Speaking of investing in intangibles, the Knowledge@Wharton newsletter is running an interesting story/podcast on Taking Work-based Learning to the Next Level:
In the mid-1990s, a new C-suite title was born when General Electric CEO Jack Welch dubbed Steve Kerr the company’s “chief learning officer.” Since then, CLOs have sprouted up at major firms in several industries. But what does this new breed of “learning leaders” bring to the table that traditional human resources departments and employee training programs do not?
The article interviews three “CLOs”: Ed Betof, former vice president of talent management and CLO at Becton, Dickinson and Company, who is a senior fellow and academic director of Wharton Executive Education’s Executive Program in Work-Based Learning Leadership; Mike Barger, vice president and CLO at JetBlue University; and Ann Schulte, vice president of global learning at MasterCard Worldwide.
The bottom line is that companies are taking their skills development activities much more seriously:
Knowledge@Wharton: Historically, Human Resources departments have been in charge of programs that enhance employees’ skills, such as on-the-job training and tuition reimbursement. Why is there a need for a separate role that’s wholly dedicated to learning?
Schulte: Well, I think that in the environment that we’re in today, identifying the skills and the competencies that are necessary for an organization to be successful is a critical first step. Once those competencies have been agreed upon at a strategic level by the organization, the learning department and the learning leaders can come in and provide a variety of different interventions.
In the old days, as you referenced, when training existed in the HR department, a lot of times those interventions were limited to a class of some sort. Today, we talk about all different sorts of ways to help employees build their skills and become continuous learners, so that they can continue to contribute to the strategic goals of the organization.
Barger: I think the evolution of the learning function has moved more from a training and skills delivery function to more of a performance engineering function. Our job now is directed much more at improving frontline performance — again, connecting that performance to business improvements, which is considerably different than I think what HR and training used to do. I think now our energies, as I mentioned before, are really directed at driving performance improvement through all levels of the organization.
Betof: One thing that I would add is, in addition to addressing the skills, knowledge and talent needs for today, the chief learning officer and the functions that they lead are responsible for anticipating and working with other leaders in their organizations to anticipate the skills, the knowledge, the talents necessary next year, three years and even five years, possibly even beyond, depending on the type of organization. So, it should be just about be impossible now, going forward in very contemporary organizations, to have a strategic business plan without a strong talent and talent learning element — not just hanging at the end of that plan, but integrated into the fiber of the strategic plan.
And so what is the pubic policy to encourage such activity? In some case, companies understand that enlightened self-interest dictates that they continually train their workforce. Much of this is in firm-specific knowledge. But some of it is in industry-specific or even general skills. Here we run into the free-rider problem. Why should I train workers who can just take that skill to some other company. In some cases, there is an IP solution — a non-compete agreement. But those have their own problems.
A free-rider problem has generally been accepted by economists as a market failure – where government intervention is acceptable and appropriate. In addition there is the spillover effect where general social welfare is increased by an increase in this private activity, thereby justifying public investment.
In this case, some have suggested a knowledge tax credit. Essentially this is an expansion of the research and experimentation tax credit — another activity with spillovers to both other companies and to society at large — to training activities.
There is another argument for the knowledge tax credit. We have long understood that increased private investment in plant and equipment is necessary for continued economic growth. As a result, there are various tax incentives for investment in equipment–including in the recent stimulus package. So why would we treat our people — which everyone says are companies’ most important asset — worse than equipment? If a tax incentive for investment in machinery is appropriate, so is a tax incentive for investment in workers. It is as simple as that.