What is Organisational Learning and Why is it Important?

Feb 04, 2021


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The COVID-19 pandemic has thrown the global economy into great uncertainty. Coupled with constantly evolving technology and increasingly demanding customer needs, businesses today are facing unprecedented challenges. An organisation’s ability to learn quickly and adapt readily to such volatile market conditions can be a significant competitive advantage. As a result, organisational learning has gained prominence in recent times.

Organisational learning is a process of creating and transferring knowledge within an organisation. To fully reap the benefits of organisational learning, organisations should continually adapt their behaviour to reflect the new knowledge gained from this process. Instead of simply doing things “the way we have always done it”, organisations can gain knowledge and improve over time by learning from its experiences.

Learning can take place in any of these four communities: individual, team, organisational, and inter-organisational. An individual can learn new skills or ideas and contribute positively to an organisation by increasing his or her productivity at work, but the biggest gains occur when the knowledge is shared across the organisation.

Organisational Learning in Practice

Going a step further from the standard training and development programmes, the organisational learning theory emphasises the importance of developing a learning culture within the organisation. A learning culture includes shared visions, values, systems and practices that support and encourage continuous learning and improvement.

From a practical standpoint, there are various ways to implement organisational learning. Toyota Motor Corporation, which is often seen as the benchmark for organisational learninghas several practices including the creation of learning labs.Itregularly conducts hansei events at key milestones in a vehicle programme to reflect on the development process. Hansei which translates to ‘reflection’ is a central idea in Japanese culture, where one recognises his or her mistakes and pledges improvement. In a similar vein, Deloitte conducts change management conversations after specific events, where the organisation takes stock of its collective performance and looks at what worked, what went wrong, and what needs to be improved. We take a look at the key benefits of organisational learning.

1. Increases employee engagement

Your employees are your greatest asset and investing in their learning can bring valuable returns in the form of employee engagement and commitment.  Engaged employees are more likely to not just stay in their jobs, but also go the extra mile to help their organisation achieve better business outcomes. According to a Towers Perrin research, companies with engaged workers have a 6% higher net profit margin.

A learning culture helps to engage employees by creating a shared vision and a sense of collective commitment towards knowledge sharing. Shared accountability towards learning encourages employees to communicate and collaborate, ask questions, and challenge themselves and their peers. Instead of simply showing up and routinely completing given tasks, employees in a learning organisation feel that they can actively contribute to the growth of their peers and their organisation.

2. Improves productivity and efficiency

On an individual level, it has been found that a 10 percent increase in employee education levels yields an 8.6 percent increase in productivity. Employees who are equipped with the knowledge they need can perform their roles with more confidence and higher efficiency. The relationship between an organisation and its employees is a symbiotic one, and as employees gain knowledge and improve over time, so does the organisation.

Moreover, an organisation or team is greater than the sum of its individual employee’s abilities. When employees share insights and brainstorm together, problems can be solved better and faster. Knowledge and performance can also improve exponentially. The success of tackling complex business challenges multiplies when you leverage cross-functional learnings and synergy.

3. Fosters innovation

As the saying goes, “teamwork makes the dream work”. When employees come together to brainstorm and collaborate, ideas have the potential to get bigger and brighter.

Innovation cannot be forced; it needs to be fostered in the right environment. A learning culture fuels innovation as it empowers employees to continually challenge the status quo to experiment (and sometimes fail), and pursue new ways of doing things. An organisation’s leaders are pivotal in creating a safe learning environment and they should embody the open-mindedness and curiosity that they hope to see in their employees. When there is an emphasis placed on learning, even problems and mistakes become opportunities to reflect, innovate, and improve.

4. Raises the bar

The emphasis on learning and continuous improvement helps to raise the bar across many aspects. Positive influences can be seen in an organisation’s innovation, strategic flexibility, employee satisfaction and general performance. In increasingly volatile and uncertain economic conditions, developing a culture for learning can only benefit your organisation, as it thrives on the knowledge and solutions that your employees create.

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