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How to Create a Learning and Development Strategy in SMEs

Create your own learning and development strategy for your SME to enhance your business performance and maximise your business resilience. Learn more.

How to Create a Learning and Development Strategy in SMEs

Published on:

12 Aug 2021

Learning and development (L&D) offers great benefits to businesses, including a stronger company culture, improved employee retention, increased employee engagement and improved business productivity and performance to name only a few.

But these various benefits hinge on the effectiveness of your learning and development strategy.

Many learning and development strategies aren’t delivering the desired results for businesses, despite investing billions:

  1. Of 4,300 surveyed employees, 74% say they aren’t achieving their full potential at work due to a lack of development opportunities.

  2. Only 12% of employees say they apply skills learned in training to their job.

  3. Just 38% of managers say their learning programs meet their learner’s needs.

  4. Only 25% of McKinsey survey respondents said training measurably improved performance.

What is a Learning and Development Strategy?

L&D refers to any and all activities a business undertakes to encourage the professional development of employees.

A learning and development strategy then is the formal process which plans, aligns and measures L&D activities.

L&D activities look different in every business. In larger corporations, learning and development activities often focus on formal training programmes, in the form of online course units, specialist training providers and more.

In SMEs, L&D activities are often far less formal and may come in the form of personal development plans, individual L&D budgets and mentoring.

An L&D strategy aligns these activities with organisational goals. It sets out the workforce knowledge, skills and behaviours necessary to achieve organisational goals and plans how to develop these areas to achieve said goals. In this sense, it seeks to improve organisational performance by improving employee performance through supporting and aiding their development with a variety of activities and methods.

Or at least this is what an effective learning and development strategy should do.

The Current Problems with Learning and Development Strategies

Learning and development strategies as we currently know them aren’t as effective as businesses want them to be.

Worldwide, businesses invest more than £258 billion into learning and development. For this huge sum, businesses should expect to see substantial benefits, but research suggests a majority of business leaders and employees find current L&D strategies lacklustre at best:

  1. 75% of managers are dissatisfied with their companies L&D function.

  2. 70% of employees don’t feel they have the mastery of skills necessary to do their job.

  3. 99% of learning and development professionals say critical skill gaps will negatively impact their companies in the coming years. The negative impacts mentioned included future growth, customer experience, product quality and the ability to innovate.

  4. 33% of employees say their current company training doesn’t meet their expectations.

  5. 1 in 3 employees say their company’s training is out of date.

For management and leadership, the problem is even more apparent:

  1. 59% of managers overseeing less than three employees report having no training whatsoever, while 41% of managers overseeing three to five employees report the same.

  2. Nearly 50% of managers with over 10 years of experience say they’ve only had nine hours training total.

What all these statistics and the statistics from the introduction highlight is that learning and development isn’t working as well as it could be for many businesses or employees.

Employees feel like they’re not having their learning needs met or being given the development opportunities they desired. Businesses have identified skills gaps, but the current L&D strategy isn’t helping them address this gap or improve business performance as a whole. On top of all this, for a huge number of businesses, management seems to be entirely neglected from the learning and development strategy.

What are the Benefits of an Effective Learning and Development Strategy?

Moving away from the current issues highlighted above, what benefits can an effective learning and development strategy bring for businesses?

Investing in learning and development increases employee satisfaction, engagement and retention. 68% of employees want to learn and train in the workplace and 94% of employees will stay longer at a company that invests in their learning and development. Retention rates rise by 30% to 50% at companies with strong learning cultures, while 40% of employees who receive poor training will leave their role within a year.

This increased engagement and satisfaction has a direct impact on business performance. Businesses that invest in learning and development gain 21% more profit.

Overall, an effective learning and development strategy helps create a better place to work, with improved behaviours driving the company forward. Employees across the business are engaged and motivated to continuously develop their skills, knowledge and behaviours, increasing both innovation and business performance. Overall, the company culture creates value beyond its product or service. It improves the lives of employees, creating sustainable businesses that contribute to society as a whole.

This improved company culture also attracts the best talent, especially millennials. 87% of millennials believe learning and development in the workplace is important and 60% of them want leadership training. Considering this generation makes up the largest percentage of the global workforce, attracting and retaining the best talent from this generation is key to business success.

Why is a Learning and Development Strategy Important?

All these learning and development strategy benefits add up to a business with better performance, increased profit and improved business resilience.

This matters because of the external challenges that businesses are facing. Businesses face increased uncertainty in global markets, slimmer margins, increased competitiveness from globalisation.

Creating a company culture of continuous improvement can help businesses better navigate these external challenges, making them more innovative and agile in the face of constant change.

To achieve this though, your learning and development strategy needs to be effective. By this we mean, it cannot be done ad hoc or forgotten about until an annual appraisal. An effective learning and development strategy must align with larger business goals, as well as be continuously monitored and improved.

10 Steps to Create an Effective Learning and Development Strategy in Your Business

You can create an effective learning and development strategy by using the following framework:

  1. Assess the current business behaviours, knowledge and skills

  2. Identify the desired behaviours, knowledge and skills

  3. Align the L&D strategy with the business strategy

  4. Identify learning and development leaders

  5. Identify the best learning and development activities

  6. Execute L&D strategy and continuously monitor

  7. Measure the impact on business performance

  8. Identify activities that create the most value and scale

  9. Invest in learning technologies to suit your business needs

  10. Create a continuous learning and development cycle

1. Assess the Current Business Behaviours, Knowledge and Skills

As with most strategies, a learning and development strategy should begin by identifying current behaviours, knowledge and skills across the business.

You can assess knowledge of individual employees through a variety of means. This could be through employee feedback, as well as through individual performance metrics. Bloom’s revised taxonomy can also be helpful in assessing the level of knowledge possessed by employees and whether they are able to apply that knowledge successfully.

Similarly, skills can be assessed across teams by utilising competency maps to assess where strengths and weaknesses lie. These can be completed by individual employees, or through leadership.

Behaviours are an often overlooked part of learning and development, but behaviours are what drive employees to utilise their skills and knowledge. Gaining a better insight into the behaviours driving individuals and teams helps businesses better understand how to engage, motivate and inspire their employees. Current behaviours can be assessed by utilising workplace personality tests.

2. Identify the Desired Behaviours, Knowledge and Skills That Will Improve Business Performance

Now you have a wealth of information available on the current behaviours, knowledge and skills across your business, you can identify where the gaps are.

These will be bespoke to the unique needs of your business and are difficult to generalise. You may have critical skill gaps within certain departments limiting performance or perhaps there is a lack of consistent behaviours within customer service teams which is impacting the customer experience. Whatever it might be, create a list of the desired behaviours, knowledge and skills that could have a direct impact on business performance.

3. Align the Learning and Development Strategy With the Business Strategy

To be effective and create value, a learning and development strategy must align with business goals. This is something many businesses struggle with, only around 40% of companies say their learning strategy is aligned with business goals. An effective organisational design process will help deliver the business goals.

This is often due to outdated practices within L&D, with particular regard to the metrics used to measure L&D performance. For example, a common metric used to measure the success of a learning and development activity would be participation rate or completion rate. While these metrics give us some insight, they don’t give a clear picture of how that attendance impacted business performance.

Chances are you’ll have a long list from the above activity, but ask yourself which would create the most value within your business and which would have the largest impact on the bottom line? These are your learning and development objectives, aligned with your business strategy and goals.

4. Identify Learning and Development Leaders

Often the learning and development strategy is owned by one department or even one employee in smaller businesses. Employees know little about the L&D strategy and their place within it due to a lack of transparent communication.

An effective learning and development strategy needs to be owned and led by the relevant department to ensure someone is responsible for executing and monitoring the strategy as it progresses. This will again be down to the unique structure of your business as to who these leaders will be.

All this said, a learning and development strategy works best when employees have a good understanding of the strategy, their individual goals and how they relate to the larger business goals. Businesses can benefit by creating collaborative partnerships with each department or team in regard to leadership and development, for example, by having each department have a team member responsible for monitoring their role within the wider L&D strategy.

One of the simplest ways to achieve this transparent communication is by investing in the right technologies, so that all employees can log in and monitor their own performance and progress, as well as wider business performance.

Learning and development also has a place within the c-suite, especially if businesses hope to create a company culture of continuous learning. Leadership should be aware of and actively promote learning and development as a core value of the business, modelling to employees the importance of L&D within the company.

5. Identify the Best Learning and Development Activities to Achieve Objectives

There are many potential learning and development activities you can utilise to achieve your objectives.

This includes:

  1. Coaching

  2. Mentoring

  3. Lectures

  4. Seminars

  5. Webinars

  6. Discussions

  7. Debates

  8. Individual L&D budgets

  9. Gamification

  10. Job shadowing

  11. Guided learning

  12. Peer learning

  13. Micro learning

Utilise the behaviours assessment completed earlier to figure out the best learning activities for teams and individuals. Most importantly, keep learning relevant and applicable to keep employees engaged and to ensure learning is not forgotten mere moments after.

This may mean bespoke approaches, as opposed to a company-wide online course for example. But taking this approach means that you’ll see more value created from your learning and development activities. We’ll use an example to expand on this point.

Let’s say a business opts for a generic customer service learning and development course, that can be completed in online modules as and when it suits employees. There are many modules and employees have an hour once a week to complete a module.

Now let’s say another business knows they have some knowledge and behaviours lacking within their customer service. Instead of the generic learning technology though, they opt to get employees to pick real case studies each week from their workload and meet in small discussion groups to discuss the strengths and weaknesses of customer service within those case studies.

Keeping learning relevant and timely helps employees retain and apply that knowledge, as well as increase engagement. Keep this in mind when choosing your learning and development activities.

6. Execute the Learning and Development Strategy and Continuously Monitor

With your strategy created and your learning and development activities identified, you can execute your learning and development strategy.

L&D leaders identified earlier on are ultimately responsible for this and should have clear tasks and responsibilities in regard to the execution of the strategy. They can similarly ensure all departments are doing their bit with regular, open communication with relevant team members.

As with all technologies, modern learning and development technologies allow for businesses to monitor performance in real-time. This can ensure the strategy stays on course and help businesses navigate any issues as they happen, instead of after the fact.

7. Measure the Impact of Learning and Development Activities on Business Performance

We touched upon L&D metrics earlier, but we’ll expand on that here. Your L&D metrics should directly align with your KPIs within your business strategy. These are the metrics you should be measuring to get an accurate idea of the impact of your learning and development strategy, not empty metrics like participation or attendance.

Using the example above again, businesses could compare customer satisfaction rates from before and after the learning and development activities to see the real impact of learning for both their employees and their customers, and ultimately their bottom line.

8. Identify Which Activities Create the Most Value and Scale

SMEs often don’t have the budget to trial many learning and development activities at once. This learning and development framework allows SMEs to figure out which activities create the most value and to scale only those activities.

You don’t need to immediately roll out a company wide learning and development programme. In fact, we’d advise against it. Start small and build your way up. Trial activities with one department, monitor and assess the results.

If you’re able to implement several learning and development activities at once, figure out which made the biggest impact on business performance and scale that activity across your business where possible. For example, if you tried webinars for customer service teams but saw little improvement in customer satisfaction, but your individual learning and development budgets had increased employee engagement and productivity, you would scale the latter to be a company-wide programme.

9. Invest in Learning Technologies to Suit Your Business Needs

With value-adding learning and development activities identified through performance metrics, businesses can make better decisions about the right L&D technologies to invest in to further improve their learning and development processes across the business.

Investing in these technologies initially represents a significant cost, one that many SMEs cannot afford to bear with no return. Monitoring learning and development progress and measuring the impact on performance ensures businesses can invest in the best technologies to suit their unique learning and development needs and business goals.

10. Create a Continuous Learning and Development Cycle

To create a company culture of learning, your learning and development strategy needs to be a continuous process. Once it has been planned, executed, monitored, measured and scaled, it should be repeated.

This learning and development cycle gives companies a competitive edge. It means their employees are always learning and developing their own behaviours, knowledge and skills. This means teams are always becoming more productive and efficient, which in turn means companies are always improving their business performance, making them more competitive and innovative places to work.

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