By the 1990s, many L&D professionals were grumbling that they were continually- even deliberately- overlooked when it came to being promoted to board level and were determining to "do something about it."
That "something" was for them to become more aware and astute in terms of the thing that motivates boards and businesses: measurement. Thanks to technology, with growing processor power and programming perspicacity, all sorts of business measurements are possible - relating to costs, benefits, return on investment, and almost anything else you can think of.
This is good news for board members, especially CEOs, CFOs and, indeed, everyone with ambition and accounting skills. It's not such good news for L&D professionals: while others are focusing on the financial effects of business changes, they consider the impact of change, in human terms, on the motivation and subsequent performance of their organizations' workforces.
The functions of management are to plan, organize, staff, lead, and control. Each is strongly influenced by how much money is available. However much they may wish it were not the case, managers -including L&D ones - can't carry out their responsibilities effectively without understanding their financial constraints. That means keeping track of their department's finances via an accounting system, which, usually these days, is computerized.
From time to time, L&D professionals need to source - or develop - finance-related learning materials. So they need to understand financial concepts, if only to know which learning materials to endorse to their organizations' workforces. In addition, they need to understand and use these same financial concepts in their continuing struggle with senior executives. They need to do this, if not to establish some sort of status and supremacy in their organization, then at least to receive recognition and respect.
"Walk in their shoes"
Dr Anton Franckeiss, the business development and practice director for Acuity Global Development, believes that the key to communicating effectively with the financial directors or chief financial officers in your organization is to prove - as quickly as possible, clearly and without emotion - that you understand what's required to "walk in their shoes."
Franckeiss recommends that, in making connections with financial specialists in order to establish productive working relationships with them, "you get to them one-to-one and cover an agenda item that plays to their interest areas. For example, make the financial case for an ROI on coaching. Tell the finance specialist about the steps being taken to ensure -“ via monitoring and measuring - that the coaching work has a real focus on what the business needs and how the coachee will develop a deeper understanding and become more adept at financial matters as a result of the coaching.
"Stress that the coaching objectives are set with clear and measurable improvements against an individual's agreed business objectives. It's not just development being undertaken for the sake of making the individual a better, more rounded person.'"
"These days, it's vitally important that L&D activities are linked to business objectives and financial targets.
"Of course, you're not expected to be a financial expert. However, you're supposed to be able to comprehend the basics of what finance is all about. You need to know why prudent budget control is an important part of business strategy - and not something just designed to impede the 'people agenda.'
"When speaking to these people, you need to use words that indicate an understanding of the rationale for the financial side of life. So you need to use such terms and phrases as 'cost effectiveness,' -'added value -measurable benefits,' and this contributes to the bottom-line.'"
According to Nick Hindley, associate director, learning and performance improvement, at PPD, L&D professionals need to understand what their organizations are trying to achieve. Armed with that knowledge, they can work out how what they do can help this in the most time-efficient way. Then they need to deliver, evaluate and report the results. He stresses that, whatever the key business messages are, there are no different or separate L&D goals. There are only business goals where targeted L&D can help.
"You can convey L&D messages in financial terms by showing the links between development and business outcomes," he says. "After all, business outcomes are produced by behaviors that support productive change."
Hindley advises that, if you relate every development solution to your organization's current strategic aims, you can't go far wrong. "This has to be more than rhetoric. You must show how the development delivers specific behavioral and operational outcomes that support a specific goal.
"The direct approach is best. Show the links between the development activity and the required results - and explain how you'll track and report progress."
He believes that there's no substitute for talking to, and getting to know, your in-house finance teams, adding: "A finance team that understands how you work and what you can do will always then be supportive of robust development plans.
"The financial models of my current company are very different from any of the previous organizations in which I've worked. Because I've become well known to the financial team, I've also had the opportunity to help them with their development programs and conferences -where I've learned much more about the realities of the financial world in which my colleagues operate."
Do you think that L&D professionals need to understand financial concepts? How do you ensure that you have a good knowledge of finance in your organization? Join the discussion below.