Building organizational capabilities

McKinsey Quarterly is a great online publication. Astute. And partly free.

This month McKinsey reveals the results of a global survey on building organizational capabilities.

Nearly 60 percent of respondents to a recent McKinsey survey1 say that building organizational capabilities such as lean operations or project or talent management is a top-three priority for their companies. Yet only a third of companies actually focus their training programs on building the capability that adds the most value to their companies’ business performance.

We defined a capability as anything an organization does well that drives meaningful business results.

Further, some three-quarters of respondents don’t think their companies are good at building the capability that is most important.

So far, so good. Now, for the sand in the Vaseline,

Lack of alignment

Despite the importance of capability building on the strategic agenda, executives’ responses indicate they’re not very good at executing: only about a quarter think their companies’ training programs are “extremely” or “very effective” in preparing various employee groups to drive business performance or improve the overall performance of their companies (Exhibit 2).

Calling Bob Mager.* Why do the execs think a flaw in their culture is a training problem? You no more use training for culture change than you’d use Google to learn to swim.

What else goes wrong

Companies also struggle to measure the impact of training on business performance: 50 percent of respondents say their companies keep track of direct feedback, and at best 30 percent use any other kind of metric. In addition, a third of respondents don’t know the return on their companies’ training investment. Because companies don’t know the impact of training, they appear to set their agendas using different measures, including prioritizing by employee role, which may not actually result in the most impact to the bottom line.

This is piffle. If a company wants to know whether its training is effective, it needs to talk with a sample of employees to find out if the learning is showing up on the job. It should check with supervisors to find out if workers are performing better. Besides, business people bet on uncertainty all the time. What’s the value of a CEO brought in from the outside? Which ad dollars drive sales?
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* Mager famously asked, “Could he do it if you held a gun to his head?” If he could, you’ve got a motivation problem, not a training problem.

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