McKinsey Quarterly

Closing the capability gap in the time of COVID-19

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Building capabilities that durably change workforce behaviors has never been easy, and the pandemic has made it harder. But some organizations have found approaches to thrive in recovery and beyond.

The COVID-19 crisis has reminded business leaders that a more capable workforce creates more resilient companies. Even before the pandemic struck, organizations faced a dizzying pace of change and the ever-present risk that today’s best-performing companies could be tomorrow’s vanquished ones. Against this backdrop, the virus and its shocks have shown how the capabilities and mindsets of an organization’s workforce provide a foundation for resilience and successful adaptation.

Sadly, though, the traditional approach to corporate training was broken long before the pandemic arrived. Despite the enormous sums spent on a wide range of capability-building programs, the results seem uneven at best. One study estimated that US companies spend more than $150 billion annually on employee learning, but that a large majority of this spending does not deliver the intended results. Indeed, this research indicated that only one in four senior managers characterize the investment in capabilities as “critical to business outcomes.”1

This is not to say there are no success stories when it comes to building capabilities to drive behavioral change. A handful of institutions have met with high levels of success historically. These efforts tend to focus on in-person, hands-on learning using real business problems or competitive simulations. Unfortunately, the pandemic put a sudden halt to such gold-standard programs because of remote-working and physical-distancing requirements. Leaders who recognize the imperative to transform their workforces thus face another enormous challenge. This unexpected bend in the road is forcing companies to innovate their capability-building approach rapidly. The implications will linger long after the pandemic ends.

That may explain why we now hear a rising call from business leaders for a new kind of capability building that works in today’s virtual environments and focuses not simply on learning but also on achieving the behavioral change that comes from the day-to-day application of new learning and skills across broad segments of the workforce. That is the holy grail of behavioral change, as well as the ultimate foundation of resilient business operations.

This article, based on a series of case examples from the pandemic, explores some of the promising approaches we have seen companies take to meet the challenge presented by the COVID-19 crisis. Significantly, many of these innovations do more than just address the problems posed by remote working. Today’s cutting-edge approaches to capability building are also contributing new ways of ensuring that employees apply their new skills regularly. While we are still in the early days of this revolution in workforce upskilling, it is clear that there are opportunities to apply the science of learning and behavioral change in real business settings under the constraints imposed by COVID-19. Companies that have harnessed these innovations have delivered sustained behavioral change via high-quality capability building in a remote world.

The lessons these efforts offer point to three areas to focus critical action as companies work toward recovery. First, more workers than ever before need new capabilities, but the ability to build these skills via in-person experiences will be limited. Thus, digital delivery will need to evolve rapidly to fill the gap. Second, given the physical gaps and the psychological distance created by the pandemic, companies need new tools and approaches to engage and motivate learners to change their behaviors. Finally, the record on sustaining behavioral change is poor. In an environment of isolation and physical distancing, it will be critical to employ new reinforcement techniques that are at once simple and robust.

Evolve digital delivery to build capabilities at a distance

Many organizations already include online training in their learning journeys, but few would say that such programs are successful. Typically comprising static videos, “try again” assessments, and pass/fail metrics, online learning has long been a poor cousin of gold-standard in-person and on-the-job capability-building programs.

But in the world of COVID-19, in-person and on-the-job capability building has become dramatically more difficult. As in the case of so many other business activities, the COVID-19 pandemic has accelerated the need to adopt and innovate with digital tools.

In the world of COVID-19, in-person and on-the-job capability building has become dramatically more difficult.

Given the new reality of economic pressure leading to tighter budgets and the need for remote working in many geographies, digital capability building for the post-COVID-19 period will become the primary professional-development opportunity for many employees. As a result, the effectiveness bar for digital programming has risen significantly. Traditional passive- and digital-learning experiences simply won’t cut it anymore. Instead, remote-learning experiences must deliver the skills employees need, while also inspiring the consistent application of those new skills, so that behaviors—and performance—ultimately improve.

One North American animal-health provider took on this new challenge. When COVID-19 halted all in-person gatherings, management pivoted to digital capability building for the entire organization. The company wanted to help all employees understand, rapidly and efficiently, what it would take for the organization to tackle business recovery successfully. To that end, a decision was teed up to top management: What capabilities do our employees need? One school of thought was to develop a bespoke capability-building program per job type, with the intent of building technical expertise. Another was to target the fundamental mindsets and behaviors required by every employee to do their job better. With cost and time pressures at play, as well as a long-term focus on sustainable change, the company went with the latter approach, leveraging a single at-scale digital program focused on a set of fundamental target skills and associated behaviors.

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The company created its playbook around five critical elements:

  1. Investing in fundamentals. Management’s first action was to pull back from its prior focus on building employee expertise and technical prowess. Instead, the leadership realized that a set of foundational behaviors was more important (for example, all employees need to understand how to deliver feedback effectively and what a good implementation plan looks like). One specific lesson each employee went through was how to prioritize their work systematically—daily, weekly, and monthly. This included a helpful, but simple, matrix that employees could use to sort their work, as well as practical tips, such as 15-minute calendar holds per day to organize themselves. By improving capabilities in these fundamental areas, the organization subtly changed the entire business.
  2. Positioning digital as the primary method of capability building. The company set the expectation that digital skill building was the first formal step for any employee seeking to develop and increase their capabilities. Each digital program on offer included an overarching story line that was engaging and consistent from lesson to lesson. Learners were required to apply concepts in practice versus simply memorizing them. For example, instead of defining a good milestone plan, users were required to analyze a sample milestone plan and make critical suggestions for improvement. With the foundation established through the digital program, employees were then encouraged to access a library of additional materials that the organization’s leaders created to reinforce each concept and provide contextual examples from the company itself.
  3. Setting priorities from top to bottom. No one was exempt from completing the digital-learning journey. One weekly senior-team meeting began with a scorecard showing team and individual completion rates, including those for C-suite executives. The intent was not to shame but to inspire by showing that everyone was on the journey together. This boosted buy-in and accountability. After six months, 93 percent of the company’s people had engaged with the digital course and were on track to complete it by the end of the year. All employees were expected to commit 30 minutes to an hour a week for capability building. Some managers even set aside weekly working sessions for their teams to stop what they were doing and work on the learning journey.
  4. Enforcing behavioral change, not content assessments. Completion statistics were tracked to enforce engagement, but success was declared only when actual changes in behavior could be observed. For example, even if 95 percent of employees completed the “having effective meetings” module, but managers saw no improvement in the quality of meetings, that module was not considered completed. Completing a digital skill-building program means nothing if employees are not actually doing things differently. To achieve this, all team leads were given standardized checklists they used on a weekly basis to score their teams’ behaviors against expectations. To reinforce core concepts, discussions of specific strengths and development areas, as well as quantitative metrics, became part of weekly meetings.
  5. Establishing a change culture. With virtually the entire company completing an identical journey, the digital program became a sort of backbone, or steady foundation. Despite the dramatic market changes and workplace disruption around employees, they relied on a common core of expectations, language, and target behaviors. The organization worked the new vocabulary into everyday conversation and even created customized videoconferencing backgrounds with common phrases from the course. Employees could be certain there was a path for growth ahead of them.

Remote-learning experiences must deliver the skills employees need, while also inspiring the consistent application of those new skills, so that behaviors—and performance—ultimately improve.

Ultimately, this company met the challenge of COVID-19 and used it as an opportunity to step up its game on capability building writ large. In fact, one silver lining also emerged from this experience. High-quality remote capability building has one clear advantage over in-person approaches: scalability. An effective remote program can reach wide swaths of even the largest, most diffuse workforce. In a remote-working environment, the premium on driving the right kinds of behaviors among midlevel and frontline leaders skyrockets. At the same time, we cannot expect behavioral changes and skills learned by a select few to cascade to the entire organization as effortlessly as they did in the past. Newly lean and remote workforces will require new capabilities for every employee. Next-generation digital programs can cost-effectively answer this need at scale.

Bridge both physical and psychological distance in virtual workshops

One universal reality of the coronavirus crisis is the reduction of in-person interactions, which has left many leaders wondering how to achieve a similar intimacy and caliber of cross-functional discussion, problem solving, and behavioral change—without sitting across a table. A simple “cut and paste” of in-person experiences to an online format does not work. Content designed for an in-person event is not always well suited to virtual formats, and the skillful facilitation of remote meetings is not a common skill. Still, the need is as great as ever, so some companies have returned to the drawing board and applied a first-principles approach to the problem. What would an effective remote capability-building program look like? What are the most important elements of such an effort?

Collaboration in a remote-working environment is difficult in many respects. Virtual training must emphasize technological fluency and problem solving in tandem with the content it delivers. At one global industrial company, training on business-case development forced small teams to synthesize raw data, access a whiteboard-style collaboration website, and work together via videoconference to value an initiative. The result: the participants not only learned the key components of a business case but also improved their ability to collaborate virtually. We believe organizations that deploy this approach to successful virtual training—and pair these virtual sessions with safe, high-impact in-person experiences—will see a multiplier effect on the impact delivered by and the sustainability of changed behaviors.

Collaboration in a remote-working environment is difficult in many respects. Virtual training must emphasize technological fluency and problem solving in tandem with the content it delivers.

There is even evidence to suggest that virtual environments can deliver experiences equivalent to or better than those of classic in-person programs. Our research with learners over the past six months shows that a well-designed virtual program can meet or exceed the efficacy of in-person offerings. Indeed, some 87 percent of learners participating in newly adapted virtual experiences agreed that they were at least as effective as an in-person event. Virtual workshops can be effective tools for organizations as they emerge into recovery from the pandemic (exhibit).

Stacked bar chart shows the majority of learners agree on the efficacy of well-designed virtual-learning experience when compared to in-person workshop.

The experience of one South American multinational logistics company provides some lessons on how to maximize virtual workshops’ effectiveness. Before the pandemic, the organization was set to embark upon a two-year full-scale business transformation. A core pillar of the effort was ensuring that employees were equipped with the skills and capabilities they would need to drive a successful transformation.

Then COVID-19 hit. As economic and health challenges mounted, it would have been easy to delay the transformation. Instead, the organization decided to take a long-term view of the business and pushed forward. Leaders in the business realized that they would rapidly need to adapt the planned approach to capability building from in-person to virtual learning. Among the guiding principles they followed to design and deliver virtual workshops were the following three:

  1. Opt for interactivity over content. When training sessions fail, the typical autopsy report points to “death by PowerPoint.” More than ever, it is the quality of facilitation and breadth of discussion that make or break a remote-learning experience rather than any novel information on a slide. For example, one full-day in-person workshop reduced the number of slides it used from about 80 to roughly 20. A majority of the time was spent in small groups where participants explored thought starters that helped them create the key insights together. The engagement and debate elevated the employees’ experience.
  2. Lean into the technology. Instead of apologizing upfront for the technology, the company embraced it and generated excitement among participants. For example, facilitators insisted that everyone should participate with video and made extensive use of smaller, intimate breakouts. The company had never used videoconferencing before, so this training allowed finance analysts to see their business partners for the first time, thereby fostering new connections. Individuals who had been on phone calls for years finally had a chance to spend hours together learning, laughing, and debating in a safe environment. Effective virtual programs can, in just a few days, break down siloes that have been built up over years, changing how employees communicate and connect long after the workshop ends.
  3. Make leadership visible. Because the logistics of in-person workshops are cumbersome, leadership participation in traditional workshops was either nonexistent or very limited. This approach won’t pass muster with newly lean remote workforces that are tired, anxious, and yearning for leadership. Virtual workshops can more effectively bridge the gap between the leadership and employees. Because no travel was required, the company was able to secure multiple hour-long blocks of time with the CEO and other senior leaders to speak face-to-face with employees and actually participate in the program. Said one of the company’s buyers: “I have talked with my boss’s boss more today than in the last two years combined.”

Innovate reinforcements to sustain behavioral changes

Designing reinforcements to sustain behavioral changes has never been easy. The typical assumption has been that merely delivering a capability-building program leads to changed behavior. But this linkage is unsupported. Before COVID-19, managers relied on informal feedback loops with office colleagues as a partial remedy for this lack of reinforcement mechanisms. Such interactions were by no means comprehensive but helped to bridge the gap partially.

Today, remote working has taken this and other approaches to reinforcing changes in mindsets and behaviors off the table. The good news is that the science behind shifting mindsets and behaviors is instructive, and some companies have used these lessons to create reinforcement approaches adapted to remote-working environments. Although this is still early days, initial results have been positive.

The guiding principles for sustaining behavioral change over the long haul are as valid today as they were before the pandemic hit. Managers must set clear expectations for change, and employees must be nudged and guided to meet those expectations. Two primary and proven techniques are available to help in this effort: direct association and enforcing consequences, both positive and negative. Direct association, in this context, means linking desired behaviors to actual business outcomes relevant to employees. Likewise, good or bad consequences provide real-time course corrections to keep behavioral change on track.

We have observed many companies beginning to experiment with novel applications of direct association and consequence enforcement. Although it is too early to draw definitive conclusions from these efforts, their successes and shortfalls in delivering critical reinforcement to behavioral-change programs illustrate their promise and pitfalls.

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One South Pacific telecommunications operator actively took on reinforcement through direct association after COVID-19 had interrupted an in-person capability-building program. With that option off the table, the leadership team quickly adapted and held a set of virtual workshops designed with that format in mind. To reinforce the content, they organized employee-led “lunch and learn” sessions to associate desired behaviors with the broader organization’s performance goals. Each 45-minute session focused on a specific topic seeded from the formal workshop and was exclusively discussion based and directly linked to events or initiatives happening that week. The team created an approachable environment with minimal slides and no senior leaders present. Open and engaging discussion helped to close the circle between classroom content, employee behavior, and actual business outcomes in real time. Two months into the lunch sessions, 94 percent of employees agreed with the statement “I am getting the support I need to grow my capabilities to lead or be part of a remote team.”2

While the journey to build capabilities has only gotten harder in the remote-working world of COVID-19, the imperative to create more capable workforces has never been greater.

Some companies have pushed for even greater innovation with highly customized real-time “nudges”—both positive and negative. At a large industrial manufacturer in North America, the capability-building program’s front end was a mobile application. Rather than merely delivering the content, managers could use the app to send customized nudges to employees, with interesting teasers of what they would learn, goals and encouragement for the week, and positive reinforcement when programming was completed ahead of schedule. A manager who noticed that an employee was not exhibiting desired behaviors could seamlessly assign additional programming, as well as provide direct feedback. This provided all employees—from people working remotely at home to those working on the factory floor—with personalized reinforcement.

Others have seen their efforts fall flat when they deviated from a proven approach. A large Japanese bank insisted on the use of a noncustomized, automatic email campaign to send messages to employees at the end of each week with rolled-up statistics and a reminder of tasks to complete the next week. These generic emails lacked reinforceable and specific consequences. Moreover, they failed to establish clear behavioral-change expectations or link them to broader business goals. Employee behaviors quickly reverted to the status quo.

While the journey to build capabilities has only gotten harder in the remote-working world of COVID-19, the imperative to create more capable workforces has never been greater. Organizations committed to exercising this strategic lever have shown that evolving their digital programming, investing in high-quality virtual workshops, and designing formal new reinforcement programs will make them better off in the recovery and more capable and resilient in the long run.

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