Saturday, May 24, 2008

Two Cool Ideas from Quebec’s Law 90

The government of Quebec has fostered some of the most unique and amazing work in identifying and promoting skills development in North America. Its Law 90, which requires that employers with a payroll of $1 million or more per year spend at least 1 percent of payroll on training—or pay the equivalent into a fund that goes to promoting workforce development—has had many positive effects.

In the long run, it has significantly increased the participation in learning programs by adults. When the law was passed in the mid-1990s, participation was well below the Canadian average. Now it is near it.

But it’s also fostered some really creative thinking and programs. Some ideas I found really interesting:

Good Idea One: Right now, Quebec is certifying skills in a number of job categories (mostly skilled trades from what I understand). This not only allows people to focus training, but also to help identify transferrable skills so that, should a factory be closed (as happened a lot in my own neighborhood, when the clothing manufacturing was transferred to China earlier this spring), the transferrable skills become more easily identified, other suitable forms of employment are more easily identified, and employers are more comfortable that they’re hiring appropriately skilled workers.

(In fact, I heard a really inspirational story about a group of women immigrants in their 40s who were laid off of jobs at a clothing manufacturing plant. A job counselor spoke with them at length about their past work and skills and, in analyzing these discussions, teased out the transferrable skills. She determined that these women would make great machinists in other manufacturing operations and convinced a metal manufacturer to hire them, where these women are now working.

This is all the more significant because many of these women had not worked for any other employer in Canada and, on their own might not have found such skilled employment that could help them retain their salary levels.)

This also confirms my belief that e-portfolios and similar tools, alone, are not enough. Only skilled analysis by qualified reviewers can tease out and use the information in these portfolios for good purposes.

Good Idea Two: Although organizations whose annual payroll is below $1 million are not required to set aside 1 percent for skills development, Quebec still tries to help them. One ways is the establishment of training consortia (mutuelles en francaise) among small and medium enterprises, which are essentially training buying clubs. In some ways, they work like these small investor clubs by pooling everyone’s resources together to buy in bulk. So a small organization that might not even have enough people to warrant a private management training class (and would have to pay significantly more to send a single student to class) now can work with other organizations in either their geographic region or industry (as these mutuelles are organized) to purchase the class and hold it onsite.

But mutuelles go further: they are nonprofit organizations and have a small staff that not only conducts the purchasing, but works with members to identify their training needs. To be honest, that’s kind of a necessary practice. Without knowing what’s needed, how would the staff of the mutuelle know what training programs to schedule?

I thought this was significant because, before I left the US, a number of large training vendors were trying to get Fortune 100 corporations to outsource their entire training operations to a single vendor. For the most part, this value proposition never flew. But Quebec was able to make this happen by working at the other end of the size spectrum (small to medium enterprises), and by using a nonprofit consortium rather than a for profit vendor structure to sell the service. In addition, the Quebec government provides some additional financial support for these mutuelles through funds available in the 1 percent fund (the funds that organizations pay into if they have not met their minimum on training.)

Most significantly, these mutuelles help small and medium enterprises provide a level of development to their staffs that most might otherwise neglect.

One Last Thing: Although some people might think that the 1 percent law is pretty excessive, consider it in relation to typical training expenditures. According to ASTD’s numbers, a typical organization spends somewhere around 1.5% of payroll on training. Organizations that have unusually high staff development needs spend 2 or more percent. These are usually in high growth and emerging industries, like pharmaceuticals, high tech, and biotech. Organizations in mature industries typically spend less, but around 1 percent. In other words, the 1 percent is a bare minimum of what organizations would spend anyway if they were like other organizations.

Investing more in training, however, has positive benefits. Laurie Bassi, a former Director of Research for ASTD, correlated spending on training with overall organizational performance and found that the higher the spending on training, the stronger the overall organizational performance. She ran the numbers for bad times and good and found the same trend. She believed in her work so much she left ASTD and founded a fund that invests in organizations, with the investment in training serving as a significant criterion for selection.

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