than changing it for retired employees.”

Rita Pyrillis is Workforce’s senior editor. Reprinted from Workforce.com

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Surviving ‘Training Heartbreak’ Via Simple Coaching

My dad was a trainer and not always thrilled about it. I never knew this when I was a kid, of course. Like many ’70s era dads, sharing his feelings and experiences was not a priority. He did “something in Personnel,” my mom said.

But now it’s the 21st century and Dad is all about sharing and advice. “Training is a heartbreaker,” he now says. Really, Dad? Thanks for letting me know 30 years ago when I was making career choices, I think to myself. But I just ask him why.

“Because you give it all you got, and people don’t want to be in the training room in the morning, but then they learn something by the afternoon, and then they pat you on the back as they leave and make profound statements about how they’re going to CHANGE and you’ve made their lives better and easier somehow.”

“Sounds good to me,” I say, already knowing where he’s going with this.

“And then they go back to work,” he says, “to the chaos of their busy lives, and that big CHANGE in behavior you were both so sure about and hoped for? Never happens.”

“And it’s their manager’s fault.” That’s his parting line and then we drop it and talk about cars.

He’s right, of course. That middle manager—who attended the training right along with his direct report—could have followed up. He could have coached by providing simple feedback and recognition.

But he got busy, too.

Why Managers Don’t Coach

The sad thing is that coaching doesn’t have to take that much time in a manager’s day, and the ROI is enormous.

I understand the busy part. As I’ve traveled the country during the recession, it seems as if managers are busier than ever. It certainly seems as though they’re being asked to do more with less. The good news is that coaching doesn’t have to be a formal process. It can take three to 10 minutes to deliver a great coaching interaction. It can be highly informal and take less than 10 minutes a day.

Or it can be done all at once, say, once per week, in a single, regular 45-minute meeting with an employee. It can be done in groups or individually. It can be done. And not doing it can make a manager miserable. Performance might improve over time without coaching, yes, but it will be much, much slower and more painful.

Other than time management, there are other reasons why managers don’t coach:

  • They don’t see themselves as developers of talent, but rather operational managers only (the classic Leader vs. Manager juxtaposition). It’s a truism that you’ll get out of people what you put in and true leaders will want to coach to get more out, to make their direct reports, and themselves, more successful.
  • They fear confrontation, however productive it might be. Coaching might get into feelings and facing an employee’s true motivation, or lack thereof.
  • They fear failure. “What if I coach and nothing changes?” is the old, better-not-to-try-at-all approach.
  • They think their team is doing OK. Is OK enough? It sort of goes against common sense to assume that resting on your laurels will be motivating and stimulating over the long haul. Doing OK is OK, but high performers want to be on a high-performing team that continues to seek new, higher levels of achievement.

And the biggest reason managers don’t coach? Love. OK, maybe more like and respect. Managers are fundamentally good people and they like and respect their teams—so much so that they go into protective mode.

“My team,” they say, “is overwhelmed as it is. Introducing new behaviors and expecting us to train and coach to them is a D.O.A. idea because somehow it suggests my team has the time to experiment with new behaviors (“yeah, right—although they would if I had more people”) and my team isn’t good enough as they are (see the bullet, above, on resting on laurels), and, after all, you—The Man—would ask them for the moon if I let you, but I’m here to protect them and their feelings and their work/life balance.”

There are legitimate parts of all these reasons not to coach. Managers have a tough job. It’s a difficult balance. And yet no team wins without a playbook (that’s partly introduced in training) and no playbook will be executed well without a coach. Snap!

As for the ROI of coaching, it can be a block, too. Sometimes you can’t put a finger on an exact number. In sales, it’s easy. Elsewhere, not so much. And yet we know that even if ROI can’t be proven scientifically, we likewise know it can be felt because managers have felt the momentum of effective performance before.

In the end, it’s simply about making people feel comfortable with that new thing that was introduced in training. “New” tends to be uncomfortable and the entire study of change management makes one thing clear: Change that is managed is more likely to be accepted, accepted faster, and sustained over the long term.

How to Coach?

There are dozens of simple frameworks for providing feedback and/or recognition. They’re all over the Internet and they’re free and they’re similar. If you can even start managers down this habitual path, you’re less likely to experience the heartbreak of training. A mere sample framework is the 5 Ps model:

  1. Prepare. The manager gives herself time to observe the employee behavior and prep for the next four Ps.
  2. Purpose. Once she starts providing feedback, she steps back and reminds the employee (and herself) what the end goal is.
  3. Perspectives. This is where coaching is a conversation, not a lecture, and this where most managers fall down. Employees remember their execution of the behavior as well as you do. Let them tell you what went right and wrong first. This addresses, in many ways, the manager who’s concerned about confrontation because there’s nothing less confrontational than standing by and letting employees critique themselves.
  4. Plan. Manager and employee have looked at what can be the better behavior and better result for the next time—so what’s the plan to get there?
  5. Progress. The manager checks her employee’s progress. Continue to follow up. And, more important than anything else, give someone a huge pat on the back when he or she has achieved both the purpose and the result discussed in the previous coaching conversation!

Of course, the preceding was the quickest, dirtiest summary, but you get the idea. And there’s plenty of training out there to learn more.

Now, returning to my dad’s conception of training as potentially heartbreaking: Once a manager knows how to coach, that doesn’t mean he’ll actually do it. It represents a change in routine, after all, and we all know how we feel about change. If a manager doesn’t want to coach, a trainer or training company can offer to coach for them. You say they’ll say it’s “too expensive”?

Maybe. But it’s also expensive not to coach. Think of the gazillions of dollars in lost opportunity costs

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from training that is never properly sustained or followed up—think about all of that heartbreak. Therefore, it’s worth asking the question. Any service that will protect the training investment is probably worth it and any service that’s very likely to increase performance will pay for itself. There’s no better way to avoid heartbreak than following up on your own training. So ask.

About the Author:

Richard Lampner is a trainer and account manager for Signature Worldwide, a Dublin, OH-based company offering sales and customer service training, marketing, and mystery shopping services for a variety of service-based industries. For more information, visit www.signatureworldwide.com.

Reprinted from Training Magazine

 

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Get Rid of Bad Hires Quickly through a ‘No-Fault Divorce’ Process

Everyone knows that the average hiring process is less than perfect. In fact, most selection processes have high failure rates (i.e. even after months or even years of “assessment,” nearly 60 percent of the marriages in California end in divorce).

So it shouldn’t be a surprise that as many as 46 percent of new hires fail within 18 months, according to Leadership IQ. Research also reveals that 61 percent of new hires are unhappy because they feel that they had been misled during the hiring process, according to Harris Interactive. The Recruiting Roundtable similarly reports that 50 percent of the hiring organizations or the new hires themselves regret the decisions they made. Shifting to non-exempt workers, research by Humetrics reveals that 50 percent of all hourly employees quit or are fired within their first six months.

Given this high rate of mishires, it’s surprising that most corporations don’t even track mishires who must be terminated or encouraged to resign. Even fewer organizations have a formal “early release process,” like a no-fault divorce for identifying bad and frustrated hires and releasing them as soon as possible.

Why You Should Release Weak Hires and the Disgruntled as Soon as Possible

Some of the reasons why you should have a formal effort to release mishires include:

  • They are unlikely get better – one major network equipment company that thoroughly researched the issue determined that new hires who are still weak performers after six months on the job have an extremely small chance of ever getting better. If that rule holds for your corporation, it makes sense to cut your losses at the six-month point and move on.
  • They take up everyone’s time — weak hires may take up to 17 percent of the manager’s time that could be spent on employees who have a real chance for improving. They will also waste the resources of the training and performance management teams that will try in vain to get visa mishires up to speed.
  • Customers can tell — if these weak new hires have interactions with customers, their negative impacts after their first six months may equal or exceed their yearly salary.
  • They frustrate coworkers — coworkers can quickly get frustrated with having to constantly help new hires who never appear to “get it.” Keeping weak performers may also frustrate and drive your top performers into job search mode.
  • They delay the hiring of a quality replacement — keeping a weak performer eliminates the possibility of refilling the position with a top performer. In addition, if you put off the releasing of the weak new hire, you also delay the time until a replacement hire can be fully trained and at work meeting their minimum productivity levels.
  • They may “check out but never leave” – failing to release a weak hire may “doom” both the firm and the hiring manager to 10 to 20 years of weak performance. They unfortunately may stay “forever,” because their weak performance record will make it unlikely that they will ever be recruited away by another firm.

Approaches for the Quick Identification and Release of Weak New Hires

There are at least eight approaches that you should consider that facilitate the identification of weak new hires and their quick release. Those approaches include:

  1. No-fault divorce after six months — Cisco once offered a “no-fault divorce” option that would still work today. Under the concept, managers could offer several months of pay and a good reference if their poor performers at the six-month point agreed to resign after being told there was an extremely low probability that they would succeed if they stayed on. If they refuse the offer and stay until their one-year evaluation and failed it, they would get no severance money and a bad reference. This gives them a powerful incentive to leave early. Incidentally, accepting the package means that they must sign away their right to sue. Having the no-fault divorce as an option may also encourage wavering potential candidates to accept your companies’ offer, because they know up front that even if they fail in the job, they will have a palatable “out” available to them.
  2. Extended onboarding — some firms use an extended onboarding process to better identify hiring mistakes. Facebook (six weeks) and Zappos (four weeks) use this intense onboarding process as a secondary assessment level. It has the advantage of giving much more time to accurately reveal not just their skills, but also their team and cultural fit.
  3. Pay them to leave after onboarding – it may seem expensive to pay weak hires to leave. But if you calculate the damage that they can do, the idea turns out to have a high ROI. Zappos offers all new hires a $3,000 bonus to quit at the end of onboarding if they realize that this is not the job for them.
  4. Use initial training as a screening process — if there is an extensive new hire training program, make it an “early mishire identification process.” HR must also learn how to statistically project the probability that the new hire will succeed/fail, based on their training scores. Those with a low likelihood of further improvement should be released immediately.
  5. Consider a more rigorous probation period — almost all corporate “probation periods” are ineffective, because they are unstructured and they are supervised by managers who are naturally reluctant to fire someone who they just recently picked themselves. A more effective approach is to require managers to set periodic objective assessment points, with passing scores, and to report the subsequent rating of each new hire to HR. Human resources should also make managers aware of the low probability of success of a weak initial performer getting better and the economic costs of stretching out their release.
  6. Use a mentor — some firms like Facebook provide every new hire with a mentor. That new hire mentor can be trained as an assessor, so that they can advise the new hire and the manager whenever they deem the new hire to be a lost cause.
  7. Allow the team to vote them out – Whole Foods has a unique approach that allows team members to “vote” at the end of an assessment period on whether to make the new hire a permanent member of the team. Because there is a team-based performance reward, it makes sense to give team members a voice on whether to accept weak performers or “bad-fit” hires.
  8. Encourage the dissatisfied to leave quickly — because 61 percent of new hires may be unhappy with their choice of a new job, it makes sense to take proactive action to encourage those who are dissatisfied (even if they are good performers) to quit even sooner than they would naturally.If you take the option of offering good performing new hires money to leave, you may be initially criticized but realize that you are also sending the message that the firm is “looking out for their interest.” and as a result, you may also create a long term “friend” of the company who may yield future business or referrals. The best way to identify dissatisfied new hires is to have an HR generalist or the recruiter who brought them in to assess whether their dissatisfaction will eventually impact their performance and teamwork.

HR’s Role

HR can take a more aggressive role in the early release by developing predictive metrics that through statistics, allowing your firm to accurately predict the likelihood that a weak new hire will eventually become a very good employee. HR can also develop a new-hire monitoring program to more closely watch weak-performing new hires and to provide the hiring manager with their recommendations on which new hires should be released. HR should also report to senior managers on how well they have reduced the “time to release” of weak-performing new hires.

Why is Recruiting so Error-Prone?

Recruiting is at best a hit-or-miss operation. Even the best-designed recruiting systems provide ample opportunities for misjudging candidates and thus producing bad hires. Hiring errors occur because candidates misrepresent themselves on their resumes (more than 50 percent do). New hires also exaggerate their experience and put on their best behavior during interviews, so it’s easy to overrate a candidate. Companies also make errors by skipping or doing ineffective references and by assuming that managers are a good judge of talent.

Unfortunately, despite these many potential errors in the hiring system, recruiting managers continue to operate under the false “zero failure rate assumption” that everyone is a good hire! If continuous improvement of the hiring process is also a goal, you will need a formal feedback mechanism that educates and thus improves the hiring system after a hiring mistake is discovered.

Final Thoughts

Once you understand the damage the weak new hires can create, everyone should work together to reduce the nearly 50 percent new-hire failure rate. However, because there will always be a significant percentage of weak hires, an additional focused effort is required to speed up the identification and then the quick release of these “weak and won’t get better hires” who somehow get through the hiring process.

Reprinted from ERE.net

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Dear C-Suite: We Don’t Do Training

In 2012, Peter Aceto, president and CEO of ING Direct, a Canadian bank with nearly 1.8 million customers and more than $38 billion in assets, delivered a speech where he talked about being a social CEO. Two points emerged.

Early in the talk, Aceto said, “I believe we are at the confluence of two revolutions — a social revolution and a technology revolution.” Later he said, “How people work and make decisions is not new. However, technology and social networks [have] allowed this type of sharing to happen faster, with a broader group of people and outside of traditional boundaries.”

It’s time to help the C-suite — aside from Aceto and other learning-savvy and employee engagement-focused C-suite leaders — appreciate and understand that organizations don’t do training anymore.

Learning purists and traditionalists who are hell-bent on ensuring the “sage on the stage” practice continues may scoff at the idea of trying to erase the term “training” from Oxford’s dictionary. But learning professionals must help the C-suite understand that training is merely an event, and that learning must now be defined as a connected, collaborative and continuous process.

Learning can happen in formal, informal, social and experiential ways; it does not solely happen — as is traditionally defined in C-suite circles — as training. Learning leaders must help re-educate and coach C-suite executives: Learning is not merely a classroom event or an e-learning course, and training isn’t learning.

Learning consultant Dennis Callahan once wrote, “learning happens everywhere, not somewhere.” John Hagel, co-chairman at the Deloitte Center for Edge Innovation and author of several books, including “The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion,” agrees. “I am struck by the fact that when I broach the subject of talent development with C-level executives, they almost invariably have two reactions: this is about training programs, and that’s the responsibility of our HR department. As a result, they tend to view it as an expense item, and it tends to be one of the first things cut in times of pressure,” Hagel said.

According to Jane Hart, founder and principal of the Centre for Learning & Performance Technologies, a learning technology consulting firm, formal training has been the standard way to develop people for so long it has become accepted practice that this is the way things are done. “We do know from studies, however, that senior managers don’t really believe formal training brings significant rewards, so many retain their training departments because they are expected to do so.”

Let’s say the C-suite thinks talent development is solely about training — a term which many learning leaders abhor — and they leave it to human resources or the learning department within HR to execute. Yet the learning department is delivering formal courses because that’s how it has always been done; it’s no wonder the C-suite’s view is that learning is in fact training.

Further, learning departments aren’t doing anything to change the fixed mindset of the C-suite on the definition of learning. So, how could they change their own views? It’s not as though the C-suite spends a lot of time thinking about this issue. But if the C-suite believes training equates to a fixed expense line item — such as external vendors, training and education, muffins in the classroom — and the organization happens to run into a quarterly budget or financial issue, they immediately think, “cut training.”

Jenny Dearborn, the chief learning officer for SuccessFactors and SAP Cloud, said there is a disconnect between the definition of learning in organizations and how senior executives actually learned things before they got to the C-suite.

“If you ask anyone in the C-suite what was their most impactful and career-advancing learning or development experience, it would not be a formal training course or even their formal education or degree program,” she said. “Their career-changing learning experience was a job rotation, stretch assignment or special project, and the coaching and mentoring that went along with it on the job to ensure professional growth and success.”

Dearborn is right. The irony with the C-suite is they think training is an event and thus an expense, yet their own best learning experiences have most likely come from the aforementioned informal or social learning opportunities she detailed.

In the summer 2013 issue of MIT Sloan Management Review, an article appeared titled, “The Executive’s Role in Social Business.” It said, “Adopting social technologies can often mean changing the way people work, and that means leaders need to invest time and effort in explaining the purpose and value of the new tools as well as providing the necessary financial and organizational support to sustain these workflow changes over time.” Learning leaders need to invest the time and effort to explain how important the new definition of learning is to the C-suite.

The Centre for Learning and Performance Technologies runs an annual survey titled Learning in the Workplace. The 2013 results from more than 600 participants reinforce the idea that learning in the organization is shifting to a combination of formal, informal and social, yet learning professionals aren’t doing much to help the C-suite understand the importance of the shift.

In many cases they are abetting the current situation. The survey reported that 68 percent of those working in HR or learning and development consider formal training and e-learning “to be of little or no value for them in the workplace.”

In 2012, when cloud-based learning organization Skillsoft surveyed 503 CEOs of organizations with more than 250 employees across 13 business sectors, the results revealed that 42 percent of the CEOs interviewed said “the length of a course was a more important deciding factor than its content.”

Also from the report, the “measurable return on investment from training mattered most to only 7 percent of respondents.” The good news is it seems as though the C-suite doesn’t care if the training has ROI. The bad news is they still think the content comes in the form of a course, regardless of whether it’s short (42 percent) or not short (58 percent).

If, as the American Society for Training & Development reported in 2011, “U.S. firms spend $1,067 per employee (about 2.7 percent of the entire staffing budget) to provide employees with an average of 32 hours of training programs annually,” how can learning leaders switch from a total number of courses and hours of training programs mindset to one that incorporates more of the informal and social learning mechanisms that actually make up a pervasive learning model?

To start, learning leaders should ignore former president Woodrow Wilson, who once said, “If you want to make enemies, try to change something.” Instead, help the C-suite understand learning need not be trapped in a box, a classroom or an LMS. It need not solely be considered a line item budget cost. It needs to incorporate the entire cadre of learning offerings, options and opportunities.

Deloitte’s Hagel said a “holistic approach embracing [the] physical environment, virtual environment and management systems — everything that shapes the environment that we work in” — is necessary because there are few C-suite executives who understand that “the most powerful form of learning and talent development occurs in the day-to-day, on-the-job work environment; and that it is directly tied to tangible performance improvement in the metrics that matter.”

It’s time for learning departments to take the proverbial bull by the horns and help the C-suite understand that the organization doesn’t simply conduct training anymore. Dearborn said she often asks her C-suite peers to think back to their own careers and determine the most impactful development exercise they might have experienced. “One-hundred percent of the time they say a special project, committee, stretch assignment or a mentor.”

She said she then asks them to think about how best to put structure around the informal experiences so they can scale to support the entire business. “Then I lead them down the logic path that points to social and collaborative learning — then they get it.”

Hart said learning leaders should think about how Silicon Valley startups operate, as they “treat learning in a very different way — and usually adopt very social collaborative approaches to learning and working.”

About the Author:

Dan Pontefract is the author of “Flat Army: Creating a Connected and Engaged Organization” and the head of learning at Telus, a Canadian telecommunications company. Reprinted from Chief Learning Officer

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