The best corporate training departments operate as small, entrepreneurial businesses within the greater enterprise.
It’s common sense to view your department that way. Just as you don’t pay your grocery store for its rent and compensation costs, the enterprise doesn’t give you money (in the form of a budget) to pay your costs. You get money to “buy” your services – whether or not you actually charge customers directly.
Benefits of Thinking like a Business
Running a training department as a business has far-reaching benefits.
To earn a customer’s business, you’d better offer a good deal or they’ll go elsewhere. The business-within-a-business paradigm induces efficiency and frugality, since employees know they have to remain competitive.
Beyond just efficiency, you must offer a range of relevant, innovative and high-quality services. The paradigm encourages innovation and creativity, since entrepreneurs are eager to find new ways to add value and grow their businesses. And, of course, you must deliver impeccably on every promise. Business owners are accountable for results, not just for managing resources and processes.
Furthermore, you must build effective partnerships with your customers and contribute to their business objectives. Employees learn to be customer focused.
The business-within-a-business perspective also creates empowered, developmental and fulfilling jobs. Employees own their own little businesses and learn to manage them. Virtually every performance objective for a training department is satisfied when it’s run as a business within a business.
Operating as a business means that your customers decide what they buy from you. It’s the opposite of saying, “We serve the enterprise as a whole, and we know what’s best for you.”
The foundation is a catalog of well-defined services. Here are some examples:
- Needs assessments to help customers define their developmental requirements
- Seats in classes sponsored by the training department
- Custom course delivery, where the customer supplies the courseware and the attendees
- Courseware development assistance (sold to subject matter experts (SMEs) who sell their expertise in the form of documentation and courseware)
- Mentor coordination
- Professional credentials facilitation
What’s not in your catalog are the many things you do to stay in business, like planning your business, developing new services, managing your resources and marketing your services. Entrepreneurs know the difference between “do” and “sell.”
How to Manage Vendors
An entrepreneurial training department wants to be the “go-to” place for all things training. You want market share. So, you want to build the habit of buying training through you, not around you.
That means you generally wouldn’t refer customers to external training vendors, especially for topics that are of general interest. Instead, you sell the training internally and use vendors in combination with your internal resources to fulfill those sales. You’re a value-added reseller, not a broker of external training services.
This way, whether you “make” or “buy,” you can provide training on virtually any topic, and there’s no limit to your resources. Your only constraint is your customers’ ability to pay for the training they want.
Of course, you must accept accountability for the quality of your services, even if you’ve hired a contractor or vendor to deliver them. Entrepreneurs manage vendors as part of their staff.
How to Treat Your Budget
Your budget is the enterprise’s way of paying for your services (not paying your costs). So, think of it as prepaid revenues – money put on deposit with you at the beginning of the year to buy your services throughout the year.
Of course, your services have a cost. Those revenues (provided in your budget) only pay for a finite amount of services.
This paradigm, described in my book, “Internal Market Economics,” solves many problems. For example, if you’re forced to cut your budget, the enterprise will have to decide which services it will forego. And if customers want more than your budget buys, they’ll have to find incremental money to pay for additional services.
Thus, expectations match resources. And while you always strive to be more efficient, there’s no magical “do more with less” in your budget negotiations, or arbitrary limits like last year, plus or minus a percentage. In business, “you get what you pay for.” So, constructive budget discussions focus on the needs of the business, and executives learn to appreciate the value you deliver.
Once decided, your budget creates a checkbook. Then, a customer-driven governance process decides which checks to write (which of your services to fund within the constraint of your budget). Customers like being empowered to decide what they’ll buy from you. They’ll naturally buy what they most need, aligning your department with their strategies. Thus, you’ll deliver greater value to the business.
Implications for Structure
Perhaps most fundamental to internal entrepreneurship is your organizational structure. Jobs must be defined as businesses (not the traditional roles, responsibilities, processes and tasks).
So, what are the businesses within a training department?
There are five types of businesses within any organization, be it a training department or an entire enterprise, defined in my book, “Principle-Based Organizational Structure.” These lines of business are “building blocks” of an entrepreneurial organization chart:
The “Building Blocks” of Structure
- Service Providers produce an ongoing stream of services. They keep things running.
- Engineers design, build, repair and support solutions. They’re gurus in technologies and disciplines.
- Coordinators help stakeholders agree on shared decisions such as policies and plans.
- Sales and Marketing build relationships with customers and help them discover how training services can add real value to their businesses (sometimes called strategic alignment).
- Auditors inspect and judge others, and sometimes veto their decisions.
How do these lines of business apply to a training department? Here are some examples:
- Service Providers: course administrators, training facility owner-operators, professional certification facilitators, course sponsors and topic-independent teachers.
- Engineers: curriculum design experts and, occasionally, SMEs in the courses that are routinely taught.
- Coordinators: professionals providing business planning for the training function itself, standards coordination and enterprise-wide training policy coordination.
- Sales and Marketing: relationship managers assigned to each business unit in the enterprise.
- Auditors: hopefully, none of these, since judging others is incompatible with serving others.
Sorting out the lines of business within your organization chart gives employees a clear focus. It tells them what they’re supposed to be good at and provides the basis for defining each of their service catalogs. (It’s tough to develop a catalog if you don’t know what business you’re in!)
It also helps you avoid impossible jobs. You can spot groups that are trying to cover too many different businesses, instead of focusing on excellence in one thing. You can also see conflicts of interests where incompatible businesses are combined in one group (like a Service Provider who keeps things stable, combined with an Engineer whose job is to drive innovations).
Applying this framework to your organization also ensures that every line of business is covered somewhere. Even very small training departments are expected to deliver all the same services as big ones, so they need to ensure that every one of these lines of business is covered by someone (even if it’s fulfilled using contractors and vendors).
Sorting out individuals’ lines of business also clarifies teamwork by defining who “sells” what to whom within your department.
Ideas to Action
Getting your employees to think and act like entrepreneurs takes more than arm waving. Systemic change in your organizational “ecosystem” is generally required.
The two most powerful organizational systems are resource-governance processes (which I call the “internal economy”) and organizational structure (its organization chart and cross-boundary teamwork processes). Other organizational systems include culture, methods and tools, and metrics and rewards.
To get started down the path to an entrepreneurial training organization, decide which organizational system to work on first. It’s best to start with one of the two most powerful systems (internal economy or structure), and then adjust the other organizational systems later. This delivers more change early in your transformation process, and reduces the systemic pressures against the change.
So, if you are most concerned about your budget (e.g., expectations beyond your resources) or giving clients control over your priorities (demand management), then start with your internal economy.
On the other hand, if you’re more concerned about your employees not understanding that they’re in business to serve customers, then start with structure.
System change in either your internal economy or structure will help you develop a training department that’s the “vendor of choice” to your customers and the “employer of choice” to training professionals throughout your community.