Developing and monitoring learning metrics.
By Michael Ramos and Cate Miller
Accounting is the language of business. CPAs help business owners understand and manage their business by analyzing financial and non-financial metrics. To improve the results of the firm’s professional development efforts, those same financial management skills can be used to manage the learning function.
Part 2 in a 3-Part Series: Run Training Like a Business
Part 1: 4 Steps to Get More from Your Training Budget
Part 2: How to Manage CPE by the Numbers
Part 3: How to Build a Powerhouse Learning Team
Measurable goals provide:
- Credibility to the learning strategy. CPAs value measurable results, and communicating measurable learning goals across the firm signals that leadership is committed to professional development and supports developing the firm into a high-impact learning organization.
- Basis for accountability. Performance improves when people have a clear understanding of what is expected and are held accountable for meeting those expectations
- Foundation for continuous improvement. “You get what you measure.” It’s human nature to seek to improve in those areas where performance is being measured
Take Action. Define the most important goals for the firm’s learning function. Direct the learning team to develop financial and non-financial metrics to monitor progress toward achieving those goals.
Prepare a Budget and Use It to Manage the Learning Function
Unfortunately, when it comes to managing the firm’s learning investment, many firms do without a budget. The lack of a budget means that firm leaders make critical decisions about learning investments without all relevant information. Or worse, critical decisions are not made and poor performance from the past is carried forward.
Best practices for preparing and managing the learning budget include the following.
- A true budget. The learning budget should be prepared with the same discipline that is used to forecast revenue. For example, revenue is tied to underlying revenue generating events. Likewise, learning costs should be budgeted based on learning events and projects and budgeted on a monthly or quarterly basis. Annual lump sum budgets spread evenly throughout the year are not nearly as useful because they give a distorted view of learning department performance.
- Centralized. Decisions about how to spend learning dollars may be decentralized, but the firm needs one central learning budget that consolidates the projected and actual learning expenses across the entire firm. The learning department should have direct oversight of the budget and then be held accountable
- All in. Budgets should include both hard and soft dollars. Hard costs include fees paid for third party content and instruction, travel, technology fees, consultants, etc. Budgets that include only hard dollars and external spend will be incomplete and may be unsuitable for making many decisions. For that reason, firms should capture the time spent by firm partners and employees to manage, develop and deliver learning. Don’t underestimate the true cost of developing course materials and preparing for delivery. Learning industry rule of thumb is that it takes 40 hours for 1 hour of class time to design and prepare the delivery of a successful course
- Organized to Facilitate Analysis. To make decisions about learning, firm leaders should be able to:
- Differentiate between fixed and variable costs.
- Align budget to L&D value chain. (Refer reader to article #1)
- Analyze costs by service line and/or industry.
- Analyze costs by course type; by instructor; by class
Analyze costs by individual program or course over its entire shelf life
- Differentiate between internal and external spend;
The purpose of the budget is to help decision makers make better decisions. To achieve that goal does not require the learning budget to be overly precise, and to be sustainable the budget cannot be too complicated to prepare. If the firm does not have available all the information necessary to create the ideal budget, make a good faith estimate, document your assumptions, and move forward.
Firms that have not previously prepared firm-wide learning budgets and cost summaries may be surprised at the size of the “all-in” learning investment. The knee jerk reaction may be to undertake a cost-cutting exercise. Avoid this reaction. It may be true that the firm can achieve the same or better results with a lower dollar investment, but cutting the learning budget is best done using a scalpel, not a hatchet, and only after careful analysis. For more on getting a bigger “bang for the learning “buck,” see ”High-Impact Learning: 4 Ways to Maximize CPE ROI” by Michael Ramos, previously published in CPATrendlines.
Take Action: Describe the ideal budget and financial metrics firm leaders need to manage the learning function. Compare that ideal budget to the one currently in place, and map out a multi-phase plan to get the firm from where it is now to where you want it to be.
Develop Non-Financial Metrics to Help Manage the Learning Function
Measuring and tracking several easy-to-determine non-financial metrics will help firm leadership gain a more complete picture of learning department efficiency and productivity.
Usage Metrics provide insight into how much and in what form firm accounting professionals consume learning. For example, if the firm invests in the development of e-learning programs, knowing how many on-line CPE credit hours were consumed and by whom will allow the firm to assess the ROI of its online learning development efforts. Knowing the ratio of firm-provided CPE to total CPE consumption may provide insight into the “market” assessment of the quality of firm-provided learning. Common usage metrics include:
- Number of total and unique participants
- Number of CPE credit hours consumed
- Total number of CPE credit hours consumed (both internal and externally-sponsored)
Content and Development Metrics help assess the productivity of the learning function. Common content and development metrics include:
- Number of unique course offerings
- Number of new courses developed or added to the catalog
- Number of unique learning events
- Number of hours spent by accounting firm professional on course development
Headcount can be an important denominator to assess efficiency and plan for expanding the learning function as the firm grows. Headcount should include both learning and accounting professional FTEs. Useful ratios include:
- Number of CPE credit hours consumed per learning FTE
- Number of total and unique participants per learning FTE
- Number of CPE credit hours offered per learning FTE
- Number of unique learning events per learning FTE
Determining the proper level of detail to provide for each metric is more art than science. More granularity can help pinpoint what the firm is doing well and where improvement is needed. However the cost of gathering and maintaining detailed learning metrics can not outweigh the benefit.
In general, most firms track metrics by:
- Delivery modality
- Technical subject area
- Program (e.g., tax staff training, new manager training, etc.)
- Service line, industry, office, or other business unit
Take Action: Determine the non-financial metrics that would be most useful in monitoring the progress of the learning team toward achieving its annual goals. Evaluate the level of effort required to regularly capture and report these metrics and develop a plan for implementation.
Managing By the Numbers is a CPAs Sweet Spot
CPAs understand and appreciate the value that financial and non-financial measures play in managing a business and driving performance. That same measurement discipline can and should be applied to the firm’s learning function to help drive improved performance.
Michael Ramos is the principal of Michael Ramos and Associates, a learning consultancy firm that works with CPA firms and organizations that provide products and services to the profession to help them develop and deploy high-impact learning programs. He has over 25 years of experience developing and delivering competency-based professional development programs and is the author of numerous auditing books and guides. He also served as the Director of CPE and Training at the AICPA.
Cate Miller, CPLP, PHR is the Director of Learning & Development at Dixon Hughes Goodman LLP, a position she has held for over six years. In that role she has oversight of the firm’s learning function and is charged with aligning the firm’s learning programs to organizational goals and objectives. She has over 20 years of learning and talent development experience and holds an MBA from Roosevelt University.