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News & Views

Investing in your people is the best investment you can make.

by Phil Gripton
Insights
|
30th July 2018
Investing in your people is the best investment you can make., post image

Train people well enough so they can leave. Treat them well enough so they don’t want to. – Richard Branson

I’m a digital business owner: how can I de-risk my growth plan?

A real-life, everyday challenge story, to be found in businesses of all types in every market

I recently had a problem to solve in my role as COO of a large utility company. We had tens of millions invested in a sizeable customer service function, with a need to radically improve performance and customer experience whilst continuing a required downward trajectory on costs to protect margins.

Isn’t that the same issue we all have: “how do we get more from same or even less?

Upon reviewing the teams, we recognised that although they were motivated and proud, they were also lacking the rounded skills, knowledge and competence to perform their roles at the level we were demanding of them.

Are you asking a lot of your teams and just hoping they can step up?

Critical data analysis showed us that this lack of competence was leading to a series of errors that had significant downstream financial impact. This resulted in costly re-work at best, and at worst, customer complaints – with associated goodwill payments and penalties from the ombudsman. All of these were costing us dearly on a daily basis.

How much are your under-skilled people costing you per working day?

We realised that there were significant gains to be made if we could improve the teams’ knowledge and competence, both in reducing costs and in improving the service the customers received. This allowed us to build a financially-justified business case for investing in specific training for our core teams. We partnered with experts and brought in tools to help us track improvements in the core competencies, marrying and tracking these to the reduction in cost to serve over time.

The results were better than we expected:

  • Competence doubled within 6 months.
  • At the same time, we tracked a double-digit reduction in cost to serve percentage, delivering a seven-figure in-year saving to the bottom line. A return of 800% on the development investment made.
  • In the first invested cohort we saw a significant reduction inemployee turnover as people settled into their learning journeys and felt invested.
  • Colleague referrals for open roles increased, and our Glassdoor profile improved as we became seen as an employer of choice who cared for our people.
  • We were externally recognized for excellence in our service performance, receiving industry accreditation for the revised service offering we were providing.

Concern: What if we invest in our people and they leave?

Bigger concern: What if we don’t and they stay?

Key insights:

  • Quantifying the downstream cost of failing to invest properly in the development of our teams was a critical discovery, which paid back in spades.
  • Selecting the right partners to create a progressive and measurable competence improvement programme which could be applied across the teams was pivotal to the success.
  • Having this investment and activity as a key deliverable for the senior team was instrumental to the focus it was given and the results it delivered.
  • Investing in people didn’t make them leave, it made them want to stay and do more and better. Productivity rose, errors fell and happiness grew.

So what can we take from this in our agencies and digital businesses?

According to independent studies conducted by Deloitte, Rakuten, the Digital Marketing Institute (DMI) and Capgemini in 2017:

  • One in two businesses believe the digital talent gap is hampering their business performance;
  • Marketers perceive their digital knowledge to be 27% higher than it actually is.
  • The cost of mistakes and human error caused by low competence can be measured in millions of pounds, but is rarely fully understood and tackled.
  • Marketers estimate that they waste 26% of their marketing budget on the wrong channels or strategies.
  • As budgets continue to increase and the skills gap continues to widen, only 53% of brands focus on improving their inefficiencies. However, 78% have stated their aim to grow.
  • Businesses investing in comprehensive learning programmes have realised up to a 218% higher revenue per employee.
  • 47% of colleagues actively seek a company that invests in its employees’ career development.
  • 45% of colleagues cite investment in their development as a reason to stay with a business.

With a challenging market and industry commentators suggesting agencies need to up their game, why are we still underinvesting in our people’s skills and competence?

We all know that the training budget pot is the first to be dipped into to cover unplanned in-year cash issues (closely followed by the bonus pot!).

So my question is: why do digital leaders think this is the right thing to do?

My theory is that many have not directly connected the investment we make in our teams to the improvement they can make to key metrics in our business, so they are not satisfied that these investments constitute value for money. This often means that budgets set aside for learning and development end up being used as an anti-churn fund, without much thought or strategy applied to deliver an uptick in performance.

These monies end up being spent on employees attending expensive conferences (with sizeable ticket prices), offering small satisfaction to management that this will make individuals feel at least partially valued, and that learnings from the conference will be transmitted to colleagues by osmosis over time.

In reality, we all know this isn’t the case. The person who attends the conference cannot distill all the relevant detail, isn’t a training professional, and only remembers 40- 60% of what they heard in the first place; so they cannot bring the subject to life in a way that adds material value to their peer group.

So what can we do about it?

If you agree that individuals and teams with a higher degree of skill, knowledge and competence are more likely to deliver better performance and results, will churn less and make fewer errors, then surely you will want to invest in your teams.

I argue that when you invest properly in the teams delivering your client work, they:

  • perform at a higher level if improved through smart, tailored managed learning;
  • remain more invested in your business and will not churn as regularly, reducing hiring costs and maintaining your productivity;
  • make fewer mistakes, reducing risk and costing you less in correcting those errors;
  • make better cross-channel decisions on allocation of media spend, achieving more bang for your buck on campaigns;
  • become brand advocates, adding to your employer brand metrics (positive sentiments on Glassdoor etc) and making you a brand of choice for in-demand resources;
  • help protect your rate card, and/or demonstrate better value for money for your clients;
  • allow you to build lower-cost, home-grown talent (rather than buying in the expensive galácticos), improving your ever-pressured operating margins.

Key learnings for putting together your learning strategy:

  1. Measure and understand the prevailing state of knowledge and competence in your key delivery teams. It’s hard, but worth it.
  2. Benchmark the teams to a recognised industry standard of excellence.
  3. Gap-analyse the teams to that standard and understand each individual’s gap.
  4. Understand the impact of that gap in terms of wastage, efficiency loss, and staff turnover, and express it in £s.
  5. Make a business case to invest in offsetting the issues you discover in point 4 above.
  6. Select partners who can provide the crucial skills transfer you need to close the gap to best-in-class standard, and who can actively measure the impact of the learning on your core metrics.
  7. Put in place specific learning journeys to ensure gaps are filled efficiently, with accountability on your training team/partner for closing those gaps.
  8. Measure gaps constantly to ensure progress is being made.
  9. Constantly iterate, tune and refine the learning on offer to keep it current and relevant to the individual’s progress.
  10. As senior leaders, hold yourselves accountable for gap closure and have it measured it alongside the improvement in the relevant performance metrics. Don’t leave this purely in the hands of your HR team: they need your help to make this fly.
  11. If your wage bill is over £3m, you are already paying the apprenticeship levy to the government, which you can claim back to invest into your teams. If you’re an SME then there is funding there for you, too. Find a partner who can help you take advantage of that funding.

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