Training Development

Chapter One

Introduction to Employee Training and Development

Objectives

After reading this chapter, you should be able to

Discuss the forces influencing the workplace and learning, and explain how training can help companies deal with these forces.

Draw a figure or diagram and explain how training, development, informal learning, and knowledge management contribute to business success.

Discuss various aspects of the training design process.

Describe the amount and types of training occurring in U.S. companies.

Discuss the key roles for training professionals.

Identify appropriate resources (e.g., journals, websites) for learning about training research and practice.

Forces Affecting the Workplace Make Training a Key Ingredient of Company Success

Customer service, employee retention and growth, the economy, a multigenerational workforce, the use of new technology, extending learning beyond the classroom—these are just some of the issues affecting companies in all industries and sizes and influencing training and development practices. The four companies discussed below—Best Buy, Valvoline, Sonic Automotive, and Dow AgroSciences—show how these concerns have affected companies in several different business sectors and how training and development have helped them succeed.

Many companies, recognizing that learning goes beyond typical face-to-face classes, are using technology to make it easier for employees in different locations to learn and share knowledge through formal courses, as well as through collaboration. For example, Best Buy, the electronics retailer, introduced a new app called Gravity to appeal to the way that millennial employees prefer to access training materials and learn. Users of any type of smart device such as a smartphone or tablet computer can use Gravity to scan a product’s UPC or QR code and

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access short training videos and key product information. This allows employees to personalize learning by scanning products as they walk through the store when they are not helping customers. Employees can use Gravity to expand their knowledge on a product they are somewhat familiar with or learn about new products. They also can use Gravity to quickly answer a customer’s question. Best Buy employees are using Gravity at an amazing rate and it’s paying off. In less than one year, employees have used Gravity more than one million times; on average, they have viewed three unique pages of information each time. Products supported by Gravity show an average increase of 23 percent of unit sales compared to before the app was available.

The next time you pass an oil change store while driving or purchase an oil change for your car, consider the training received by the employees who are servicing your vehicle. Valvoline Instant Oil Change’s training program includes online, managerial-led and instructor-led training combined with skills assessments and tests. Within 60 days of their hire date, new team members complete 270 hours of training, earning them certification in top-side (garage floor), bottom-side (under the automobile), and guest greeting procedures and 10 additional services.

Sonic Automotive, an auto dealership with over 100 locations, faced the challenge of how to decrease the turnover rate and develop the leadership and management skills of its Service and Parts leaders whose previous jobs involved working close to the customer. Sonic developed a new program to help these leaders become more proficient in the managerial and leadership skills needed to effectively perform their jobs and to help them avoid feeling frustrated in their new role. The Fixed Operations Academy at Sonic includes two interactive, instructor-led, one-week training sessions; debrief webinars in which the leaders-in-training share their experiences as they try out their new skills; and assessments used to evaluate leaders’ skill acquisition. Also, each leader identifies how they can improve at their store and completes and implements an action plan to do so.

Dow AgroSciences provides products and services to help produce food to feed the world. Its products include seeds and pest and weed control products, as well as services such as pasture management. The sales professionals at Dow AgroSciences work in a business environment that is increasingly competitive, with demanding customers and frequent new product and process innovations. To prepare new sales professionals to be successful in this environment, training at Dow AgroSciences includes actual selling scenarios, role plays, peer and trainer feedback, and access to learning resources. Trainees work on projects for eight months before they are assigned to a sales territory.

Several companies are trying to meet millennials’ need for opportunities to grow and develop. At Amazon, millennials can move at their own pace because the company does not have any time-in-position requirement. All employees are encouraged to ask about development opportunities and one-on-one conversations are held to communicate opportunities within Amazon. At Taco Bell’s restaurant support center, millennials can serve on cross-functional employee teams that meet for one to two months to work on business challenges. This provides an opportunity for millennial employees to work creatively, take responsibility for solving an important problem,

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and network with others. One of the challenges with all employees, including millennials, is making sure they recognize the value of in-job and lateral development opportunities that don’t immediately result in a promotion. Lincoln Financial Group emphasizes that for career success millennials should expand their portfolio of experiences rather than solely focusing on promotions along a specific career path.

Sources: Based on “Outstanding Training Initiatives, Best Buy: Gravity,” training (January/February 2017), p. 100; M. Weinstein, “Sonic Automotive Revs Its Leadership Engine,” training (January/February 2017), pp. 46–50; P. Harris, “The Relentless Pursuit of Better,” TD (October 2017), pp. 28–30; “Training Top 125 2018 Rankings 36–45, Valvoline Instant Oil Change,” training (January/February 2018), pp. 58–59; “Training Top 125 2018 Rankings 116–120, Dow AgroSciences LLC,” training (January/February 2018), pp. 82–83; J. Ramirez, “Generation D,” Human Resource Executive (October 2, 2017), pp. 10–12.

INTRODUCTION

The examples discussed in the chapter opener illustrate how training can contribute to companies’ competitiveness. Competitiveness refers to a company’s ability to maintain and gain market share in an industry. Although they are different types of businesses, these four companies have training practices that have helped them gain a competitive advantage in their markets. That is, their training practices have helped them grow the business and improve customer service by providing employees with the knowledge and skills they need to be successful.

Companies are experiencing great change due to new technologies, rapid development of knowledge, globalization of business, and development of e-commerce. To remain competitive in this environment, companies must take steps to attract, retain, and motivate their workforces. Training is not a luxury; it is a necessity if companies are to participate in the global and electronic marketplaces by offering high-quality products and services. Training prepares employees to use new technologies, function in new work systems such as virtual teams, and communicate and cooperate with peers or customers who may be from different cultural backgrounds.

Human resource management refers to the policies, practices, and systems that influence employees’ behavior, attitudes, and performance. Human resource practices play a key role in attracting, motivating, rewarding, and retaining employees. Other human resource management practices include recruiting employees, selecting employees, designing work, compensating employees, and developing good labor and employee relations. Chapter Two, “Strategic Training,” details the importance placed on training in comparison to other human resource management practices. To be effective, training must play a strategic role in supporting the business.

Human resource management is one of several important functions in most companies. Other functions include accounting and finance, production and operations, research and development, and marketing. Keep in mind that although human resource management practices (such as training) can help companies gain a competitive advantage, the company needs to produce a product or provide a service that customers value. Without the financial resources and physical resources (e.g., equipment) needed to produce products or provide services, the company will not survive.

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This chapter begins by defining training and development and discussing how the training function has evolved. Next, the forces that are shaping the workplace and learning are addressed. These forces influence the company’s ability to successfully meet stakeholders’ needs. The term stakeholders refers to shareholders, the community, customers, employees, and all the other parties that have an interest in seeing that the company succeeds. The discussion of the forces shaping the workplace (including technology, globalization, and attracting and winning talent) highlights the role of training in helping companies gain a competitive advantage.

The second part of the chapter focuses on current trends in training practices. This section also introduces you to the trainer’s role in a business and how the training function is organized. This section should help you understand current training practices, the types of jobs that trainers may perform, and the competencies needed to be a successful trainer (or, if you are a manager, the competencies needed to identify a successful trainer). The chapter concludes with an overview of the topics covered in the book.

TRAINING AND DEVELOPMENT: KEY COMPONENTS OF LEARNING

Our focus in this book is to help you understand the role of training and development in today’s organizations. To do this, it is important for you to understand what training and development means in the broader business context. Figure 1.1 shows the role of training and development for the business. The overall goal of training and development is learning. Learning refers to employees acquiring knowledge, skills, competencies, attitudes, or

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behaviors. But the focus of training and development is not just on employees learning for its own sake. Today, merely offering training programs is not enough to get support and funding from executives and to establish the credibility of the training and development function to managers and employees. Learning needs to demonstrate how it contributes to the company’s competitive advantage through improving employee performance, supporting the business strategy (such as growing the business), and contributing positively to business outcomes such as quality, productivity, development of new products, and retaining key employees. From a company’s perspective, what employees learn contributes to the development of intangible assets such as human capital. Human capital refers to knowledge (know what), advanced skills (know how), system understanding and creativity (know why), and motivation to deliver high-quality products and services (care why).1 Human capital may be more valuable than physical capital (equipment or technology) or financial capital (monetary assets, cash) for providing a company with an advantage over its competitors, because it is difficult to imitate or purchase and it is unique to the company.

FIGURE 1.1 The Business Role of Training and Development

There are a number of different ways that learning occurs in a company. They are represented on the outside of the circle in Figure 1.1. Training refers to a planned effort by a company to facilitate learning of job-related competencies, knowledge, skills, and behaviors by employees. The goal of training is for employees to master the knowledge, skills, and behaviors emphasized in training and apply them to their day-to-day activities. Traditionally, companies have relied on formal training through a course, program, or “event” to teach employees the knowledge, skills, and behaviors they need to successfully perform their job. Development is similar to training, except that it tends to be more future-focused. Development refers to training as well as formal education, job experiences, relationships, and assessments of personality, skills, and abilities that help employees prepare for future jobs or positions. We will discuss development in more detail in Chapter Nine, “Employee Development and Career Management.” Formal training and development refers to training and development programs, courses, and events that are developed and organized by the company. Typically, employees are required to attend or complete these programs, which can include face-to-face training programs (such as instructor-led courses) as well as online programs. As you will see later in the chapter, U.S. companies invest billions of dollars in formal training.

Informal learning is also important for facilitating the development of human capital.2 Informal learning refers to learning that is learner initiated, involves action and doing, is motivated by an intent to develop, and does not occur in a formal learning setting.3 Informal learning occurs without a trainer or instructor, and its breadth, depth, and timing is controlled by the employee. It occurs on an as-needed basis and may involve an employee learning either alone or through face-to-face or technology-aided social interactions. Informal learning can occur in many different ways, including through casual unplanned interactions with peers, e-mail, informal mentoring, or company-developed or publicly available social networking websites such as Twitter or Facebook. The application of social media from a marketing strategy to a learning strategy and the availability of Web 2.0 technologies such as social networks, microblogs, and wikis allow employees easy access to social learning or learning through collaboration and sharing with one or two or more people.4 One estimate is that informal learning may account for up to 75 percent of learning within organizations.

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One reason why informal learning may be especially important is that it may lead to the effective development of tacit knowledge, which can be contrasted with explicit knowledge.5 Explicit knowledge refers to knowledge that is well documented, easily articulated, and easily transferred from person to person. Examples of explicit knowledge include processes, checklists, flowcharts, formulas, and definitions. Explicit knowledge tends to be the primary focus of formal training and employee development. Tacit knowledge refers to personal knowledge based on individual experiences that is difficult to codify. The characteristics of formal training and development programs, such as the relatively short duration of classroom or online training and limited opportunities for practice, may limit the extent to which tacit knowledge can be acquired. Thus, informal learning is central to the development of tacit knowledge because it involves employee interactions in personal relationships with peers, colleagues, and experts through which tacit knowledge is shared. It is important to recognize, however, that informal learning cannot replace formal training and employee development. Formal training and development are still needed to prepare employees for their jobs and to help them advance to future positions. Informal learning complements training by helping employees gain tacit knowledge that formal training cannot provide. In fact, research suggests that providing opportunities for formal training encourages employees to engage in follow-up informal learning.6

Knowledge management refers to the process of enhancing company performance by designing and implementing tools, processes, systems, structures, and cultures to improve the creation, sharing, and use of knowledge.7 Knowledge management contributes to informal learning. Consider G4S Secure Solutions, which provides security solutions around the world.8 Its employees are spread across field offices and client locations. Most G4S security officers don’t have computer access or are restricted by client firewalls. But security officers need timely information in order to protect clients and property. Seeking and sharing knowledge can help save lives. As a result, the company developed an Internet and social networking solution. It provides access to company materials, announcements, policies and procedures, training manuals, operational and support tools, and best practice forums. It can be accessed from anywhere, giving employees the ability to ask questions across the company as well as within their office, location, or work team. The solution includes social networking features similar to Facebook. Employees can create profiles that have their skills, interests, achievements, projects, and contact information. They can participate in threaded discussions. Tags can be used to identify similar documents or discussions on the same topic. Caterpillar Inc., a manufacturer of construction and mining equipment, engines, and gas turbines, has likewise moved toward becoming a continuous learning organization with the help of knowledge management.9 Thirty years ago, Caterpillar had most of its value in its plant and equipment. Today, intangible assets account for most of the company’s value. Caterpillar’s web-based knowledge management system, known as Knowledge Network, has thousands of communities of practice. They range in size from small teams to hundreds of employees worldwide. The communities of practice are useful resources for employees to gain both explicit and tacit knowledge. They are used to distribute information, post questions, and provide space for reference materials. One community of practice focused on bolted joints and fasteners, thus giving specialized engineers who generally work alone in manufacturing facilities the ability to ask other engineers questions or get second opinions on designs and problems. The communities of practice at Caterpillar have resulted in improved decision making, increased collaboration

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and teamwork, and better product design and development. For example, members of the Bolted Joints and Fastener community and the Dealer Service Training community have saved the company more than $1.5 million using online discussions.

Many companies that recognize the value of learning have taken steps to ensure that formal training and employee development are linked to strategic business objectives and goals; use an instructional design process to ensure their effectiveness; and compare or benchmark the company’s programs against competitors or other companies in the industry.10

Consider the role of learning at Western Union.11 Western Union, a financial services company, faces many business challenges such as changing regulations, intense competition, and the need to deliver a better customer experience by providing new products and enhanced technology for making payments and sending money. One estimate is that Western Union conducts 31 customer transactions per second! Meeting these challenges required its managers to create and model a new high-performing work culture for employees. Leadership in Action (LIA) was designed to get its top leaders to embrace the change and help teach other managers about it. The company’s top leaders met with small groups of company leaders each month to discuss key leadership topics such as empowerment, accelerating performance through feedback and accountability, and making informed pay decisions. The face-to-face learning circles were supplemented with other content delivered in a number of different ways, including instructor-led training, e-learning, role play, serious games, and social media.

This discussion is not meant to underestimate the importance of “traditional training” (which focuses on the acquisition of knowledge, skills, and abilities), but it should alert you that, for many companies, training is evolving from a focus on skills to an emphasis on continuous learning and the creation and sharing of knowledge. This evolution of training is discussed in Chapter Two.

DESIGNING EFFECTIVE TRAINING

The training design process refers to a systematic approach for developing training programs. Figure 1.2 presents the seven steps in this process. Step 1 is a needs assessment, which is necessary to identify whether training is needed. Step 2 is to ensure that employees have the motivation and basic skills necessary to master the training content. Step 3 is to create a learning environment that has the features necessary for learning to occur. Step 4 is to ensure that trainees apply the training content to their jobs. This step involves having the trainee understand how to manage skill improvement, as well as getting co-worker and manager support.

FIGURE 1.2 Training Design Process

Step 5 is to develop an evaluation plan. Developing an evaluation plan includes identifying what types of outcomes training is expected to influence (for example, learning, behavior, or skills), choosing an evaluation design that allows you to determine the influence of training on these outcomes, and planning how to demonstrate how training affects the “bottom line” (that is, using a cost-benefit analysis to determine the monetary benefits resulting from training). Step 6 is to choose the training method based on the learning objectives and learning environment. This step may include a traditional training method of face-to-face interaction with a trainer or e-learning using web-based training or mobile learning. Step 7 is to evaluate the program and make changes in it or revisit any of the

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earlier steps in the process to improve the program so that learning, behavior, change, and other learning objectives are obtained.

The training design process shown in Figure 1.2 is based on principles of Instructional System Design. Instructional System Design (ISD) refers to a process for designing and developing training programs. There is not one universally accepted instructional system development model. The training design process sometimes is referred to as the ADDIE model because it includes analysis, design, development, implementation, and evaluation.12 In Figure 1.2, Step 1 (Conducting needs assessment) and Step 2 (Ensuring employees’ readiness for training) are related to analysis. The next three steps—Creating a learning environment; Ensuring transfer of training; and Developing an evaluation plan—are design issues. Step 6 (Selecting and using a training method) relates to implementation. Step 7 (Monitoring and evaluating the program) relates to evaluation. Regardless of the specific ISD approach used, all share the following assumptions:13

Training design is effective only if it helps employees reach instructional or training goals and objectives.

Measurable learning objectives should be identified before the training program begins.

Evaluation plays an important part in planning and choosing a training method, monitoring the training program, and suggesting changes to the training design process.

Trainers for AbsorbU, the internal college for ITU AbsorbTech, an industrial laundry service company, design courses using the ADDIE model.14 AbsorbU focuses on learning needs related to customer service, production, leadership, and sales. AbsorbU trainers find that using the ADDIE model helps them to identify training needs and desired results and focus attention on knowledge transfer or behavior change. Also, they use ADDIE when they are revisiting courses to ensure that the content remains useful.

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Overcoming the Flaws of the ISD Model

Some training professionals argue that the ISD model is flawed for several reasons.15 First, in organizations, the training design process rarely follows the neat, orderly, step-by-step approach of activities shown in Figure 1.2. Second, in trying to standardize their own ISD method used in the training function, some organizations require trainers to provide detailed documents of each activity found in the model. This adds time and cost to developing a training program. Third, the ISD implies an end point: evaluation. However, good instructional design requires an iterative process of design, execution, evaluation, and reconsideration of the needs that the program was designed to meet, as well as the learning environment, the transfer of training, and all the other activities in the ISD process. Fourth, many companies claim to use an instructional design approach but dilute its application.16 This might include assuming that training is the best solution without investigating other causes for performance gaps, failing to identify training objectives and results, focusing too much on the training method while ignoring the role of the work environment in transfer of training, and concentrating evaluation on whether trainees liked the program rather than measuring the impact of training on job performance or business results. Despite these criticisms, use of the ISD process is the best way to help ensure the effectiveness of training and development.

The training design process should be systematic, yet flexible enough to adapt to business needs. Different steps may be completed simultaneously. For example, as Suffolk Construction’s business grew, the company experienced an increased need for training.17 Company leaders also needed the training department to reduce the amount of time it typically used for developing and revising training. As a result, the training team adapted the ADDIE model to include three “lean” management principles (flow efficiency over resource efficiency, active visualization, and continuous improvement). Use of the lean principles has allowed Suffolk to provide internal clients with benchmarks of time and cost estimates for designing and developing learning content. It can also provide internal clients with a visual model of the course creation process so they can better understand it. Keep in mind that designing training unsystematically will reduce the benefits that can be realized. Choosing a training method before determining training needs or ensuring employees’ readiness for training increases the risk that the method chosen will not be the most effective one for meeting training needs. Also, training may not even be necessary and may result in a waste of time and money. Employees may have the necessary knowledge, skills, or behavior but simply lack the motivation to use them.

The introduction of new technologies such as mobile learning (discussed in Chapter Eight) highlights a shift from trainees having to learn from an instructor in one location to trainees learning independently and not being bound to learning in the workplace. Still, good training design requires determining the trainees’ needs, identifying resources so that trainees can learn what they need to know, and providing trainees with access to reference materials and knowledge bases when they encounter problems, issues, or questions on the job.18

The development of a web-based training program focused on teaching managers the skills needed to run effective business meetings provides a good example of the instructional design process. The first step of the process, needs assessment, involved determining that managers lacked skills for conducting effective meetings and helped to identify the type of meetings that managers were involved in. The needs assessment process involved

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interviewing managers and observing meetings. The needs assessment process also identified the most appropriate training method.

Because the managers were geographically dispersed and had easy access to computers, and because the company wanted a self-directed, self-paced program that the managers could complete during free time in their work schedule, the training designers and company management decided that web-based training was the appropriate method. Because training was going to be conducted over the web, the designers had to be sure that managers could access the web and were familiar with tools (e.g., web browsers) involved in using it. This related to determining the managers’ readiness for training.

The next step was to create a positive learning environment on the web. Designers made sure that the program objectives were clearly stated and provided trainees with opportunities within the program for exercises and feedback. For example, trainees were asked to prepare an outline for the steps they would take to conduct an effective meeting. The designers built into the program a feedback system that indicated to the managers which of the steps they outlined were correct and which needed to be changed. The designers also included assessment tests that allowed the trainees to receive feedback through the program and to skip ahead or return to earlier material based on their test scores. The assessment included a test of meeting skills that the managers completed both prior to and after completing the program. Results were stored in a data bank that the company could then use to evaluate whether trainees’ meeting skills had improved from pretraining levels.

THE FORCES INFLUENCING WORKING AND LEARNING

Table 1.1 illustrates the forces that influence working and learning. Globalization of business, demographic changes, new technologies, and economic cycles are some of the forces shown in Table 1.1 that influence all aspects of our lives—how we purchase products and services, how we learn, how we communicate with each other, and what we value in our lives and on the job.19 These forces are affecting individuals, communities, businesses, and society. To survive, companies must address these forces—with training playing an important role.

TABLE 1.1 Forces Influencing Working and Learning

Economic cycles Globalization Increased value placed on intangible assets and human capital Focus on link to business strategy Changing demographics and diversity of the workforce Talent management Customer service and quality emphasis New technology High-performance work systems

Economic Cycles

Today, there are many signs that the U.S. economy is healthy.20 The stock market recently reached record highs: The Dow Jones Industrial Average has exceeded 20,000 in 2018. Annual growth in economic output is close to 3 percent. Based on their confidence in the

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economy, many U.S. businesses are adding jobs and expanding. The labor market is at or close to full employment, with an historically low employment rate that has reached below 4 percent. For some workers, wages have increased as the economy grew, unemployment dropped, and companies experienced labor shortages. For example, pay for workers in retail jobs rose 3.8 percent in the second quarter of 2018. Skilled job candidates in high-demand fields such as information technology received competing offers with increasing pay. Regardless of wage growth, because the consumer-price inflation remains low, workers lose less of what they earned due to the rising costs of goods and services. It is important to recognize that regardless of the current economic cycle, training has been shown to positively contribute to a company’s performance. For example, companies that used more selective staffing and training before the economic recession of 2009 outproduced and had better performance than competitors before the recession and recovered more quickly.21

However, there are several threats to economic growth.22 The Federal Reserve is faced with the challenge of how much to raise interest rates to avoid inflation or stimulating a recession when unemployment rates and economic growth move back toward their historical levels. President Trump has proposed tariffs on imports from China to try to reduce the U.S. trade deficit, which was over $502 billion in 2016 and the largest deficit in four years. He is also renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico. The U.S. trade deficit means that the United States imports more products than it exports to the rest of the world. President Trump believes that taking actions on trade will continue to stimulate economic growth and support U.S. jobs, especially for working-class Americans. However, the relationship between trade, economic growth, and employment is complex, and it is influenced by factors such as currency exchange rates and government spending and taxation. In fact, the United States has had trade deficits during periods of economic expansion and recession, and under high and low employment. If the United States enacts tariffs and tough trade policies, other countries may retaliate by placing tariffs on U.S. imports. This could actually hurt and not help U.S. businesses. For example, U.S. manufacturers such as John Deere and Boeing, which use imports such as aluminum and steel from other countries to make their products, would experience increased production costs, which could result in the loss of jobs. Tariffs on U.S. products would also hurt technology companies such as Apple, which has a large global market for its products, including China.

One of the implications of the current economy with low unemployment rates is that companies are unable to find employees with the skills they need to expand their operations, replace retiring employees, or keep up with increased demands for their products and services.23 Also, valuable high-performing employees may be looking to change jobs for higher wages or better career opportunities.

As a result, companies in many industries, including hospitality, retail, and manufacturing, are having problems attracting, finding, and retaining talented employees with the skills they need. Many are using training as part of the solution. For example, consider the hospitality and retail industries.24 One estimate is that there is a 70 percent annual turnover rate in hospitality jobs, which includes hotels and restaurants. A large number of employees in hospitality jobs are leaving for more attractive and better-paying jobs in other industries with more career opportunities. This has created an urgent need for hotels to take steps to attract and retain employees. One of the steps being taken by the hotel industry is to offer tuition assistance to attract, retain, and prepare new employees for managerial roles.

The American Hotel & Lodging Association and Pearson PLC are testing a new program for hotel industry employees that will cover the cost of a two-year online associate’s degree and a significant portion of the cost of a bachelor’s degree. Ten companies, including Red Roof Inns and Wyndham Hotels and Resorts, with a total of 50,000 employees are participating in the program.

Retail is an increasingly competitive business, with companies striving to meet customer needs at the lowest price yet attract and retain valuable employees. To avoid losing employees who otherwise might leave for a better career opportunity, Walmart has made a two-year investment of over $2.7 billion to increase workers’ wages as well as provide additional training. Walmart’s training for both new and experienced associates is designed to provide them with the interpersonal and business skills they need to be successful, share possible career paths they might pursue, help them understand the retail business model, and explain the reasons for the job tasks they are asked to perform. For one part of the training, Walmart has built over one hundred training academies located across the country. Associates attend classroom training, provided in rooms in the back of stores, and practical training on the floor of the store. Associates can choose to study topics such as leadership, merchandising, operations, technology, and customer service. They also receive training related to the department in which they work, such as produce. The goals of the training investment are to increase employee satisfaction and skills, which in turn lead to better customer service.

Some companies are even extending training beyond their current workforce to ensure they have employees available in the future.25 GW Plastics, based in Vermont, provides high school students with for-credit classes in advanced manufacturing at its plant. The company also has a scholarship program that pays for the cost of tuition and provides a paid internship for students earning a degree in mechanical engineering technology at Vermont Technical College. APT Manufacturing Solutions, a robotics company, created a training center at its plant that offers high school students courses they can take for college credit. APT also created an apprenticeship program. APT will pay tuition for apprentices who attend school while working 40 hours per week. Wichita, Kansas, is home to several aircraft manufacturing companies. Overall, the number of available jobs in the aircraft manufacturing industry has declined but retiring employees and the use of new manufacturing technology have created a skills gap and a labor shortage. As a result, companies such as Textron are working with local technical colleges to help ensure current and prospective employees have the necessary training for manufacturing jobs. With financial support from local companies, Wichita Area Technical College provides a tuition-free program, including courses in sheet metal assembly and composite technology.

Globalization

Many companies are involved in international markets by exporting their products overseas, building manufacturing facilities or service centers in other countries, entering into alliances with foreign companies, and engaging in e-commerce. One estimate is that developing economies and emerging markets such as those found in the BRIC nations (Brazil, Russia, India, and China) are responsible for 19 percent of the world’s economy.26 Other countries such as Indonesia, Malaysia, Kenya, Columbia, and Poland, which have a growing middle class, strong infrastructure, business-friendly regulations, and stable governments, are likely new emerging markets. The importance of globalization can be seen in the recent hiring patterns

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of large U.S. multinational corporations that have increased their overseas workforce, particularly in Asia.27 German brands Audi, BMW, and Mercedes-Benz are the top-selling luxury brands in China, but U.S. automakers are trying to take away some of their market share.28 Ford Motor’s Lincoln brand opened three showrooms in China in 2014, and by the end of 2016 it planned to have 60. Lincoln discovered that the customer focus was lacking in the Chinese market. So it hired Mandarin Oriental staff to train showroom salespeople in customer service. Globally, Yum! Brands opened over 2,000 restaurants in 2016, with 600 of those in China contributing over 50 percent of the company’s profits. Global companies are struggling to find and retain talented employees, especially in emerging markets. Companies are moving into China, India, eastern Europe, the Middle East, Southeast Asia, and Latin America, but the demand for talented employees exceeds the supply. Also, companies often place successful U.S. managers in charge of overseas operations, but these managers lack the cultural understanding necessary to attract, motivate, and retain talented employees. To cope with these problems, companies are taking actions to better prepare their managers and their families for overseas assignments and to ensure that training and development opportunities are available for global employees. Cross-cultural training prepares employees and their families to understand the culture and norms of the country to which they are being relocated and adjust to their home country after the assignment. Cross-cultural training is discussed in Chapter 10. For example, McDonald’s has designated Russia as its high-growth market, with more than a dozen restaurants in Siberian towns and plans to open more.29 When a new McDonald’s opened in Tomsk, it served 6,000 customers in the first day of operations. To train future managers in the store operations, leadership, and staff management skills needed for global expansion to be successful, McDonald’s has seven Hamburger Universities in the United States and abroad, including campuses in Oak Brook, Illinois; Sydney; Munich; London; Tokyo; São Paulo; and Shanghai. All provide training materials and tools in different languages and cultures. To successfully compete with its Indian rival, Ola, Uber is challenged to recruit and train a million new drivers in India, where most people do not drive or own a car, and few potential drivers understand English or how to use an app.30 The stakes are huge given the market size: India has 1.2 billion people. Uber has recruited Indians driving taxis, buses, and rickshaws; private drivers working for companies and families; and individuals who have never driven before. To be successful in India, Uber has to teach new drivers how to speak politely, dress well, and follow traffic rules. They have to check to ensure recruits have necessary licenses and other documents, teach them how to use the Uber app, and instruct them in how to use online banking so they can see if they have been paid. Uber also helps drivers lease automobiles. Uber currently has 400,000 drivers, but it wants to add 1 million in the next two years.

Mars, the global candy company (you may enjoy M&M’s or Skittles), helps interested employees develop their skills through partnerships around the world. The Mars Ambassador Program provides employees with the opportunity to share their expertise and develop skills by spending up to six weeks supporting projects managed by organizations such as the Rainforest Alliance or the World Wildlife Federation or working with local communities.31 For example, one Mars Ambassador team spent a week in Puerto Rico rebuilding an animal shelter. The local community benefited by being able to provide better care and quality of life for the animals. The employees learned how to work as a team in a challenging situation. Another team worked with students in Bucharest, Romania, to design and implement an energy audit for their school, which resulted in cost savings and energy conservation.

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Globalization also means that employees working in the United States will come from other countries. Immigration contributes to the diversity of the U.S. population and workforce. Many U.S. industries, including high-technology, meat-packing, construction, farming, and service, rely on immigrants to perform jobs that U.S. citizens find undesirable because they require physical labor or pay low wages. Although a common belief is that most immigrants have rudimentary skills, the percentage of highly skilled immigrants now exceeds the percentage of low-skilled immigrants. There is an ongoing debate in the U.S. government about the role of both legal and illegal immigration in terrorism and the reduction of job opportunities for U.S. citizens. Over 40 million people living in the United States were born in other countries, and approximately an equal number have a foreign-born parent. More than one million immigrants come to the United States each year, and 4 out of 10 are relatives of U.S. citizens.32 Mexico, China, and Cuba are the leading countries of birth for lawful permanent residents or “green card” recipients, who may live and work anywhere in the United States. Another 12 percent come on work-related visas, some of which are available only for workers with exceptional qualifications in science, business, or the arts. The U.S. government also provides temporary visas to a limited number of highly educated workers, allowing them to work in the country for a set period of time but not to remain as immigrants.

Regardless, many companies would face severe hardship if they were forced to no longer rely on immigrants. A low unemployment rate means that many employers are struggling to fill both full-time and seasonal skilled and unskilled jobs.33 For example, the King of Texas Roofing Company has turned down projects worth millions of dollars because it can’t hire enough roofers, who come primarily from Mexico. Thousands of Mexican workers and other immigrants are needed to pick citrus crops in Florida, work in restaurants such as Tacoliscious in San Francisco, and do landscaping in Colorado. Apple, Google, and other high-tech companies rely on the U.S. visa program to provide foreign employees with specialized skills needed to design software and new products, skills in short supply among U.S. workers.

One estimate is that immigrants, some of whom are illegal, will account for an additional million persons in the workforce.34 Immigrants provide scientific talent and fill low-wage jobs. The impact of immigration is especially large in certain areas of the United States, including the states on the Pacific Coast, where 70 percent of new entrants to the workforce are immigrants.35 U.S. colleges cannot keep up with the demand for engineers. To find engineers, companies have to look overseas to China, Japan, Korea, and India to hire them.36 The H-1B visa program is for persons in highly skilled and technical occupations requiring completion of higher education. New visas are capped at 65,000 per year, 20,000 of which are reserved for employees with U.S. master’s degrees. Some 40,000 companies submitted applications in 2016! There is no cap on H-1Bs for employees working for the government, universities, and other nonprofit institutions. The largest number of H1-B visas are issued for computer-related occupations (43 percent). Top companies for H-1B visas include Cognizant Technology Solutions, IBM, and Microsoft.37 Indian-owned companies such as Tata Consultancy and Wipro have the most H-1B visa approvals. Other visa programs are available for lower-skilled temporary or seasonal workers (H2-A, H2-B) who are also in short supply. Many of these immigrants will have to be trained to understand the U.S. culture. Likewise, U.S. employees will need skills to improve their ability to communicate with employees from different cultures.

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Globalization also means that U.S. companies have to carefully consider the costs and benefits of moving jobs overseas or using foreign suppliers. Offshoring refers to the exporting of jobs from developed countries, such as the United States, to countries where labor and other costs are lower. India, Canada, China, Russia, Ireland, Mexico, Brazil, and the Philippines are some of the destination countries for offshored jobs. Why are jobs offshored?38 The reasons given for offshoring factory and other jobs often include lower labor costs and the availability of a skilled workforce with a strong work ethic. For example, Rexnord Corporation plans to close its industrial bearings factory in Indiana and move the jobs to Mexico in order to save $30 million annually.39 Rexnord still employs more than half of the company’s workforce in the United States and has operations in Europe, Asia, and Africa. However, rather than offshoring work, reshoring, or the return of jobs to the United States, is becoming more common. There are several reasons for this, including higher product shipping costs, fear of supply chain disruptions due to natural disasters and political instability, quality concerns, negative publicity, and customer preference for U.S.-made products.40 Also, rising labor costs in some countries, such as China, are becoming more comparable to those in the United States. Finally, some countries’ local standards for safety, health, and working conditions may be substantially lower than those in the United States, resulting in negative publicity and turning off potential customers. For example, Hanesbrands has added workers to a plant in North Carolina.41 Socks are knitted there and then sent to a plant in El Salvador that sews, dyes, and packages the socks. Although El Salvador has the advantage on labor costs, electricity costs in North Carolina are much lower. Also, having plants in both places provides a backup in case of problems. Peds Legwear also makes socks in North Carolina, allowing the company to avoid import taxes, cut shipping costs, and respond faster to shifts in demand. Plus, selling socks made in the United States was a major reason Walmart contracted with the company.

Apple Inc. is known for introducing revolutionary and functional products such as the iPhone, the Mac Air computer, and the iPad.42 Apple relies on manufacturing partners in Asia to build its products and has been criticized by labor groups who have challenged how its manufacturing partners in Asia have treated their employees. Apple has taken this criticism seriously and is auditing its suppliers and manufacturing facilities to take steps to reduce, if not eliminate, the illegal and poor treatment of workers who assemble or provide materials for any of its products. Apple’s Suppliers Code of Conduct focuses on ensuring that its partners don’t hire underage workers, provide adequate training and safe working conditions, and pay fair wages. Three million people were trained in these workforce protections in 2017.

Increased Value Placed on Intangible Assets and Human Capital

Training and development can help a company’s competitiveness by directly increasing the company’s value through contributing to intangible assets. A company’s value includes three types of assets that are critical for the company to provide goods and services: financial assets (cash and securities), physical assets (property, plant, equipment), and intangible assets. Table 1.2 provides examples of intangible assets, which consist of human capital, customer capital, social capital, and intellectual capital. Human capital refers to the sum of the attributes, life experiences, knowledge, inventiveness, energy, and enthusiasm that the company’s employees invest in their work.43 Intellectual capital refers to the codified knowledge that exists in a company. Social capital refers to relationships among employees in the company. Customer capital refers to the value of relationships with persons or other

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organizations outside the company for accomplishing the goals of the company (e.g., relationships with suppliers, customers, vendors, and government agencies). Intangible assets are equally as valuable as financial and physical assets, but they are not something that can be touched and they are nonmonetary.

TABLE 1.2 Examples of Intangible Assets

Human Capital · Tacit knowledge · Education · Work-related know-how · Work-related competence Customer Capital · Customer relationships · Brands · Customer loyalty · Distribution channels Social Capital · Corporate culture · Management philosophy · Management practices · Informal networking systems · Coaching/mentoring relationships Intellectual Capital · Patents · Copyrights · Trade secrets · Intellectual property

Sources: Based on L. Weatherly, Human Capital—The Elusive Asset (Alexandria, VA: SHRM Research Quarterly, 2003); E. Holton and S. Naquin, “New Metrics for Employee Development,” Performance Improvement Quarterly 17 (2004), pp. 56–80; M. Huselid, B. Becker, and R. Beatty, The Workforce Scorecard (Boston, MA: Harvard University Press, 2005).

Intangible assets have been shown to be responsible for a company’s competitive advantage. Several studies show that investments in training and development lead to increases in financial performance, productivity, and innovation.44 The American Society for Training and Development (ASTD) found that companies that invested the most in training and development had a shareholder return that was 86 percent higher than companies in the bottom half and 46 percent higher than the market average.45 Training and development have a direct influence on human and social capital because they affect education, work-related know-how and competence, and work relationships. Training and development can have an indirect influence on customer and social capital by helping employees better serve customers and by providing them with the knowledge needed to create patents and intellectual property.

As mentioned earlier in the chapter, intangible assets such as human capital also contribute to a company’s competitive advantage because they are difficult to duplicate or imitate.46 For example, Blue Apron, a company that delivers the fresh ingredients and cooking instructions its customers need to prepare delicious meals, puts a great deal of effort into developing human capital, social capital, and customer capital.47 Blue Apron hosts a wine happy hour that brings customers together to help build friendships, facilitate networking, and introduce wines the company is selling that month as part of its meal delivery subscription. Full-time employees attend an annual camping trip, which often involves visiting

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a farm to see where its ingredients are grown. Blue Apron provides leadership training programs for every level of manager within the company. The training programs focus on how managers want to develop as leaders, how they can help their employees develop, and how to lead across the organization.

Chapters Seven, Eight, and Nine discuss specific training and development activities that contribute to the development of human and social capital. How to measure human capital is explained in Chapter Six, “Training Evaluation.” The value of intangible assets and human capital has three important implications:

A focus on knowledge workers.

Employee engagement.

An increased emphasis on adapting to change and continuous learning.

Focus on Knowledge Workers

One way that a company can increase its intangible assets, specifically human capital, is by focusing on attracting, developing, and retaining knowledge workers. Knowledge workers are employees who contribute to the company not through manual labor, but through what they know, perhaps about customers or a specialized body of knowledge. Employees cannot simply be ordered to perform tasks; they must share knowledge and collaborate on solutions. Knowledge workers contribute specialized knowledge that their managers may not have, such as information about customers, and managers depend on these knowledge workers to share that information. Knowledge workers have many job opportunities. If they choose, they can leave a company and take their knowledge to a competitor. Knowledge workers are in demand because of the growth of jobs requiring them.

Employee Engagement

To fully benefit from employee knowledge requires a management style that focuses on engaging employees. Employee engagement refers to the degree to which employees are fully involved in their work and the strength of their commitment to their job and the company.48 Employees who are engaged in their work and committed to their companies give those companies a competitive advantage, including higher productivity, better customer service, and lower turnover.

Perhaps the best way to understand engagement is to consider how companies measure employee engagement. Companies measure employees’ engagement levels with attitude or opinion surveys. Although the types of questions asked on these surveys vary from company to company, research suggests the questions generally measure themes such as pride in the company, satisfaction with the job, prospects for future growth with the company, and opportunity to perform challenging work.49 How do we know if an employee is engaged? An engaged employee is passionate about his work, is committed to the company and its mission, and works hard to contribute. Engagement survey results show that only 33 percent of U.S. employees are engaged in their work, 51 percent are not engaged, and 16 percent are actively disengaged.50 Actively disengaged employees cost the United States billions of dollars every year in lost productivity.

Consider how Echo Global Logistics, Adobe, Whole Foods, and Timberlane support employee engagement.51 Echo Global Logistics uses a Facebook-like application to allow employees to provide positive feedback and badges to other employees. The application

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gives employees the ability to use sayings in their feedback to each other that reflect Echo’s values, such as “Bring Your Own,” which refers to employees bringing their best effort to work. The use of the sayings as part of employees’ feedback to each other has resulted in their increased attention to company values. The application also has a survey function that can be used to measure employee engagement and track improvements. The surveys can be administered weekly or even daily, which allows the company to take fast action to implement necessary improvements. The surveys ask employees to respond to statements such as, “I can see a link between my performance and total compensation,” “Echo operates by strong values and ethics,” and “There is good teamwork across departments.” Adobe Systems’s engagement survey includes questions asking employees to rate their job satisfaction, opportunities for advancement, and compensation and benefits. The company uses engagement surveys to learn if employees feel they can be themselves at work, are encouraged to be creative, and if they have had career development conversations with their manager. The survey also provides insight into whether benefits offered by Adobe—including six months of paid parental leave, the ability to work part-time, and the availability of a sabbatical—contribute to high levels of employee engagement. Whole Foods supports engagement by allowing employee teams to make recommendations about whether new hires should be hired permanently at the end of their probationary period. Timberlane uses results from a test of employees’ preferences to match them with the tasks they are most interested in and comfortable performing.

Emphasis on Change and Continuous Learning

In addition to acquiring and retaining knowledge workers, companies need to be able to adapt to change. Change refers to the adoption of a new idea or behavior by a company. Technological advances, changes in the workforce or government regulations, globalization, and new competitors are among the many factors that require companies to change. Change is inevitable in companies as products, companies, and entire industries experience shorter life cycles.52 For example, Hilton Worldwide is faced with the business challenge of adopting technology to create operational efficiency and engage with its hotel guests from when they book their stay to when they check out.53 Training plays a key role in supporting Hilton’s decision to use technology to help increase its market share. More than 80,000 front desk staff and managers in 4,400 hotels have to become familiar with Digital Check-in, an app that customers can use to make reservations, choose their room, and check in with their mobile devices. Hilton is using a blended training approach that includes short games, job aids, and quick reference guides available using a computer or smartphone. Front desk employees and managers have to achieve a 100 percent score to complete the training. So far, 67,000 have completed the training. The use of technology for training delivery and instruction meshes nicely with the use of the innovative Digital Check-in app. The characteristics of an effective change process are discussed in

Chapter Two, “Strategic Training.”

A changing environment means that all employees must embrace a philosophy of learning. A learning organization embraces a culture of lifelong learning, enabling all employees to acquire and share knowledge continually. Improvements in product or service quality do not stop when formal training is completed.54 Employees must have financial, time, and content resources (such as courses, experiences, and development opportunities) available to increase their knowledge. Managers take an active role in identifying training needs and

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helping to ensure that employees use training in their work. Also, employees are actively encouraged to share knowledge with colleagues and other work groups across the company using e-mail and the Internet.55 Lupin Limited, a global pharmaceutical company, makes information available to all employees through the company’s intranet.56 This helps create a company culture that emphasizes continuous learning, knowledge sharing, and the development of an organizationwide knowledge base. Information can be searched for by keyword or by reviewing a list of projects. Chapter Five, “Program Design,” discusses learning organizations and knowledge management in detail. For a learning organization to be successful, teams of employees must collaborate to meet customer needs. Managers need to empower employees to share knowledge, identify problems, and make decisions, which allows the company to experiment and improve continuously.

Social collaboration and social networking technology are helping employees share knowledge and contribute to the development of a learning organization.57 CareSource uses wikis (websites with content created by users) and discussion boards to encourage employees to engage in critical thinking and learn from each other by sharing ideas about how to apply skills that they have acquired in formal training programs. Coldwell Banker encourages its real estate professionals to develop and share videos of the best sales techniques using the company’s video portal. Coldwell Banker also uses communities of practice to encourage employees to share best practices and provide insights on how to best approach specific types of job assignments. inVentiv Health (now part of Syneos Health) uses tools on Facebook to help sales employees share information and update lessons learned.

Focus on Link to Business Strategy

Given the important role that intangible assets and human capital play in a company’s competitiveness, managers are beginning to see a more important role for training and development as a means to support a company’s business strategy—that is, its plans for meeting broad goals such as profitability, market share, and quality. Managers expect training and development professionals to design and develop learning activities that will help the company successfully implement its strategy and reach business goals. Strategic training is discussed in greater detail in Chapter Two.

Changing Demographics and Diversity of the Workforce

In the United States the Bureau of Labor Statistics (BLS), an agency of the Department of Labor, tracks changes in the composition of the U.S. labor force and forecasts trends. Companies face several challenges as a result of increased demographics and diversity of the workforce. Population is the single most important factor in determining the size and composition of the labor force, which is composed of people who are either working or looking for work. The civilian labor force is projected to increase by 11.5 million between 2016 and 2026, reaching close to 168 million by 2026.58 The workforce will be older and more culturally diverse than at any other time in the past 40 years.

Increase in Ethnic and Racial Diversity

Between 2016 and 2026, the U.S. labor force will continue to grow more ethnically and racially diverse due to immigration, increased participation of minorities in the workforce, and higher minority fertility rates. Between 2016 and 2026, the projected annual growth

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rates are higher for Hispanics (2.7 percent) and Asians (2.5 percent) than for African Americans and other groups.59 By 2026, the workforce is projected to be 76 percent white, 12 percent African American, 7 percent Asian, and 4 percent other ethnic or cultural groups. By 2026, 53 percent of the labor force will be men and 47 percent will be women. Not only must companies face the issues of race, gender, ethnicity, and nationality to provide a fair workplace, but they must also develop training programs to help immigrants acquire the technical and customer service skills required in a service economy.

Aging Workforce

Figure 1.3 compares the projected distribution of the age of the workforce in 2016 and 2026. In 2018, baby boomers will be 57 to 70 years old, and this age group will grow significantly by 2026. The labor force will continue to age. The 55-and-older age group is expected to grow by approximately 6 million to 42 million in 2026, representing an 8 percent increase between 2016 and 2026. The median age of the labor force in 2026, 42.3 years, will be the highest ever recorded.60 By 2026 baby boomers will be from 62 to 80 years old. As a result, a large number of them will have moved out of the labor force. However, many will continue to work more years because individuals are leading healthier and longer lives than in the past, providing the opportunity to work more years. In addition, the high cost of health insurance and decrease in health benefits will cause many employees to keep working to maintain their employer-based insurance or will prompt them to return to work after retirement to obtain health insurance through their employer. Also, the trend toward pension plans based on individuals’ contributions rather than years of service will provide yet another incentive for older employees to continue working.

FIGURE 1.3 Comparison of the Age of the 2016 and 2026 Labor Force

Sources: Based on Bureau of Labor Statistics, U.S. Department of Labor, Employment Projections: 2016–2026, News Release, October 24th, 2017, from www.bls.gov/emp, accessed March 23, 2018.

The aging population means that companies are likely to employ a growing share of older workers—many of them in their second or third careers. Older people want to work, and many say they plan a “working retirement.” Despite myths to the contrary, worker

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performance and learning in most jobs is not adversely affected by aging.61 Older employees are willing and able to learn new technology. An emerging trend is for qualified older employees to ask to work part-time, or for only a few months at a time, as a means of transitioning to retirement. Employees and companies are redefining what it means to be retired to include second careers, as well as part-time and temporary work assignments.

Generational Differences

Five generations are represented in the workforce, each one with unique and similar characteristics to the others. In Table 1.3, the year born, nicknames, and ages of each generation are shown. Consider some of the attributes that are believed to characterize each generation.62 For example, members of Generation Z, born after 1995, have started to graduate from college and are already part of the workforce. They are digital natives and are more attached to mobile phones and tablets for learning and connecting with others than are millennials. Generation Z may be more entrepreneurial than other generations and more interested in meaningful work than money. They likely lack basic job skills because they were unable to get jobs during the recession when they were teenagers. With baby boomers retiring, this generation will have many job and career opportunities. Generation Z workers want a work environment in which they can have instant communication and access to answers.

TABLE 1.3 Generations in the Workforce

Year Born	Generation	Ages
1925–45	Traditionalists Silent generation	>73
1946–64	Baby boomers	54–72
1965–80	Generation X	38–53
1981–95	Millennials Generation Y Echo boomers	23–37
1996–	Generation Z Digital natives	<22

Millennials grew up with diversity in their schools and were coached, praised, and encouraged for participation rather than accomplishment by their baby boomer parents. Millennials are characterized as being optimistic, willing to work and learn, eager to please, self-reliant, globally aware, and in favor of diversity and teamwork. They are also believed to have high levels of self-esteem. Millennials are a highly educated and technologically connected group who approach the workplace with the mentality “What’s in it for me?” They are the generation most likely to switch jobs and be on the lookout for new opportunities. Millennials want to understand how they fit in with their jobs, teams, and companies. They look for work that fuels their sense of purpose and makes them feel important. They do not feel close ties to their jobs or the brands to which they give their money.

For millennials, opportunities to learn and grow are very important. Some believe that because they lived through the recession, which saw their parents lose jobs and the value of their retirement savings, they are motivated to engage in development opportunities to improve their skills and make them employable regardless of the economy.63 According to a recent Gallup survey, 87 percent of millennials rate professional or career growth and development opportunities as important to them in a job (recall from the chapter opener how Amazon, Taco Bell, and Lincoln Financial are providing development opportunities for millennials). More than one-third of millennials report that their most recent learning

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opportunity at work wasn’t worth their time and 60 percent say they are open to considering a new job.64

Generation Xers grew up during a time when the divorce rate doubled, the number of women working outside the home increased, and the personal computer was invented. They were often left on their own after school (latchkey kids). They value skepticism, informality, and practicality; seek work/life balance; and dislike close supervision. They tend to be impatient and cynical. They have experienced change all of their lives (in terms of parents, homes, and cities).

Baby boomers, the “Me” generation, marched against the “establishment” for equal rights and an end to the Vietnam War. They value social conscientiousness and independence. They are competitive, hard working, and concerned with the fair treatment of all employees. They are often considered to be workaholics and rigid in conforming to rules.

Traditionalists grew up during the Great Depression and lived during World War II. They tend to value frugality, are patriotic and loyal, adhere to rules, are loyal to employers, and take responsibility and make sacrifices for the good of the company.

It is important to note that although generational differences likely exist, members of the same generation are no more alike than members of the same gender or race. This means that you should be cautious in attributing differences in employee behaviors and attitudes to generational differences or expecting all employees of a generation to have similar values. Research suggests that the generations of employees have similarities as well as differences.65 Although differences in work ethic have been found among baby boomers, Generation Xers, and millennials, millennial employees are more similar than different from other generations in their work beliefs, job values, and gender beliefs. Most employees view work as a means to more fully use their skills and abilities, meet their interests, and live a desirable lifestyle. They also value work/life balance, meaning flexible work policies are necessary to allow them to choose where and when work is performed.

Nonetheless, members of each generation may have misperceptions of each other, causing tensions and misunderstanding in the workplace.66 For example, Generation Xers who will be managing Generation Z employees may become irritated by having to answer Generation Z employees’ questions about why they are expected to perform a job a certain way and by their employees’ preference for instant feedback and praise when they get work completed. Millennials may think Generation X managers are bitter, jaded, abrasive, uninterested in them, and poor delegators. In turn, Generation X managers may consider their millennial employees too needy for attention, demanding, and overly self-confident. Millennials might believe that baby boomers are too rigid and follow company rules too closely. They believe employees in the older generations have been too slow in adopting social media tools and that they overvalue tenure rather than knowledge and performance. Traditionalists and baby boomers believe that millennials don’t have a strong work ethic because they are too concerned with work/life balance. Also, members of the younger generations may resent baby boomers and traditionalists who are working longer before retiring, blocking promotions and career moves. We will discuss the potential implications of generational differences for training and development in Chapters Four and Five.

Companies can use increased diversity to gain a competitive advantage. Important outcomes expected from diversity practices include improved public image of the company, improved financial bottom line, decreased complaints and litigation, and retention and recruitment of a diverse workforce.67

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Training plays a key role in ensuring that employees accept and work more effectively with each other. To successfully manage a diverse workforce, managers and employees must be trained in a new set of skills, including:

Communicating effectively with employees from a wide variety of backgrounds.

Coaching, training, and developing employees of different ages, educational backgrounds, ethnicities, physical abilities, and races.

Providing performance feedback that is free of values and stereotypes based on gender, ethnicity, or physical handicap.

Training managers to recognize and respond to generational differences.

Creating a work environment that allows employees of all backgrounds to be creative and innovative.68

Consider the programs that several companies are offering to capitalize on older employees’ skills and accommodate their needs, provide training and development opportunities that appeal to a diverse workforce, and cope with generational differences.69 Many of these programs are a part of companies’ efforts to manage diversity, which we will discuss in more detail in Chapter 10.

CVS/pharmacy has stores in every climate and region in the United States. CVS created its Snowbirds Program to allow older employees to move among locations according to their preferences. This is especially important for older employees who spend winters in the southern states and summer in the northern states. More than 1,000 employees, including retail clerks, pharmacists, and managers, have participated in the program. Scripps Health has equipped patient rooms with lifts to assist all employees, but especially older workers, in moving patients from beds to wheelchairs, helping them to sit up, and changing their position in bed. The National Institutes of Health (NIH) offers two phased-retirement programs that allow employees to choose to either gradually transition to retirement by reducing hours or enter into a trial-retirement program that allows retirees to return to work within one year of retiring in case they decide they aren’t ready to leave the workforce. This helps ease their transition out of the job and workplace but provides them time to share their knowledge and help train other employees to take their jobs.

Consider Microsoft’s approach to diversity, which focuses on its employees, culture, suppliers, and customers.70 To find the best and brightest employees, Microsoft has expanded the universities, conferences, and events from which it recruits new employees to include the National Society of Black MBAs, the National Society of Hispanic MBAs, Out and Equal, and Recruit Military Expo. To support universities’ and high schools’ information technology curriculum and to develop opportunities for women and minorities, the company has formed partnerships with traditionally women’s schools, historically black colleges and universities, and Hispanic-serving institutions. Also, through its DigiGirlz program and Blacks at Microsoft Minority Student Day, the company exposes diverse high school students to the high-tech work world. A diverse culture is supported in several ways. Current employees can participate in resource groups including those for parents, Asians, Blacks, Hispanics and Latinos, women, the LBGTQ community, and the physically challenged. Training courses on topics such as managing diversity, how to build an inclusive culture, and understanding unconscious bias are available for all employees and managers. Microsoft offers flexible work policies to help employees balance work and life. These include resource and

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referral services as well as generous maternity and paternity leave policies. On the customer side, Microsoft has spent more than $2 billion with suppliers that are minority-, women-, or veteran-owned or owned by persons with disabilities. Also, Microsoft is developing technology that contributes to diversity by removing barriers between people. For example, the Kinect Sign Language Translator eliminates communication barriers by enabling speech-to-sign-language translation.

EY, the accounting and professional services company formerly known as Ernst and Young, is taking actions to meet millennials and Generation Z employees’ needs for constant technology-aided learning, job flexibility, more frequent feedback, and opportunities to develop high-demand skills.71 For example, EY’s performance evaluation system provides opportunities for managers and teams to have daily digital conversations. In the EY Badges program employees can earn credentials for demonstrating mastery in high-demand skills related to artificial intelligence and robotics. Badges can also be earned by publishing a paper, helping colleagues, or volunteering in the community. EY employees can publicly demonstrate their accomplishments by posting the badges they earn on their Facebook or LinkedIn pages.

Talent Management

Talent management refers to the systematic, planned, and strategic effort by a company to use bundles of human resource management practices, including acquiring and assessing employees, learning and development, performance management, and compensation, to attract, retain, develop, and motivate highly skilled employees and managers. Talent management is becoming increasingly more important because of changes in demand for certain occupations and jobs, new skill requirements, the anticipated retirement of the baby boomer generation, and the need to develop the managerial talent and skills of the next generation of company leaders. Also, the results of surveys suggest that opportunities for career growth, learning, and development and the performance of exciting and challenging work are some of the most important factors in determining employees’ (especially millennials’) engagement and commitment to their current employer.72

BNSF Railway, the largest freight railroad in North America, recognizes that developing and promoting talent from within the company is critical for business success because of the technical nature of the work, the complicated operating environment, and the company’s desire to maintain its strong culture.73 BNSF Railway uses programs and processes to develop its internal talent, including an internship and management training program that starts with college and graduate school hires, regular department level discussions of top talent and talent movement, and development plans matched to each employee’s development needs and desired career path. The emphasis on talent has paid off: 38 percent of the company’s top talent received a development move or promotion and 96 percent of its top 500 leadership positions have been filled with internal talent. To develop and retain millennial employees, Miami Children’s Health System is assigning projects that expose millennials to senior leaders.74 One of the projects involved having clinical staff members work with the learning and development team to create short videos showing operating procedures. The staff members received a financial reward for their work and were recognized in an internal newsletter. Millennials are also asked to attend town hall meetings and small discussion groups where they can interact with the chief operations officer, vice presidents, and other senior leaders.

Changes in Demand for Occupations and Jobs

Approximately 46.5 million job openings are expected, with more than three-fourths resulting from the need to replace workers who retire or leave an occupation.75 Most new jobs added between 2016 and 2026 will be in service-providing occupations. Health-care support and practitioner occupations are projected to be the fastest-growing occupational groups and contribute the most new jobs (one out of four new jobs) from 2016 to 2026. All other occupations are expected to add jobs between 2016 and 2026 except for production and forestry, farming, and fishing.

Table 1.4 shows 10 of the 30 fastest-growing occupations projected between 2016 and 2026. Of the 30 fastest-growing occupations, 16 are related to health care and related occupations (such as home health-care aid, personal care aids, physicians assistants, and nurse practitioners). Other occupations in the top 30 are energy-related or computer and information technology occupations. Eighteen of the 30 fastest-growing occupations require some type of post-secondary education. The growth in health care reflects the inpatient and outpatient medical care that is needed for the aging U.S. population. Computer occupations

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are expected to see job growth as the demand increases for artificial intelligence, robots, and other technologies. The expected increase in energy prices will drive growth for energy occupations—especially those related to oil and gas extraction and solar power.

TABLE 1.4 Examples of the Fastest-Growing Occupations

Sources: Based on Bureau of Labor Statistics, U.S. Department of Labor, “Employment Projections: 2016–2026,” News Release, October 24, 2017, from www.bls.gov/emp, accessed April 7, 2018.

Retirement of Baby Boomers

As the oldest baby boomers continue to retire in the next several years, the implications for the workforce could be enormous.76 This could hinder prospects for economic growth and put a greater burden on those remaining in the workforce, perhaps forcing them to work longer hours. Especially in occupations with functions less conducive to technology-driven productivity innovations—many jobs in health services and educational services, for example—quality of service may suffer and needs could go unmet unless older workers can be retained or other sources of workers can be found. Even in occupations in which technological innovations have produced relatively large productivity gains—many of the more complex machining jobs in manufacturing, for example—the learning curves often are steep, meaning that new workers need to enter these occupations soon, so they can become proficient in the necessary skills by the time the baby boomers begin leaving the labor force.

It is also important for companies to try to capture the valuable knowledge that is leaving.77 Consider how Asian Paints and ConocoPhillips are trying to capture this knowledge.78 Asian Paints, a paint company in India, encourages employees to use their social network to share best practices and new ways to support dealers. The sales team uses this information to find and apply these practices to current challenges they are facing. This means that when an experienced salesperson retires or leaves the company their knowledge is not lost. ConocoPhillips, a multinational petrochemical company, uses wikis to capture knowledge from all employees, including retirees. Many of the company’s retirees come back to work part-time. They review the information on the company wiki, identify gaps in missing knowledge, and provide content. Their experiences provide the “how,” “what,” and “why” that give context to the wiki content. ConocoPhillips also uses mentoring programs, pairing up less-experienced employees with more senior employees to facilitate knowledge sharing.

Skill Requirements

As the jobless rates fall and business grows, employers in many industries such as construction and manufacturing and particularly small businesses are having difficulty finding qualified workers. Unskilled, assembly-line work is being replaced with advanced manufacturing jobs that require hard to find computer, information technology, or other technical knowledge and skills. In many of today’s jobs, especially those in the service sector, routine tasks have been automated or outsourced. Kyocera SGS Precision Tools, an Ohio company, has half the employees it had 20 years ago but produces twice as much due to computer-assisted manufacturing tools and higher skilled employees.79 The company is struggling to find maintenance technicians with the electrical and mechanical skills needed to keep equipment running. There is especially a shortage of employees with STEM skills. STEM skills refer to skills in science, technology, engineering, and math. Many available workers also lack “soft skills,” including the ability to communicate clearly, take the initiative, problem solve, get along with peers, and interact with customers.80 Further, the variety and customization of products and services many companies offer require employees to be creative and good problem solvers. Also, continuous innovation requires the ability to learn.

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Several studies illustrate the skills deficit that U.S. companies are experiencing.81 Skills deficits are not limited to any one business sector, industry, or job. Nearly half of CEOs of U.S. businesses believe that a significant skills gap exists that will result in loss of business, loss of revenue, decreased customer satisfaction, or a delay in new products or services. The Manufacturing Institute found that 80 percent of manufacturers report a moderate or serious shortage of qualified applicants for skilled and highly skilled production positions. One estimate is that 60 percent of manufacturing job openings in the next 10 years are likely to be unfilled due to the lack of employees with the necessary skills. The Organisation for Economic Co-operation and Development (OECD) found that the United States ranked 21 out of 23 countries in math and 17 out of 19 countries in problem solving. But skills deficits are not just a problem facing U.S. companies. They are occurring around the world. For example, in Italy and Spain nearly 3 out of 10 adults perform at or below the lowest proficiency level in literacy and numerical ability. One study found that, regardless of their education level, only half the companies surveyed rated new employees as adequately prepared for work. Companies’ greatest basic skills needs were in reading, writing, and math. Many employers also feel that they are having a difficult time finding employees with the right “soft skills” such as work ethic, teamwork, and communications that they believe are more important for success on the job than job-specific or “hard skills” such as blueprint reading or writing. Interpersonal skills, the ability to learn, creativity, and problem solving are especially important in the service economy because employees have responsibility for the final product or service provided.

This shortage of qualified workers means that employers are faced with the undesirable option of leaving jobs unfilled, which can limit their production and growth. A more plausible option that many companies are choosing is to hire employees who lack the complete skill set needed for the job, relying on training to develop the skills. Consider the skills shortage facing several companies and how they are using training to ensure they have the skills they need.82 Despite India having thousands of engineering and vocational school graduates, students lack the skills and training Indian companies need to fulfill contracts to make parts for helicopters and aircraft for foreign firms such as Boeing, Airbus Group, and Alstom. As a result, companies that supply those parts, such as Tata Advanced Systems, have had to invest in training facilities or send workers to other countries to learn.

To prepare employees with the skills they need, manufacturing companies are getting involved in training partnerships with federal- and state-sponsored and -funded organizations. For example, Kentuckiana Works is a regional job services group for the Louisville, Kentucky, region that offers education and training courses and helps students get jobs.83 Kentuckiana Works has worked with local employers Cardinal Aluminum, Ford Motor, and Kellogg to design certified production technical training. Slightly more than half of the students who start the program finish it, but those who do are quickly hired.

Some companies are relying on training of hard-to-employ individuals, such as recently released criminal offenders, to provide the skills they need to fill open positions. Kogok Corporation, a Maryland company that manufactures and installs heating and cooling ductwork for businesses, hired a recently released offender who spent 17 years in prison for murder.84 After being released from prison, the ex-offender had a retail job but lost it when a background check revealed his criminal history. He developed the skills needed to work as a sheet mechanic through participating in a construction training program offered by the city of Baltimore’s Jump Start program.

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Developing Leadership

Companies report that the most important talent management challenges they face are identifying employees with managerial talent and training and developing them for managerial positions.85 This is attributed to the aging of the workforce, globalization, and the need for managers to contribute to employee engagement. Executive, administrative, and managerial occupations will experience the greatest turnover due to death or retirement.86 Also, many companies do not have employees with the necessary competencies to manage in a global economy.87 To successfully manage in a global economy, managers need to be self-aware and be able to build international teams, create global management and marketing practices, and interact and manage employees from different cultural backgrounds. Managers contribute to employee engagement by performing basic management functions (planning, organizing, controlling, and leading) but also through using good communication skills, helping employees develop, and working collaboratively with employees.

A number of surveys suggest that millennials are interested in opportunities for career progression, including becoming managers and leaders, and they are significantly more likely to want formal leadership development opportunities than employees from other generations.88 Employees from all generations have strengths and weaknesses in management skills. Millennials are strong in adaptability and customer focus. They are similar to Generation Xers in important leadership and interpersonal skills, including developing others, gaining commitment, and communicating. To be effective managers and leaders, millennials need to develop their decision making and planning and organizing skills and learn how to set high work standards.

As result, many companies, including General Electric and Sherwin-Williams, are taking steps to retain talented millennials and develop their management skills.89 For example, General Electric provides job rotation for managers, which helps them gain experience working with different senior managers and different business units. This meets millennials’ needs for growth experience and networking while developing skills needed to successfully respond to different types of customers and job challenges. Similarly, Sherwin-Williams, a company that manufactures paint and sells it through its retail stores, recognized that it had been losing its manager trainees at a high rate. Using data collected from surveys and interviews, it found that trainees did not feel included and engaged. To solve this problem, Sherwin-Williams developed a new career-progression model. Performance reviews with manager trainees will now occur every six months instead of once at the end of the year, which helps provide them with more feedback and the opportunity to receive pay raises every six months. Also, district managers will now conduct regular career discussions with trainees to discuss their long-term goals. During their initial two-year training period, new employees will have more opportunities to try different roles in the company, including working with sales representatives and different types of stores, such as those specializing in floor coverings and providing commercial services for building contractors.

Customer Service and Quality Emphasis

A company’s customers judge its quality and performance. As a result, customer excellence requires attention to product and service features, as well as to interactions with customers. Customer-driven excellence includes understanding what the customer wants, anticipating future needs, reducing defects and errors, meeting specifications, and reducing complaints.

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How the company recovers from defects and errors is also important for retaining and attracting customers.

Due to the increased availability of information and competition, consumers are very knowledgeable and expect excellent service. This presents a challenge for employees who interact with customers. The way in which clerks, sales staff, front-desk personnel, and service providers interact with customers influences a company’s reputation and financial performance. Employees need product knowledge and service skills, and they need to be clear about the types of decisions they can make when dealing with customers. Customer service as a strategic training and development initiative is discussed in Chapter Two.

To compete in today’s economy, whether on a local or global level, companies need to provide a quality product or service. If companies do not adhere to quality standards, their ability to sell their product or service to vendors, suppliers, or customers will be restricted. Some countries even have quality standards that companies must meet to conduct business there. Total Quality Management (TQM) is a companywide effort to continuously improve the ways in which people, machines, and systems accomplish work.90 Core values of TQM include the following:91

Methods and processes are designed to meet the needs of internal and external customers.

Every employee in the company receives training in quality.

Quality is built into a product or service so that errors are prevented from occurring rather than being detected and corrected.

The company promotes cooperation with vendors, suppliers, and customers to improve quality and hold down costs.

Managers measure progress with feedback based on data.

There is no universal definition of quality. The major differences in its various definitions relate to whether the customer, product, or manufacturing process is emphasized. For example, consider the different emphasis of quality experts W. Edwards Deming and Phillip Crosby. Deming emphasizes how well a product or service meets customer needs. Crosby’s approach emphasizes how well the service or manufacturing process meets engineering standards.

The emphasis on quality is seen in the establishment of the Malcolm Baldrige National Quality Award and the ISO 9000:2000 quality standards. The Baldrige award, created by public law, is the highest level of national recognition for quality that a U.S. company can receive. The award is given annually. To become eligible for the Baldrige, a company must complete a detailed application that consists of basic information about the firm and an in-depth presentation of how it addresses specific criteria related to quality improvement. The categories and point values for the Baldrige Award are found in Table 1.5. The award is not given for specific products or services. Organizations can compete for the Baldrige Award in one of several categories, including manufacturing, service, small business, education, health care, and nonprofit. The Baldrige Award is given annually in each of the categories, with a total limit each year of 18 awards. All applicants for the Baldrige Award undergo a rigorous examination process that takes from 300 to 1,000 hours. Applications are reviewed by an independent board of about 400 examiners who come primarily from the private sector. Each applicant receives a report citing company strengths and opportunities for improvement.

TABLE 1.5 Categories and Point Values for the Malcolm Baldrige National Quality Award Examination

Leadership	120
The way senior executives create and sustain vision, values, and mission; promote legal and ethical behavior; create a sustainable company; and communicate with and engage the workforce
Measurement, Analysis, and Knowledge Management	90
The way the company selects, gathers, analyzes, manages, and improves its data, information, and knowledge assets
Strategic Planning	85
The way the company sets strategic direction, how it determines action plans, how it changes strategy and action plans if required, and how it measures progress
Workforce Focus	85
Company’s efforts to develop and utilize the workforce to achieve high performance; how the company engages, manages, and develops the potential of the workforce in alignment with company goals
Operations Focus	85
Design, management, and improvement of work systems and work processes to deliver customer value and achieve company success and sustainability
Results	450
Company’s performance and improvement in key business areas (product, service, and supply quality; productivity; and operational effectiveness and related financial indicators)
Customer Focus	85
Company’s knowledge of the customer, customer service systems, current and potential customer concerns, customer satisfaction and engagement
Total Points	1,000

Source: Based on National Institute of Standards and Technology (NIST), “2017–2018 Criteria for Performance Excellence and Point Values Baldrige Excellence Framework” from the website for the National Institute of Standards and Technology (January 2017), www.nist/gov/baldrige.

The Baldrige Award winners usually excel at human resource practices, including training and development. For example, consider Don Chalmers Ford, a 2016 Award winner, and Bristol Tennessee Essential Services, a 2017 Award winner.92 Don Chalmers Ford is an independent Ford Motor automobile dealer with 182 employees in Rio Rancho, New Mexico. Don Chalmers has been nationally recognized by Ford Motors for customer satisfaction and market share 13 times over the past 17 years. This has been accomplished by only 4 percent of U.S. Ford dealerships. In the past four years, its dealership profits increased by 13 percent, exceeding Ford’s national dealership benchmark by over 8 percent. In addition to analyzing its service and sales processes on a daily, weekly, and monthly basis to identify opportunities for improvement, Don Chalmers’s HR practices support the dealership’s commitment to quality. To retain sales consultants, new employees are mentored by senior leaders to ensure they understand the business strategy and that their role is aligned with the company’s core values. This resulted in a 71 percent employee retention rate in 2015, which is 45 percent higher than the national average for Ford’s non-luxury-brand dealerships. To help meet the needs of its diverse workforce, Don Chalmers provides a free on-site wellness clinic staffed with a nurse practitioner for employees and their families. To engage employees, Don Chalmers management provides employees with monthly status reports on its operations and business plans,

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and the senior leadership team regularly discusses customer satisfaction and provides performance feedback. Employees are encouraged to submit ideas for improvement, and senior leaders review, discuss, and implement them. Bristol Tennessee Essential Services (BTES), an electricity and fiber services utility company that serves 33,000 customers with only 68 employees, is a 2017 Award recipient in the small business category. BTES uses an online training portal to communicate process standards, standard operating procedures, and process changes and improvements. Employees are expected to complete all assigned modules every quarter, and all of BTES’s employees annually participate in development opportunities.

The International Organization for Standardization (ISO), a network of national standards institutes that includes 160 countries and has a central governing body in Geneva, Switzerland, is the world’s largest developer and publisher of international standards.93 The ISO develops standards related to management as well as a wide variety of other areas, including education, music, ships, and even protecting children. ISO standards are voluntary, though countries may decide to adopt ISO standards in their regulations, in which case they may become a requirement to compete in the market. The ISO 9000 is a family of standards related to quality (ISO 9000, ISO 9001, ISO 9004, and ISO 19011). The ISO 9000 quality standards address what the company does to meet regulatory requirements and the customer’s quality requirements while striving to improve customer satisfaction and continuous improvement. The standards represent an international consensus on quality management practices. The quality management standards of the ISO 9000 are based on eight quality management principles, including customer focus, leadership, employee engagement, a process approach, a systems approach to management, continuous improvement, the use of facts to make decisions, and the establishment of mutually beneficial relationships with suppliers. ISO 9001:2008 is the most comprehensive standard because it provides a set of requirements for a quality management system for all organizations, both private and public. The ISO 9001:2008 has been implemented by more than 1 million organizations in 176 countries. ISO 9000:2015 (2015 is the most recent version) has been adopted as the quality standard in nearly 170 countries, meaning that companies have to follow the standards to conduct business in those countries. The ISO 9001:2015 has been implemented by over 1 million organizations around the world. ISO 9004 provides a guide for companies that want to improve.

Why are standards useful? Customers may want to check that the product they ordered from a supplier meets the purpose for which it is required. One of the most efficient ways to do this is when the specifications of the product have been defined in an international standard. That way, both supplier and customer are on the same wavelength, even if they are based in different countries, because they are both using the same references. Today, many products require testing for conformance with specifications, compliance with safety, or other regulations before they can be put on many markets. Even simpler products may require supporting technical documentation that includes test data. With so much trade taking place across borders, it is more practical for these activities to be carried out not by suppliers and customers, but by specialized third parties. In addition, national legislation may require such testing to be carried out by independent bodies, particularly when the products concerned have health or environmental implications. One example of an ISO standard is on the back cover of this book and nearly every other book. On the back cover is something called an International Standard Book Number (ISBN). Publishers and booksellers are very familiar with ISBN numbers, since these numbers are the method through which books are ordered and bought. Try buying a book on the Internet, and you will soon learn the value of the ISBN number—there is a unique number for the book you want. And it is based on an ISO standard.

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In addition to competing for quality awards and seeking ISO certification, many companies are using the Six Sigma process. The Six Sigma process refers to a process of measuring, analyzing, improving, and then controlling processes once they have been brought within the narrow Six Sigma quality tolerances or standards. The objective of Six Sigma is to create a total business focus on serving the customer; that is, to deliver what customers really want when they want it. For example, at General Electric (GE), introducing the Six Sigma quality initiative meant going from approximately 35,000 defects per million operations—which is average for most companies, including GE—to fewer than 4 defects per million in every element of every process GE businesses perform, from manufacturing a locomotive part, to servicing a credit card account, to processing a mortgage application, to answering a phone.94 Training is an important component of the process. Six Sigma involves highly trained employees known as Champions, Master Black Belts, Black Belts, and Green Belts, who lead and teach teams that are focusing on an ever-growing number of quality projects. The quality projects focus on improving efficiency and reducing errors in products and services. The Six Sigma quality initiative has produced more than $2 billion in benefits for GE.

Training can help companies meet the quality challenge by teaching employees a concept known as “lean thinking.” Lean thinking is a way to do more with less effort, equipment, space, and time, but still provide customers with what they need and want. Part of lean thinking includes training workers in new skills or teaching them how to apply old skills in new ways so they can quickly take over new responsibilities or use new skills to help fill customer orders. Baylor Health Care System wanted to decrease waste and improve patient satisfaction and outcomes through implementing lean thinking and process improvements in several of its hospitals.95 This included training employees in how to make changes to work processes. Lean thinking and process improvement supported by training provided significant value. For example, The Corporate Supply Management team eliminated two-thirds of the time required for completing contracts, developed a decision tree for different types of projects, and reduced errors, saving $10 million. A hospital readmission team redesigned the patient discharge process to reduce the chances of patients returning within 30 days. They realized a 44 percent decrease in readmissions over a six-month period, which improved the quality of life for patients and Baylor’s ability to receive Medicare/Medicaid payments from the government.

A group within the ISO has drafted a standard for employee training. ISO 10015 is a quality management tool designed to ensure that training is linked to company needs and performance. ISO 10015 has two key features.96 First, companies have to determine the return on investment of training to company performance. Second, ISO 10015 requires companies to use appropriate design and effective learning processes. ISO 10015 defines training design as analyzing, planning, doing, and evaluating (recall the discussion of the Instructional System Design model earlier in this chapter).

New Technology

Technology has reshaped the way we play, communicate, plan our lives, and work. Many companies’ business models include e-commerce, which allows consumers to purchase products and services online. The Internet is a global collection of computer networks that allows users to exchange data and information. Roughly 84 percent of U.S. households have a computer (desktop, laptop, tablet, or smartphone) and 75 percent have Internet access. A total of 60 percent of Americans visit Google during the week, and 43 percent have a Facebook page.97 Using Facebook, Twitter, LinkedIn, and other social networking tools available on the Internet

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and accessed through smartphones, notebooks, or personal computers, company managers can connect with employees and employees can connect with friends, family, and co-workers.

Influence on Training

Advances in sophisticated technology along with reduced costs for the technology are changing many aspects of human resource management. Specifically, companies are using or considering using social networking, artificial intelligence, and robotics in the delivery of training, making training more realistic and giving employees the opportunity to choose where and when they will work. New technologies allow training to occur at any time and any place.98

Technological advances in electronics and communications software have made possible mobile technology such as personal digital assistants (PDAs), iPads, and iPods and have enhanced the Internet by developing enhanced capability for social networking. Table 1.6 shows how social networks can be used for training and development.99

TABLE 1.6 Potential Uses of Social Networking for Training and Development

Issues	Uses
Loss of expert knowledge due to retirement	Knowledge sharing, capturing, and storing
Employee engagement	Collect employee opinions
Identify and promote employee expertise	Create online expert communities
Promote innovation and creativity	Encourage participation in online discussions
Reinforce learning	Share best practices, applications, learning points, links to articles and webinars
Employees need coaching and mentoring	Interact with mentors and coaching peers

Sources: Based on P. Brotherson, “Social Networks Enhance Employee Learning,” T+D (April 2011), pp. 18–19; T. Bingham and M. Connor, The New Social Learning (Alexandria, VA: American Society for Training & Development, 2010); M. Weinstein, “Are You Linked In?” training (September/October 2010), pp. 30–33; S. Gilbert and A. Silvers, “Learning Communities With Purpose,” TD (January 2015), pp. 48–51.

In general, social networking facilitates communications, decentralized decision making, and collaboration. Social networking can be useful for busy employees to share knowledge and ideas with their peers and managers with whom they may not have much time to interact in person on a daily basis. Employees, especially young workers from the millennial or Gen-Y generations, have learned to use social networking tools such as Facebook throughout their lives and see them as valuable tools for both their work and personal lives.

Despite its potential advantages, many companies are uncertain as to whether they should embrace social networking.100 They fear, perhaps correctly, that social networking will result in employees wasting time, neglecting their work, or offending or harassing their co-workers. But other companies believe that the benefits of using social networking for human resource practices and allowing employees to access social networks at work outweigh the risks. They trust employees to use social networking productively and are proactive in developing policies about personal use and training employees about privacy settings and social network etiquette. They realize that employees will likely check their Twitter, Facebook, or LinkedIn accounts, but they ignore it unless productivity is decreasing. In some ways, social networking has become the electronic substitute for daydreaming at one’s desk or walking to the break room to socialize with co-workers.

Technology has many advantages, including reduced travel costs, greater accessibility to training, consistent delivery, the ability to access experts and share learning with

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others, and the possibility of creating a learning environment with many positive features such as feedback, self-pacing, and practice exercises. While trainer-led classroom instruction remains the most popular way to deliver training, companies report that they plan on delivering a large portion of training through learning technologies such as intranets and iPods. For example, at Rackspace, employees can use their devices to check their pay stubs, bonus reports, and time cards as well as share knowledge.101 At Biogen, salespersons can access e-learning modules on their tablets. PepsiCo has a mobile accessible career site.

Artificial intelligence, robotics, tracking systems, radio frequency identification, and nanotechnology are transforming work.102 Technology has also made it easier to monitor environmental conditions and employees and operate equipment. Driverless cars, self-driving trucks at iron ore mines that need no human operators, and computers that perform legal research are recent advances in automation. Artificial intelligence is a technology that simulates human thinking. It works through queries that allow it to learn from data over time so that it can identify trends and patterns that influence future searches and suggestions. Artificial intelligence is in use at home and in the workplace.103 Artificial intelligence has provided us with personal assistants such as Apple’s Siri or Amazon’s Alexa to whom we can give orders such as to make a purchase or play a favorite song. In the workplace, IBM has teamed up its artificial intelligence (called Watson) with H&R Block to help clients prepare their tax returns and maximize their tax refunds. Watson has also been used in health care to provide cancer diagnoses, in the law profession to conduct legal research, and in service industries to answer customers’ questions.

Robots also are being used in service in manufacturing.104 Heasy, a robot with eyes, can help you find your way through a hotel or resort. Airport Guide Robot can answer airline passengers’ questions in English, Chinese, Japanese, and Korean; scan a ticket; and give directions. Robots at Whirlpool’s dryer factory snap pictures to scan defects. At BMW’s auto plant, robots help install doors and windshields. On the shop floor, robots can work alongside employees, freeing them from having to perform repetitive, physically demanding tasks so that they can perform more important and knowledge-intensive work. Robots can help companies save money because they can work more efficiently and lower labor costs, but they still can’t perform many important tasks. For example, unlike humans, robots have been unable to neatly fold clothes because they are unable to make the distinction between fabric types and weights and irregular clothing sizes.

Wearables are just beginning to be developed and used for training and performance support solutions. Wearable Intelligence provides smart eyewear technology and camera technology to give employees hands-free, voice-activated access to procedures and checklists and live access to experts using tablet computers. These technologies allow data and live video sharing, the opportunity to review best-practice videos before or during the performance of complex procedures and operations, and real-time notifications and alerts.105 For example, an operator working on a remote oil rig or a surgeon in a sterile operating room can share live video with experts and get the advice needed to fix a broken valve or complete a medical procedure while remaining focused on the equipment or the patient.

Flexibility in Where and When Work Is Performed

The globalization of the world economy and the development of e-commerce have made the notion of a 40-hour workweek obsolete. Survey results show that 46 percent of employees work more than 45 hours per week.106 As a result, companies need to be staffed

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24 hours a day, seven days a week. Employees in manufacturing environments and service call centers are being asked to move from 8- to 12-hour days or to work afternoon or midnight shifts. Similarly, professional employees face long hours and work demands that spill over into their personal lives. Notebook computers, smartphones, and smartwatches bombard employees with information and work demands. In the car, on vacation, on planes, and even in the bathroom, employees can be interrupted by work demands. More demanding work results in greater employee stress, less satisfied employees, loss of productivity, and higher turnover—all of which are costly for companies. One study found that because of work demands, 75 percent of employees report not having enough time for their children, and 61 percent report not having enough time for their husbands or wives. However, only half of employees in the United States strongly agree that they have the flexibility they need to successfully manage their work and personal or family lives.107 Many companies are recognizing the benefits that can be gained by both the company and employees through providing flexible work schedules, allowing work at-home arrangements, protecting employees’ free time, and more productively using employees’ work time. The benefits of such flexibility include the ability to attract and retain talented employees; reduced stress, resulting in healthier employees; and a rested workforce that can maximize the use of its skills. It is estimated that 43 percent of employees do most or all of their work from home, meaning they spend time working in a location away from their peers.108 Employees in managerial, business, and financial operations and professional occupations are most likely to do some or all of their work at home.

For example, at Automattic, almost all work is done remotely.109 Automattic, which provides a content management system that is used on websites, has over 500 employees working in more than 50 countries. The company is selling its office in San Francisco because so few employees work there. Instead employees rely on several tools including Slack, Zoom, and its own internal discussion board for documenting work, having discussions, and videoconferencing. The use of these tools means that everyone can access and search internal communications, creating feelings of transparency and inclusion. At Dell, 58 percent of its employees work remotely, especially in jobs involving business support functions such as HR, legal, data science, and marketing.

Increased Use of Nontraditional Employment

More companies are moving away from the traditional employment model based on full-time workers to increasingly rely on nontraditional employment. Nontraditional employment includes the use of independent contractors, freelancers, on-call workers, temporary workers, and contract company workers. Studies estimate that between 20 and 35 percent of the total U.S. workforce is engaged in nontraditional employment, including those who have a full-time job (what is called “moonlighting”).110 Companies that rely primarily on nontraditional employment to meet service and product demands are competing in the gig economy.111 Although many companies will continue to rely on a traditional employment model using full- and part-time employees, 40 percent believe they will use a nontraditional model (independent contractors, project-based or freelance need–based work) in the next decade. What does nontraditional employment look like? Often, a website or mobile app is used to assign work, and the worker sets his or her own schedule. Because these workers do not work for a company, they do not have taxes withheld from their earnings, they do not have to receive minimum wage or overtime pay, and they are not eligible for workers’ compensation and unemployment insurance.

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Examples of companies that rely on the gig economy include transportation services Uber and Lyft and food-delivery services such as Caviar. Nontraditional employment has benefits and disadvantages for both individuals and employers.112

More workers in nontraditional employment relationships are choosing these arrangements. Nontraditional employment can benefit both individuals and employers. More and more individuals don’t want to be attached to any one company. They want the flexibility to work when and where they choose. They may want to work fewer hours to better balance work and family responsibilities. Also, individuals who have been downsized may choose nontraditional employment while they are seeking full-time employment.

From the company’s perspective, it is easier to add temporary employees when they are needed and easier to terminate their employment when they are not needed. Part-time workers can be a valuable source of skills that current employees may not have and that may be needed for a specific project that has a set completion date. Part-time workers can be less expensive than permanent employees because they do not receive employer health benefits or participate in pension plans. Employing part-time workers such as interns allows the company to determine if the worker meets performance requirements and fits in with the company culture. If so, the company may then decide to offer the employee a permanent position. For example, some technology companies such as Honeywell have relied on crowdsourcing, using services such as Topcoder and Amazon’s Mechanical Turk, to find scientists and software engineers who have the skills lacking in their own employees to solve problems, create apps, or write code.113 Alphabet Inc., the parent company of Google, has equal numbers of full-time and temporary and contract workers who test self-driving cars, manage projects, review legal documents, and do other jobs. Nontraditional employment also has potential disadvantages. These include concerns about work quality, inability to maintain the company culture or team environment, and legal liability.114 The use of nontraditional work employment and work-at-home arrangements have resulted in the development of co-working sites or shared offices where diverse workers such as designers, artists, freelancers, consultants, and other independent contractors pay a daily or monthly fee for a guaranteed work space.115 Co-working sites are equipped with desks, Internet, and conferences rooms, and some even provide couches for relaxing and free coffee and beer. Co-working sites help independent contractors and employees who work at home, travel, or telecommute and have feelings of isolation, enabling them to collaborate and interact, providing a more professional working atmosphere than coffee shops, and helping to decrease traffic and pollution.

A key issue that nontraditional employment presents is the need to provide training that is specific, on demand, delivered in small chunks, and specifically focused on the worker’s job.116 Training contract workers, for example, helps ensure that they can successfully perform their jobs the way the company wants them to as well as establish the company as a place that they might want to come back to work for in the future. Some of the challenges in training workers in nontraditional employment relationships include ensuring that the type and length of their training is sufficient but not so extensive as to make them qualify as full-time employees for salary and benefit purposes.

High-Performance Work Systems

New technology causes changes in skill requirements and work roles and often results in redesigned work structures (e.g., work teams).117 For example, computer-integrated manufacturing uses robots and computers to automate the manufacturing process. The computer allows

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the manufacture of different products simply by reprogramming the computer. As a result, laborer, material handler, operator/assembler, and maintenance jobs may be merged into one position. Computer-integrated manufacturing requires employees to monitor equipment and troubleshoot problems with sophisticated equipment, share information with other employees, and understand the relationships among all components of the manufacturing process.118

Through technology, the information needed to improve customer service and product quality becomes more accessible to employees. This means that employees are expected to take more responsibility for satisfying the customer and determining how they perform their jobs. One of the most popular methods for increasing employee responsibility and control is work teams. Work teams involve employees with various skills who interact to assemble a product or provide a service. Work teams may assume many of the activities usually reserved for managers, including selecting new team members, scheduling work, and coordinating activities with customers and other units in the company. To give teams maximum flexibility, cross training of team members occurs. Cross training refers to training employees in a wide range of skills so they can fill any of the roles needed to be performed on the team.

Consider the high-performance work systems at HindlePower.119 HindlePower is a manufacturer of battery chargers. Most of HindlePower’s 75 employees work in the factory as assemblers. There is no time clock. Employees do not need to punch in or out and there are no rules for time off. Employees don’t abuse the policy—hours in the factory consistently reach 97 to 100 percent of full-time. HindlePower established a program called the Professional Manufacturing Team, which pairs training with employee involvement in designing more efficient processes. The training includes 25 to 30 courses customized for each production line. Employees are responsible for completing all of the courses, and when they do they are designated as a manufacturing professional. Employees are also involved in decisions that go beyond training. For example, employees redesigned a production line, resulting in an additional 150,000 units produced per week.

Use of new technology and work designs such as work teams needs to be supported by specific human resource management practices. These practices include the following actions:120

Employees choose or select new employees or team members.

Employees receive formal performance feedback and are involved in the performance improvement process.

Ongoing training is emphasized and rewarded.

Rewards and compensation are linked to company performance.

Equipment and work processes encourage maximum flexibility and interaction between employees.

Employees participate in planning changes in equipment, layout, and work methods.

Employees understand how their jobs contribute to the finished product or service.

What role does training play? Employees need job-specific knowledge and basic skills to work with the equipment created by the new technology. Because technology is often used as a means to achieve product diversification and customization, employees must have the ability to listen and communicate with customers. Interpersonal skills, such as negotiation and conflict management, and problem-solving skills are more important than physical strength, coordination, and fine-motor skills—previous job requirements for many

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manufacturing and service jobs. Although technological advances have made it possible for employees to improve products and services, managers must empower employees to make changes.

Besides changing the way that products are built or services are provided within companies, technology has allowed companies to perform work using virtual teams. Virtual teams are teams in which members are separated by time, geographic distance, culture, and/or organizational boundaries and rely almost exclusively on technology (such as e-mail, Internet, and video conferencing) to interact and complete their projects. Virtual teams can be formed within one company, whose facilities are scattered throughout the country or the world. A company may also use virtual teams in partnerships with suppliers or competitors to pull together the necessary talent to complete a project or speed the delivery of a product to the marketplace. The success of virtual teams requires a clear mission, good communications skills, trust between members that they will meet deadlines and complete assignments, and an understanding of cultural differences (if the teams have global members).

For example, Art & Logic software developers all work remotely from across the United States and Canada using home offices, rented office spaces, or co-working facilities.121 The company’s clients represent a diverse set of industries, including education, aerospace, music technology, consumer electronics, entertainment, and financial services. The project teams work on the most unusual and difficult problems that developers at other companies have failed to solve. Art & Logic tries to accommodate the unique schedule and work-style requirements of its developers, but its work is highly collaborative within project teams. Every project consists of at least a project manager/developer and has a maximum of five to seven developers. Teams use Google Apps for Business for sharing documents and communicating (both within the team and with clients).

SNAPSHOT OF TRAINING PRACTICES

Training can play a key role in helping companies gain a competitive advantage and successfully deal with competitive challenges. Before you can learn how training can be used to help companies meet their business objectives, and before you can understand training design, training methods, and other topics covered in the text, you need to become familiar with the amount and type of training that occurs in the United States. Also, you must understand what trainers do. The next sections of this chapter present data regarding training practices (e.g., how much companies spend on training, what type of training is occurring, and who is being trained), as well as the skills and competencies needed to be a trainer.

Training Facts and Figures

The snapshot of training practices provided in this section is based on data collected from a number of sources, including surveys conducted by training magazine and the ATD (the Association for Talent Development, previously known as the American Society for Training and Development).122 For several reasons, these data should be viewed as reasonable estimates of practices rather than precise facts. One reason for this is that the samples may not be representative of all sizes or types of companies. For example, the training survey was conducted by a research firm that e-mailed invitations to subscribers to participate in an online survey. The response rate ranged from 41 percent for mid-sized firms

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(1,000–9,999 employees) to 36 percent for small firms (100–999 employees). The ATD annual State of the Industry Report includes hundreds of organizations across all major industries grouped into two categories: companies that have received awards for training (e.g., ATD BEST Award winners) and consolidated responses.

You may be asking yourself questions such as “How much time and money do companies spend on training?” or “Is instructor-delivered training obsolete?” Table 1.7 provides a snapshot of trends in workplace learning.

TABLE 1.7 Questions and Answers about Training Practices

Investment and Distribution of Expenditures Q:  How much do U.S. organizations spend on employee learning and development? A:  Approximately $87.6 billion Q:  How much is spent per employee? A:  $1,296 Q:  What is the percentage of dollars spent on training and development as a percentage of payroll? A:  3.3 percent Q:  How much is spent as a percentage of profit? A:  8.4 percent Q:  How much time do employees spend in formal training each year? A:  34.1 hours Q:  Who receives most of the training? A:  39 percent of training budgets and dollars are spent on nonexempt employees, 27 percent on exempt employees, 24 percent on managers, and 10 percent on executives Q:  Which industry spends the most money on training? The least amount of money on training? A:  Management consulting at $2,136 per employee is the highest and manufacturing at $614 per employee is the lowest

Efficiency Q:  What percent of total expenses goes to tuition reimbursement? A:  8 percent Q:  How many employees are there for every training staff member? A:  392 employees for every staff member Q:  What is the average cost for providing one learning hour to one employee? A:  $77 Q:  What is the average cost of producing one hour of formal training? A:  $1,896 Q:  What is the ratio of learning hours used to learning hours available? A:  54 to 1

Delivery Methods Q:  How is training delivered? A:  36 percent by an instructor in a classroom, 69 percent via blended learning (including both face-to-face and technology delivery), 26 percent online, and 2 percent mobile devices Q:  What percentage of direct learning expenditures is allocated to outside providers (i.e., outsourced)? A:  26 percent

Source: M. Ho, “2018 State of the Industry” (Alexandria, VA: Association for Talent Development, 2018); “2018 Industry Report,” training (November/December 2018), pp. 18–31.

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As can be seen in Table 1.7, U.S. organizations continue to invest large amounts of money in learning initiatives. Here is an overview of some key trends in these investments:

After rising almost 33 percent, to $90.6 billion in 2016, total training expenditures declined to $87.6 billion in 2017.

Average training expenditures per employee have gradually risen over the last several years.

The average number of learning hours per employee, which has increased every year since 2012, remained the same in 2016 and 2017.

There is an increased demand for specialized learning that includes manager, professional, and industry-specific content.

The use of technology-based learning delivery has increased from 29 percent in 2010 to 42 percent in 2017.

Self-paced online learning is the most frequently used type of technology-based learning.

Technology-based learning has helped improve learning efficiency, as shown by the reuse ratio. The “reuse ratio” is a measure of how efficiently companies are delivering their training offerings to employees. The reuse ratio was 54 hours in 2017. This means that every hour of learning content available was received by about 54 employees.

Traditional, instructor-led classroom training continues to be the most popular method. However, its use continues to decline (61 percent in 2010 vs. 54 percent in 2017).

Of the $87.6 billion spent on training, 68 percent is for internal costs such as training-staff salaries and course development, 27 percent is for services by external providers (such as consultants, workshops, or training programs outside the company), and 8 percent goes toward tuition reimbursement. Cost per learning hour fell in 2017, continuing the trend observed since 2014. This suggests that in the last four years companies have become more effective in distributing training to employees.

Figure 1.4 shows the different types of training provided by companies. Managerial and supervisory, processes, procedures, and business practices, and mandatory and compliance training account for 36 percent of learning content. The least amount of learning content concerns basic and other skills. The use of online training varies by content area.123 Mandatory and compliance training, sales training, and information technology systems training is delivered online. Online training is used least for executive development and onboarding, i.e., new employee orientation.

FIGURE 1.4 Different Types of Training Provided by Companies

Note: Data from consolidated responses (companies that submitted their annual data as part of ASTD’s benchmarking programs).

Source: Based on M. Ho, “2018 State of the Industry” (Alexandria, VA: Association for Talent Development, 2018).

Training Investment Leaders

The chapter’s opening vignette illustrates how training can be used by companies to gain a competitive advantage. Higher investment in training by companies in the United States is related to use of innovative training practices and high-performance work practices such as teams, employee stock ownership plans, incentive compensation systems (profit sharing), individual development plans, and employee involvement in business decisions. This spending (along with the use of high-performance work practices) has been shown to be related to improved profitability, customer and employee satisfaction, and the ability to retain employees. For example, companies including Wipro Technologies, Valvoline Instant Oil Change, IBM, and Verizon have recognized that training contributes to their competitiveness. They make a substantial financial investment in training and use it to drive productivity, customer service, and other results important to business. Chapter Two discusses how training can help companies meet their business goals.

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In terms of their training practices, how do companies that have recognized training’s importance in gaining a competitive advantage differ from other companies? ATD’s State of the Industry Report, 2017, compares the training practices of companies that were part of the ATD consolidated responses with companies that received ATD BEST Awards (recognizing companies that show a clear link between learning and performance).124 Consolidated responses included companies who provided ATD with a standard set of information on their training practices (e.g., number of hours spent on training); these included 399 companies with an average of 12,422 employees. Table 1.8 shows the characteristics of BEST Award–winning companies. As will be discussed in Chapter Two,

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the BEST Award winners are engaging in strategic training and development—training and development that supports the business’s strategies and has measurable outcomes. The BEST Award winners included 45 companies with an average of 42,244 employees. Table 1.9 compares the BEST Award winners with the benchmark companies that provided consolidated responses. As the table shows, companies that were BEST Award winners were able to more efficiently deliver training (less cost, higher reuse ratio) than other firms. Also, at BEST Award–winning companies, employees on average engaged in more learning hours than employees at the other firms.

TABLE 1.8 Characteristics of BEST Award Winners

Alignment of business strategy with training and development Learning is valued as part of the culture and supported by executive leaders and top managers Effectiveness and efficiency of learning is measured Investment in training and development Different learning opportunities are provided and all employees have access to them Measurement of effectiveness and efficiency of training and development activities Nontraining solutions for performance improvement used, including organization development and process improvement

Source: Based on M. Ho, “2018 State of the Industry” (Alexandria, VA: Association for Talent Development, 2018); L. Miller, “2014 State of the Industry” (Alexandria, VA: Association for Talent Development, 2014).

TABLE 1.9 Comparison of BEST Award Winners and Benchmark Companies

	Consolidated Company	BEST Award Winner
Amount of training received per employee	34 hours	48 hours
Average cost per learning hour available	$1,896	$1,548
Amount spent on training per employee	$1,296	$1,057
Ratio of learning hours used to learning hours available (reuse ratio)	53.8	108.9

Source: M. Ho, “2018 State of the Industry” (Alexandria, VA: Association for Talent Development, 2018).

Roles, Competencies, and Positions of Training Professionals

Trainers can typically hold many jobs, such as instructional designer, technical trainer, or needs analyst. Each job has specific roles or functions. Table 1.10 provides examples

of the roles that training and development professionals might take in their jobs. These roles are included in jobs such as trainer, virtual instructor, learning technologist, instructional designer, content curator, learning consultant, and training manager.125 Training department managers devote considerable time to the roles of business partner and learning strategist. Training department managers may be involved in the project management role, but, because of their other responsibilities, they may be involved to a lesser extent than are specialists who hold other jobs. Human resource managers may also be required to complete many of the training roles, although their primary responsibility is in overseeing the human resources functions of the division, department, or company (e.g., staffing, recruiting, compensation, and benefits). Special knowledge, skills, or behaviors—also called competencies—are needed to perform each role successfully.

TABLE 1.10 Training and Development Roles

Learning Strategist	Determines how workplace learning can be best used to help meet the company’s business strategy
Business Partner	Uses business and industry knowledge to create training that improves performance
Project Manager	Plans, obtains, and monitors the delivery of learning and performance solutions to support the business
Professional Specialist	Designs, develops, delivers, and evaluates learning and performance solutions

Source: Based on M. Allen and J. Naughton, “Social Learning: A Call to Action for Learning Professionals,” T+D (August 2011), pp. 50–55.

The most comprehensive study of training professionals has been conducted by the ATD.126 Figure 1.5 shows the ATD competency model. The model describes what it takes for an individual to be successful in the training and development field. It includes specific areas of expertise and foundational competencies. The areas of expertise include knowledge and behaviors required by different roles (e.g., change management, learning technologies, and training delivery). Although training professionals spend most of their time designing learning (instructional design), delivering training, managing learning programs, identifying, selecting, and using learning technologies, and coaching (working one-on-one with employees to help them develop), they do spend time in other areas as well. The model recognizes that performance improvement (designing and developing solutions to close performance gaps), talent management (including talent acquisition, development, and retention), and knowledge management are other important areas of expertise.

FIGURE 1.5 The ATD Competency Model

ATD Competencies for the Training & Development Profession
T&D Areas of Expertise	Foundational Competencies
Performance improvement	Business skills
Instructional design	Global mindset
Training delivery	Industry knowledge
Learning technologies	Interpersonal skills
Evaluating learning impact	Personal skills
Managing learning programs	Technology literacy
Integrated talent management
Coaching
Knowledge management
Change management

The foundational competencies anchor the competency model. The foundational competencies include interpersonal skills, business skills, personal skills, global mindset, industry knowledge, and technology literacy. The foundational competencies are important regardless of a trainer’s area of expertise or role but are used to a different extent in each role or specialization.

Traditional narrow jobs in the training department focusing on one type of expertise (e.g., instructional designer and technical writer) are changing; having multiple areas of

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expertise becomes more necessary for training and development to contribute to the business. Project management requires the knowledge of new training technologies (e.g., web-delivered learning, mobile learning, and knowledge management systems) and the ability to manage managers, engineers, scientists, and others who may have more experience, knowledge, or technical savvy than the trainer.

To provide you with an idea of the variety of responsibilities and expertise required for training professionals, Table 1.11 provides an example of an instructional system designer job that was posted on the ATD website.

TABLE 1.11 Example of Job Posted on the ATD Website

Instructional Designer

Role Overview: Candidate will join our learning and development team. Candidate has deep expertise in adult learning and development, with passion for the employee experience, for helping people learn and grow, and for defining the learning journey for our sales team. Core responsibilities include building training objectives and program; facilitating SME involvement and content; and providing recommendations on delivery methods.

Responsibilities · Work closely with managers and subject matter experts, analyze business needs, design and produce learning experiences, and define performance objectives · Consult with others across the organization, helping them identify the root problem and the best options for learning solutions · Develop a range of learning experiences, including: Instructor-led training (ILT) design, interactive e-learning modules, videos, job aids, facilitator guides, and resource materials · Develop training evaluation tools that evaluate behavioral and business impact · Collaborate with internal experts to help translate their knowledge into an effective learning experience · Ensure and drive standardization across all projects, content, and our learning management system · Build strong relationships with stakeholders to set and manage expectations, create project plans, and regularly communicate project updates and status · Ability to facilitate classroom or virtual training · Train instructors on how to effectively use technology when delivering material

Desired Qualifications & Experience · Bachelor’s degree in learning design or a related discipline · Three-plus years of instructional design experience designing highly interactive learning solutions, preferably for a sales environment

Knowledge, Skills & Abilities · Knowledge of learning format options and tradeoffs · Experience with e-learning development tools · Ability to translate technical content into effective learning solutions · Proficiency with Cornerstone On Demand preferred · Experience working with sales teams preferred · Experience facilitating classroom training · Ability to communicate ideas simply and clearly to others across the organization · High attention to detail · Self-driven to collaborate and seek feedback while staying on goal · Ability to work independently when appropriate · Excellent project management and organization skills · Strong relationship management skills

Source: From ATD Job Bank http://jobs.td.org/jobs/, accessed April 7, 2018.

Table 1.12 shows median salaries for training professionals. Keep in mind that very rarely does anyone hold the highest-paying jobs (training manager, executive-level manager) without having developed competencies in a number of training roles.

TABLE 1.12 Average Salaries for Training Professionals

Executive-Level Training/Human Resource Development Manager	$138,859
Information Technology Training Manager	100,335
Training Department Manager (1–5 trainers report to you)	91,422
Training Department Manager (more than 5 trainers report to you)	104,257
One-Person Training Department	75,581
Classroom Instructor/Trainer	73,265
Instructional Designer	76,023
CBT/Web/Multimedia Programmer Designer/Manager	84,484
Management/Career/Organization Development Specialist	89,693
Human Resource Manager/Specialist	73,495

Source: Based on “Learning Earnings?” training (November/December 2018), pp. 32–37.

Who Provides Training?

In most companies, training and development activities are provided by trainers, managers, in-house consultants, and employee experts. However, as the snapshot of training practices suggests, training and development activities are also outsourced. Outsourcing means that training and development activities are provided by individuals outside the company. Training providers outside the company include colleges and universities, community and junior colleges, technical and vocational institutions, product suppliers, consultants and consulting firms, unions, trade and professional organizations, and government organizations. Outsourcing is discussed in greater detail in Chapter Two.

Who Is in Charge of Training?

Training and development can be the responsibility of professionals in human resources, human resource development, or organizational development.127 Companies may also have entire functions or departments called human resources, human resource development, talent management or development, or organizational development that provide training and development.

In small companies, training is the responsibility of the founder and all the employees. When organizations grow to 100 employees, typically someone within the company is in charge of human resources, either as part of that person’s job or as his or her sole responsibility. At this point, training becomes one of the responsibilities of the employee in charge of human resources. In mid-sized to large organizations, training can be the responsibility of human resource professionals, or it can come from a separate function known as human resource development, talent management, development, learning, or organizational development.

Human resource development refers to the integrated use of training and development, organizational development, and career development to improve individual, group, and organizational effectiveness. Human resource development professionals might be involved in job and task analysis, instructional systems design, on-the-job training, and individual performance improvement. Organizational development professionals might focus on training as well as team building, conflict avoidance, employee development, and change management. Talent management professionals might focus on identifying the top talent in the company and ensuring that they get the training and development needed to promote them or prepare them for new positions. Learning professionals might focus on

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formal training and development activities as well as ensuring that informal learning and knowledge sharing occurs through the use of social networking tools. As you can see from these descriptions, training and development activities can be the responsibility of human resource management, human resource development, and organizational development professionals or departments. Keep in mind that regardless of what individual, department, or function is responsible, for training and development to succeed, employees, managers, training professionals, and top managers all have to take ownership for them. Throughout this book, the point is made that although training may be a formal responsibility of someone’s job, employees at all levels of the company play a role in the success of training. Also, regardless of which function or department is responsible for training and development, it must be aligned with the business strategy and must support business needs. Professionals who are responsible for training and development may have specialized areas of expertise, such as change management for organizational development specialists, but they may also have training and development responsibilities. As shown in Figure 1.5, to perform workplace learning and performance roles successfully, professionals must understand the business and must master the competencies and areas of expertise.

As companies grow and/or recognize the important role of training for business success, they form an entire training or learning function (how training functions can be organized is discussed in Chapter Two). The training function may include instructional designers, instructors, technical training, and experts in instructional technology.

The reporting relationship between human resource management and the training function varies across companies.128 Some organizations include training as part of the human resource function, believing that this provides strategic partnerships with other business functions and consistent companywide training. For example, at Life Care Centers of America, a Tennessee-based company that operates elder care facilities, training is included in the human resource department because the company believes that training is part of human resource expertise, including the ability to write training curricula and evaluate learning. Being centrally located in the human resource department makes the best use of resources and helps communicate a common management culture.

Other companies separate training from the human resource function because it allows the training function to be decentralized to better respond to the unique needs in different business units. The training and development department at A. G. Edwards has a learning center and develops training programs for its financial consultants and employees.129

Representatives of the training department regularly meet with the company’s management committee at corporate headquarters, as well as with regional officers and branch managers, to help them understand how training can support business objectives. A new branch manager certification program succeeded because the branch managers were involved in identifying skill gaps and their suggestions were used in the program design. The branch managers took ownership of the program and helped develop the program proposal which they then presented to corporate managers to receive funding and approval for the program. Regardless of the organizational approach used for the training function, it must help meet the training needs of the business.

Preparing to Work in Training

Everyone is a trainer at some point in his or her life. Consider the last time you had to teach some skill to a peer, sibling, spouse, friend, or even your boss. Although some people learn to train by trial and error, the best way is to take courses in training and development, or even choose an academic major related to training. For example, training and development courses are usually found in education, business and management, and psychology departments at colleges and universities. Business schools may offer undergraduate and graduate degrees in human resource management with courses in training and development, talent management, and organizational development. Education departments may have undergraduate and graduate degrees in human resource development and learning. Courses offered with such degrees include instructional design, curriculum development, adult learning, evaluation, and on-the-job training. Psychology departments offer courses in training and development as well. These courses can be part of a degree program in industrial and organizational psychology. If you are fortunate enough to be at a large university, you may have the opportunity to take courses from education, business/management, and the psychology departments that relate to training and development. Also, you should consider the competencies you want to focus on and think about how you will master them (courses, work experience, ATD certification, and so on).

To be a successful training professional requires staying up-to-date on current research and training practices. The primary professional organizations for persons interested in training and development include ATD, the Academy of Human Resource Development (AHRD), the SHRM, the Society for Industrial and Organizational Psychology (SIOP), the Academy of Management (AOM), and the International Society for Performance Improvement (ISPI). Articles about training practices can be found in the following publications: training, T+D, Training and Development, Chief Learning Officer, Workforce Management, HR Magazine, Academy of Management Executive, and Academy of Management Learning and Education. Training and development research can be found in the following journals: Human Resource Development Quarterly, Human Resource Development Review, Performance Improvement, Personnel Psychology, Journal of Applied Psychology, Academy of Management Journal, and Human Resource Management.

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Discussion Questions

Describe the forces affecting the workplace and learning. How can training help companies deal with these forces?

Discuss the relationship between formal training and development, informal learning, and knowledge management. How are they related to learning and creating a learning organization?

What steps are included in the training design model? What step do you think is most important? Why?

What are intangible assets? How do they relate to training and development?

How are companies using training and development to their benefit in today’s economy?

Training professionals continue to debate whether the ISD model is flawed. Some argue that ISD should be treated as a project management approach rather than a step-by-step recipe for building training programs. Others suggest that ISD is too linear and rigid a process—that it is the primary reason training is expensive, and that it takes too long to develop. ISD focuses on inputs; management wants outputs. Businesses want results, not the use of a design technology. Do you believe that ISD is a useful process? Why or why not? Are there certain situations when it is a more (or less) effective way to design training?

In your opinion, which of the training professionals’ roles would be most difficult to learn? Which would be easiest?

How might technology influence the importance of training professionals’ roles? Can technology reduce the importance of any of the roles? Can it result in additional roles?

page 52 Describe the training courses that you have taken. How have they helped you? Provide recommendations for improving those courses.

How does training differ between companies that are considered BEST Award winners and those that are not?

What are the implications of generational differences in the workforce? From a training and development perspective, what strategies should companies consider to cope with generational differences and use them to benefit the company?

How has new technology improved training and development? What are some of the limitations of using smartphones or notebooks for training?

Explain how training relates to attracting new employees, retaining employees, and motivating employees.

What is the relationship between talent management and employee engagement? What role can training and development practices play in keeping employee engagement high? Explain.

How can training, informal learning, and knowledge management benefit from the use of social collaboration tools like Twitter and Facebook? Identify a social collaboration tool and explain the potential benefits gained by using it.

Application Assignments

Go to the Association for Talent Development (ATD) home page on the Internet. The address is www.td.org. Review the jobs found under “Featured Jobs.” Choose a job that interests you and explain why. Based on the ATD competency model presented in the chapter, discuss the roles, areas of expertise, and competencies needed in this job.

Go to www.nist.gov/baldrige/, the website for the National Institute of Standards and Technology (NIST). NIST oversees the Malcolm Baldrige Quality Award. Click on How Baldrige Works and Self-Assessing and review the information provided. How do companies benefit from winning the Baldrige Quality Award? What value could a company get from competing for the award even if it failed to win it?

Watch the video of the U.S. skill shortage at www.youtube.com/watch?v=lmBgb1AJSeQ. Can training help reduce the skill shortage for companies and ensure workers are employable? What types of training can potentially have the largest impact on companies and workers?

Go to https://www.youtube.com/watch?v=fujLrWsAp8c and watch the video of the training flight simulator. What features provided by the simulator help pilots learn to safely fly an airplane? Do you think that simulator training is sufficient to learn how to fly? Explain your answer.

Conduct a phone or personal interview with a manager or training manager. Ask this person to describe the role that training plays in his or her company; changes, if any, they have seen in training in the past five years; and how they believe it will change in the future.

page 53 In January 2018, training identified the Top 125 companies for training. The top 10 ranked companies were:

Leading Real Estate Companies of the World

New York Community Bancorp

Sonic Automotive

BNSF Railway Company

Dollar General Corporation

Pacific Gas & Electric

Nationwide Mutual Insurance Company

United Shore Company

MasTec (utility services)

Best Buy

Choose one of these companies to research. Visit the company’s website, use a web search engine, or look for references to the company in publications such as training, T + D, Workforce, or HR Magazine. Prepare a report (not to exceed three pages) based on your research (a) describing why you believe the company was ranked in the top 10 and (b) explaining the relationship between training and the company’s competitiveness, business goals, and objectives. Your instructor will advise you on whether the report should be submitted electronically or on hard copy. (Hint: Possible reasons a company might be ranked include the amount of money it devotes to training, the level of employee involvement in training, and the type of training used.)

Case

Zappos: Facing Competitive Challenges

Zappos, based in Las Vegas, is an online retailer with the initial goal of trying to be the best website for buying shoes by offering a wide variety of brands, styles, colors, sizes, and widths. The Zappos.com brand has grown to offer shoes, handbags, eyewear, watches, and accessories for online purchase. The company’s goal is to provide the best service online, not just in shoes but in any product category. Zappos believes that the speed with which a customer receives an online purchase plays a critical role in how that customer thinks about shopping online again in the future, so the company is focusing on making sure the items get delivered to its customers as quickly as possible. Zappos has received many awards for its workplace culture and practices, including being recognized for six years in a row by Fortune magazine on its Best Company to Work For list.

Zappos CEO Tony Hsieh has shaped the company’s culture, brand, and business strategy around 10 core values:

Deliver WOW Through Service

Embrace and Drive Change

Create Fun and a Little Weirdness

Be Adventurous, Creative, and Open-Minded

Pursue Growth and Learning

Build Open and Honest Relationships with Communication

Build a Positive Team and Family Spirit

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Be Passionate and Determined

Be Humble

Deliver WOW Through Service means that call center employees need to provide excellent customer service. Call center employees encourage callers to order more than one size or color because shipping and return shipping are free. They are also encouraged to use their imaginations to meet customer needs.

The job of human resources at Zappos is more than just a rule enforcer. HR’s job is to protect the culture and to educate employees. HR focuses on interactions with managers and employees to understand what they need from HR (HR is even invited to attend work teams’ happy hours). Zappos’s employment practices help perpetuate its company culture. Only about 1 out of 100 applicants passes a hiring process that is equally weighted on job skills and on the potential to work in Zappos’s culture. Some managers at Zappos believe that if you want to get a job the most important value to demonstrate is “be humble,” including a focus on “we” instead of “I.” Job candidates are interviewed for cultural fit and a willingness to change and learn. For example, they observe whether job candidates talk at lunch with others or just the person they think is making the hiring decision. The HR team uses unusual interview questions—such as, How weird are you? and What’s your theme song?—to find employees who are creative and have strong individuality.

Zappos provides free lunch in the cafeteria (cold cuts) and a full-time life coach (employees have to sit on a red velvet throne to complain), managers are encouraged to spend time with employees outside of the office, and any employee can reward another employee with a $50 bonus for good performance. Call center employees can use an online scheduling tool that allows them to set their own hours, and they can earn more pay if they work during hours with greater customer demand. Most of the over 1,500 employees at Zappos are hourly. Every new hire undergoes four weeks of training, during which the company culture must be committed to memory, and spends two weeks dealing with customers by working the telephones. New recruits are offered $2,000 to leave the company during training to weed out individuals who will not be happy working at the company. Zappos provides free breakfast, lunch, snacks, coffee, tea, and vending machine snacks. Work is characterized by constant change; a loud, open office environment; and team interactions. Employees at Zappos move around. For example, call center employees can bid for different shifts every month. To reinforce the importance of the 10 core values, Zappos’s performance management system asks managers to evaluate how well employees’ behaviors demonstrate the core values, such as being humble or expressing their personalities. To evaluate task performance, managers are asked to regularly provide employees with status reports on such things as how much time they spend on the telephone with customers. The status reports and evaluations of the core values are informational or used to identify training needs.

Zappos also believes in helping others understand what inspired the company culture. The company created the Zappos.com library, which provides a collection of books about creating a passion for customer service, products, and local communities. These books can be found in the front lobby of Zappos offices and are widely read and discussed by company employees. Corporate culture is more than a set of values, and it is maintained by a complex web of human interactions. At Zappos, the liberal use of social media including blogs and Twitter facilitates the network that links employees with one another and with the company’s customers. Zappos takes the pulse of the organization monthly, measuring the health of the culture with a happiness survey. Employees respond to such unlikely questions as whether they believe that the company has a higher purpose than profits, whether their own role has meaning, whether they feel in control of their career path, whether they consider their co-workers to be like family and friends, and whether they are happy in their jobs. Results from the survey are broken down by department, and opportunities for development are identified and acted upon. For example, when it was clear from the survey that one department had veered off course and felt isolated from

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the rest of the organization, a program was instituted that enabled individuals in the group to learn more about how integral their work was.

To keep the company vibrant, CEO Tony Hsieh spent $350 million to develop a neighborhood in downtown Las Vegas, which is the home of Zappos.com’s new headquarters. Hsieh wants to provide employees with a great place to work as well as to live and socialize. Recently, Zappos adopted a management philosophy, holacracy, which gives employees the freedom and responsibility to decide how to get their work done and eliminates people managers. Hsieh’s intent was to allow employees to act more like entrepreneurs and help stimulate new ideas, bring their full selves to work, and have a purpose beyond making money, all of which he believes will benefit the business. Employees work in teams or “circles” rather than as individuals, and team membership can change. However, employees are finding that the new management system is confusing and requires them to spend more time in meetings. Also, they wonder how they will earn raises and advance their careers without management jobs. In all, 210 employees found the new philosophy so dissatisfying that they took three months of severance pay and left the company. Zappos is changing its recruitment process to ensure that its new hires are comfortable with holacracy’s self-management style. Despite this setback, other companies are trying to learn from Zappos’s practices. Zappos Insights is a department within Zappos created to share the Zappos culture with other companies. Zappos Insights provides programs about building a culture (3-Day Culture Camp), its WOW service philosophy (School of WOW), the power of a coaching-based culture (Coaching Event), how the HR function protects the culture and how its programs support it (People Academy), and custom programs. The cost to attend these programs ranges from $2,000 to $6,000 for each attendee.

Visit the Zappos website at www.zapposinsights.com. Go to “About” and review the information provided about the company, its culture, core values, training, and training fact sheet. Also, review the information provided about the management philosophy holacracy and how it works. Watch the video “How Zappos Will Run with No Job Titles” and the Business Insider article at www.businessinsider.com/tony-hsieh-zappos-holacracy-management-experiment-2015-5.

What challenges is Zappos facing that may derail its attempt to be the best online retailer? How can training and development help Zappos meet these challenges? Do you think that employees at Zappos have high levels of engagement? Why? Which of Zappos’s 10 core values do you believe training and development can influence the most? The least? Why? Is training necessary for Zappos’s transition from a traditional hierarchical structure to holacracy? Explain why and the type of training needed.

Sources: Based on www.zappos.com, accessed February 17, 2017; E. Bernstein, J. Bunch, N. Canner, and M. Lee, “Beyond the Holocracy Hype,” Harvard Business Review (July/August 2016), pp. 38–49; J. Reingold, “The Zappos Experiment,” Fortune (March 15, 2016), pp. 206–14; The Columbus Dispatch (April 6, 2015), p. C3; “Zappos Insights,” www.zapposinsights.com, accessed March 1, 2017; D. Richard, “At Zappos, Culture Pays,” Strategy + Business (August 2010), p. 60; www.strategybusiness.com, accessed March 25, 2013; K. Gurchick, “Delivering HR at Zappos,” HR Magazine (June 2011); R. Pyrillis, “The Reviews Are In,” Workforce Management (May 2011), pp. 20–25; J. O’Brien, “Zappos Knows How to Kick It,” Fortune (February 2, 2009), pp. 55–66; R. Silverman, “Going Bossless Backfires at Zappos,” Wall Street Journal (May 21, 2015), pp. A1, A10.

Chapter Two

Strategic Training

Objectives

After reading this chapter, you should be able to

Discuss how business strategy influences the type and amount of training in a company.

Describe the strategic training and development process.

Discuss how a company’s staffing and human resource planning strategies influence training.

Explain the training needs created by concentration, internal growth, external growth, and disinvestment business strategies.

Discuss the advantages and disadvantages of centralizing the training function.

Explain a corporate university and its benefits.

Discuss the strengths of a business-embedded learning function.

Discuss how to create a learning or training brand and why it is important.

Develop a marketing campaign for a training course or program.

Keller Williams Invests in Training to Become the Real Estate Company of Choice

The vision of Keller Williams, the largest real estate franchise in North America, is to be the real estate company of choice for agents, franchisees, and customers. Keller Williams strives to train its agents better than any other company in the world so they can delight customers, build their business, and have financial success. Just as location is a key factor in attracting buyers to purchase a home or commercial property, training is a key reason for Keller Williams’s ability to reach its business goals, which each year are based on increasing the number of agents, sales, and profitability. Keller Williams’s CEO believes that training is critical for the company to attract new agents because it helps them quickly become productive, resulting in sales and commissions. For current agents the challenge is to provide training to

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increase their productivity. To reinforce the importance Keller Williams places on training, all top executives teach at various field locations. Keller Williams’s commitment to training and its role in the success of the business was recognized by its top ranking received in back-to-back years in training magazine’s Top 125. The company earned the distinction of being ranked #1 in 2015 and 2017.

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Keller Williams has several different training programs that support agents and the business. Training involves both online and classroom instruction where learning occurs through interacting with instructors and coaching and opportunities for agents to collaborate, which helps them learn from each other by sharing knowledge and practices. For example, KW Connect makes training accessible anytime and anywhere. It includes user-generated content from more than 150,000 associates including videos, audio files, and links; a question and answer forum where agents can ask questions, receive answers, and rate the helpfulness of responses; a searchable calendar to register for instructor-led training classes; and a feature that allows associates to follow others, including executives, and receive notification when new content is posted. Managers can create customized training programs for new agents or other employee groups. One training video available on KW Connect has the top sales agents in the company compete against each other. Each top selling agent creates and uploads a short video explaining their approach to a real estate challenge. Other associates are invited to watch and rate the videos. The agent with the highest evaluation moves on to compete against another agent in a new real estate challenge. KW Connect has made it possible for associates to watch more than 624 hours of training on an average day. Business Objective: A Life By Design (BOLD) is a seven-week training program during which agents are taught mindset exercises, language techniques, and how to participate in lead generation activities. The course focuses on personal well-being as well as business skills. During some classes in the program agents engage in “real play,” calling customers with instructors providing guidance and support. This allows the agents to generate business while learning. BOLD graduates have increased sales volumes by 80 percent, closed sales by 86 percent, and commissions by 118 percent compared to agents who haven’t taken the program. Mega Agent Expansion (MAE) helps top-performing agents understand how and when to expand into new markets. MAE includes instructor-led classes, webinars, expert interviews, productivity resources, and coaching. The program helps participants understand all aspects of expanding their business, including how to centralize lead generation and administration and develop a workable business plan. They have access to a social media network for learning and sharing as well as monthly opportunities to ask questions of Keller Williams’s top expansion agents. Growth Initiative (GI) is a distant learning and consulting program that trains managers how to effectively recruit and retain agents. The program includes weekly one-hour seminars, requires managers to make two recruiting appointments each day, five days a week, and helps managers share best practices through an online community and a dedicated Facebook page. In addition to its training programs, Keller Williams invested in building a training and education center at its corporate headquarters in Austin, Texas. The center manages all aspects of learning and develops new courses, learning tools, and videos.

Keller Williams has several different training programs that support agents and the business. Training involves both online and classroom instruction where learning occurs through interacting with instructors and coaching and opportunities for agents to collaborate, which helps them learn from each other by sharing knowledge and practices. For example, KW Connect makes training accessible anytime and anywhere. It includes user-generated content from more than 150,000 associates including videos, audio files, and links; a question and answer forum where agents can ask questions, receive answers, and rate the helpfulness of responses; a searchable calendar to register for instructor-led training classes; and a feature that allows associates to follow others, including executives, and receive notification when new content is posted. Managers can create customized training programs for new agents or other employee groups. One training video available on KW Connect has the top sales agents in the company compete against each other. Each top selling agent creates and uploads a short video explaining their approach to a real estate challenge. Other associates are invited to watch and rate the videos. The agent with the highest evaluation moves on to compete against another agent in a new real estate challenge. KW Connect has made it possible for associates to watch more than 624 hours of training on an average day. Business Objective: A Life By Design (BOLD) is a seven-week training program during which agents are taught mindset exercises, language techniques, and how to participate in lead generation activities. The course focuses on personal well-being as well as business skills. During some classes in the program agents engage in “real play,” calling customers with instructors providing guidance and support. This allows the agents to generate business while learning. BOLD graduates have increased sales volumes by 80 percent, closed sales by 86 percent, and commissions by 118 percent compared to agents who haven’t taken the program. Mega Agent Expansion (MAE) helps top-performing agents understand how and when to expand into new markets. MAE includes instructor-led classes, webinars, expert interviews, productivity resources, and coaching. The program helps participants understand all aspects of expanding their business, including how to centralize lead generation and administration and develop a workable business plan. They have access to a social media network for learning and sharing as well as monthly opportunities to ask questions of Keller Williams’s top expansion agents. Growth Initiative (GI) is a distant learning and consulting program that trains managers how to effectively recruit and retain agents. The program includes weekly one-hour seminars, requires managers to make two recruiting appointments each day, five days a week, and helps managers share best practices through an online community and a dedicated Facebook page. In addition to its training programs, Keller Williams invested in building a training and education center at its corporate headquarters in Austin, Texas. The center manages all aspects of learning and develops new courses, learning tools, and videos.

Keller Williams doesn’t just invest time and money into training; it also takes steps to assure its effectiveness. To keep training standards high and improve learning, every trainer and instructor must take several “Train the Trainer” courses before they can teach any courses. It analyzes what top agents are doing and how they are doing it and then incorporates this into training programs so all associates can benefit. In all of its training, dedicated time is provided for associates to develop action plans that specify how they plan to use what they learned in their work. Every agent is encouraged to join one of the coaching programs Keller Williams offers to help them put into practice what they learned to improve their productivity. Each week they have the opportunity to participate in a coaching call led by a top executive. Different types of evaluation data are collected and shared with agents and managers. Because all training is voluntary, one measure of its value is participation. This includes tracking how much time employees spend in training (an average of 82 hours per person of formal, planned training) and the number of employees and franchisees trained each year in instructor-led (100,000) and online (26,000) courses. The return on investment (ROI) of many courses is calculated. For example, BOLD costs $799 per student but the average agent who participates in the course earns an additional $55,000 for the year. Keller Williams also tracks metrics such as the average days a property is on the market. The average days on the market for Keller Williams is lower than for its competitors, providing evidence that training is helping agents close deals quicker and provide better service.

The company anticipates it will continue to grow at a rapid pace but recognizes that real estate is a local business based on agents and their relationships. Keller Williams views training as a key to creating value for the business, its associates, and their clients. Since 2013 the number of homes bought or sold with a Keller Williams agent has doubled. This has meant financial success for both agents and the company. For example, agent commissions have increased 150 percent.

Sources: Based on L. Freifeld, “Keller Williams Realty’s View from the Top,” training (January/February 2017), pp. 26–32; “Top 125 2018 Top 10 Hall of Fame, Keller Williams Realty, Inc.,” training (January/February 2018), p. 47; L. Freifeld, “Keller Williams Is at Home at No. 1,” training (January/February 2015), pp. 28–34; L. Freifeld, “Keller Williams Is On the Move,” training (January/February 2014), pp. 40–42.

INTRODUCTION

As the chapter’s opening vignette shows, training at Keller Williams supports the business strategy. Recognizing that learning is part of all employees’ responsibilities, both managers and peers, along with training professionals, are actively involved in helping other employees gain new skills and perspectives. This helps to reinforce the value of learning and its importance for the business. Keller Williams recognizes that learning through training and development is critical for winning in the marketplace.

Why is the emphasis on strategic training important? Companies are in business to make money, and every business function is under pressure to show how it contributes to business success or else it faces spending cuts and even outsourcing. To contribute to a company’s success, training activities should help the company achieve its business

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strategy. A business strategy is a plan that integrates the company’s goals, policies, and actions.1 The strategy influences how the company uses physical capital (e.g., plants, technology, and equipment), financial capital (e.g., assets and cash reserves), and human capital (employees). The business strategy helps direct the company’s activities (production, finance, marketing, and human resources) to reach specific goals. The goals are what the company hopes to achieve in the medium- and long-term future. Most companies’ goals include financial goals, such as to maximize shareholder wealth. But companies have other goals related to employee satisfaction, industry position, and community service.

There are both direct and indirect links between training and business strategy and goals. Training that helps employees develop the skills needed to perform their jobs directly affects the business. Giving employees opportunities to learn and develop creates a positive work environment, which supports the business strategy by attracting talented employees, as well as motivating and retaining current employees.

Consider how Aerospace Corporation uses training in ways that support the business and consider its urgency and available resources.2 Aerospace Corporation, a nonprofit firm that supports the U.S. government’s defense and intelligence program, has over 3,500 employees, most of whom are scientists or in technical fields needed to work on space and ground support systems. Aerospace’s corporate vision is to provide engineering solutions to the nation’s most complex challenges. This vision is supported by its values: dedication to mission success, technical excellence, commitment to our people, integrity, and objectivity. To support its vision and values Aerospace provides 40 hours of learning each year for every employee. The emphasis on continuous learning is supported by how training is delivered. Because its workforce operates in 40 different locations and it needs to carefully account for how government-provided dollars are spent, Aerospace uses a 50-50 mix of face-to-face classroom instruction, a learning management system, and collaboration tools such as Sharepoint. This helps keep travel and lodging costs to attend training programs low, yet gives employees access to training wherever they are located.

Business strategy has a major impact on the type and amount of training that occurs and whether resources (money, trainers’ time, and program development) should be devoted to training. Also, strategy influences the type, level, and mix of skills needed in the company. Strategy has a particularly strong influence on determining the following:

The amount of training devoted to current or future job skills.

The extent to which training is customized for the particular needs of an employee or is developed based on the needs of a team, unit, or division.

Whether training is restricted to specific groups of employees (such as persons identified as having managerial talent) or open to all employees.

Whether training is planned and systematically administered, provided only when problems occur, or developed spontaneously as a reaction to what competitors are doing.

The importance placed on training compared to other human resource management (HRM) practices, such as selection and compensation.3

This chapter begins with a discussion of how training is evolving. Traditionally, training has been seen as an event or program designed to develop specific, explicit knowledge and skills. But managers and trainers and human resource professionals have begun to

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recognize the potential contribution to business goals of knowledge that is based on experience, which is impossible to teach in a training program, and they have broadened the role of training to include learning and designing ways of creating and sharing knowledge. The chapter goes on to discuss the process of strategic training and development, including identifying business strategy, choosing strategic training and development initiatives that support the strategy, providing training and development activities that support the strategic initiatives, and identifying and collecting metrics to demonstrate the value of training. The chapter next describes organizational factors that influence how training relates to the business strategy. These include the roles of employees and managers, top management support for training, integration of business units, staffing and human resource planning strategy, degree of unionization, and manager, trainer, and employee involvement in training. The chapter addresses specific strategic types and their implications for training. Then the chapter emphasizes that for strategic learning, training, and development to be adopted, accepted, and used by managers and employees, it is important to consider it from a change model and marketing perspective. The chapter ends with a description of several different ways of organizing the training function, emphasizing that the business-embedded and corporate university models are gaining in popularity as companies are aligning training activities with business goals.

The Evolution of Training: From an Event to Learning

As more companies such as Keller Williams recognize the importance of learning for meeting business challenges and providing a competitive advantage, the role of training in companies is changing.

Recall the discussion in Chapter One, “Introduction to Employee Training and Development,” of the different ways that learning can occur in a company. Learning occurs through training, development, informal learning, and knowledge management. Training and development programs that are organized and created by the company (i.e., formal training and development programs) are one way to ensure that employees learn. In less strategic approaches, training involves a series of programs or events that employees are required to attend. After attending the training program, employees are responsible for using what they learned in training on the job, and any support they might receive is based on the whims of their manager. Also, such training provides no information to help employees understand the relationship between the training content and their job performance, development objectives, or business goals. This type of training usually fails to improve workplace performance and meet business needs. The role of training as a program or event will continue into the future because employees will always need to be taught specific knowledge and skills. This approach assumes that business conditions are predictable, they can be controlled by the company, and the company can control and anticipate the knowledge and skills that employees need in the future. These assumptions are true for certain skills, such as communication and conflict resolution. However, these training events or programs will need to be more closely tied to performance improvement and business needs to receive support from top management. The training design model, presented in Chapter One, and the different aspects of the model, discussed in Chapters Three through Eight, will help you understand how to design training programs that can improve employee performance and meet business needs.

LEARNING AS A STRATEGIC FOCUS

The Learning Organization

Many companies, recognizing the strategic importance of learning, have strived to become learning organizations. As discussed in Chapter One, a learning organization is a company that has an enhanced capacity to learn, adapt, and change.4 In learning organizations employees seek, share, and apply new knowledge and skills to improve both their personal and organizational performance. Learning is part of the organizational values. Training processes are carefully scrutinized and aligned with company goals. In a learning organization, training is seen as one part of a system designed to create human capital. One estimate is that about one-third of all companies have an extensive learning organization, but the majority have at least some of the characteristics. Does having learning as a strategic focus influence the “bottom line”? It appears so. High-performing companies are five times more likely than low performing companies to have a strong learning culture.

Sears Holding Corporation includes the retailer Sears.5 Brick-and-mortar retailers such as Sears are struggling to compete against online retailers such as eBay and Amazon and discounters such as Costco and Sam’s Club. Sears Holding is trying to survive through cost reductions such as closing stores and improving its gross margins. But for Sears to reinvent itself and become profitable requires employees to make a difference by providing outstanding service. Continuous learning is key because a positive employee experience and great customer service are linked. Sears’s learning philosophy focuses on driving the company’s competitive advantage, providing employees with skills that can help them for the future, and solving problems using unconventional ways. The drive for innovation extends to Sears’s learning and development team, which tries to be innovative in its learning solutions—to think about how things could be done rather than how they have always been done. One example of this innovative thinking is Sears’s learning management system known as Segno. Segno was developed to support the company’s business metrics but at the same time promote a continuous learning culture. Like other conventional systems, Sears’s learning management system can deliver and track online learning and attendance at classroom training. But it also can track informal learning that occurs through reading a book or having a coaching conversation with a manager. Sears also uses a tool that gives employees an idea of how well they are applying their knowledge. If they are participating in learning, for example, but they are not doing well in customer service, the tool can recommend courses or other activities they can use to improve. Further, this tool can be used to link the data the business is generating to learning activities.

The essential features of a learning organization appear in Table 2.1. Note that the learning organization emphasizes that learning occurs not only at the individual employee level (as we traditionally think of learning), but also at the team and organizational levels. In learning organizations, high-level leaders provide guidance to the training and development function through serving on advisory boards and often participate as instructors or speakers in training and development programs. The learning organization emphasizes knowledge management.

TABLE 2.1 Key Features of a Learning Organization

Supportive Learning Environment · Employees feel safe expressing their thoughts about work, asking questions, disagreeing with managers, and admitting mistakes. · Different functional and cultural perspectives are appreciated. · Employees are encouraged to take risks, innovate, and explore the untested and unknown, such as trying new processes and developing new products and services. · Thoughtful review of the company’s processes is encouraged. Learning Processes and Practices · Knowledge creation, dissemination, sharing, and application are practiced. · Systems are developed for creating, capturing, and sharing knowledge. · Every employee has a development plan and is accountable for completing the learning included in the plan. Managers Reinforce Learning · Managers actively question and listen to employees, encouraging dialogue and debate. · Managers are willing to consider alternative points of view. · Time is devoted to problem identification, learning processes and practices, and post-performance audits. · Learning is rewarded, promoted, and supported.

Sources: Based on M. Ho and M. Jones (eds.), “Building a Culture of Learning” (Alexandria, VA: The Association for Talent Development, 2016); A. Edmonson, “Strategies for Learning from Failure,” Harvard Business Review (April 2011), pp. 48–55; F. Gino and G. Pisano, “Why Leaders Don’t Learn From Success,” Harvard Business Review (April 2011), pp. 68–74. Based on D. Garvin, A. Edmondson, and F. Gino, “Is Yours a Learning Organization?” Harvard Business Review (March 2008), pp. 109–116.

One of the most important aspects of a learning organization is the ability for employees to learn from failure and from successes. That is, learning includes understanding why things happen and why some choices lead to certain outcomes.6 Both success and failure

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trigger investigation, which help employees revise assumptions, models, and theories. For example, Apple’s Newton tablet failed miserably when it was introduced in 1990. However, the failure caused Apple to reexamine its theories about what makes successful products. As a result, Apple recognized that a touchphone would be accepted more easily by consumers because of the existing smartphone market. Subsequently, using what it learned about the iPhone helped Apple develop a more successful tablet, the iPad. Pixar, which has created a number of successful and acclaimed animated films, still conducts reviews of the process used to make each of its films. For example, Pixar asks employees the top five things they would do and not do again. This is important to gain a better understanding of the reasons behind successful performance so they can be shared by others. Learning from failure and success requires providing employees with the opportunity to experiment with products and services, similar to what happens in engineering and scientific research. Some of the conditions necessary for successful experimentation include that it involves genuine uncertainty, the cost of failure is small and contained, the risks of failure are understood and eliminated if possible, and there is an understanding that failure still provides important information, success is defined, and the opportunity is significant.

At Walt Disney Company over the last 10 years, training has evolved to include flexible learning delivery, customized learning experiences, and collaborative development with internal training customers.7 Disney has moved from an instructor-led training approach to an approach that uses face-to-face instruction (either in a classroom or on the job) combined with online instruction (e.g., via game simulation and e-learning). This suits Disney’s business strategy, which has always emphasized matching the appropriate technology and methods to the audience regardless of whether the audience is a guest or an employee (cast member).

A single training event or program is not likely to give a company a competitive advantage because explicit knowledge is well known and programs designed to teach it can be easily developed and imitated. However, tacit knowledge developed through experience and shared through interactions between employees is impossible to imitate and can provide companies with a competitive advantage. Pixar, a subsidiary of Walt Disney Company, has enjoyed huge success with its computer-animated films, including Finding Dory (the blue tang fish Dory helps us learn about the meaning of family) and Inside Out (the story about emotions, change, and growing up). These and its other films required the cooperation of a team of talented directors, writers, producers, and technology artists who were located in different buildings, had different priorities, and spoke different technical languages.8 Pixar follows three operating principles: (1) all employees must have the freedom to communicate with other employees, regardless of their position or department; (2) it must be safe for everyone to offer ideas; and (3) the company must maintain awareness of innovations occurring in the academic community. Pixar University offers a collection of in-house courses for training and cross-training employees within their specialty areas. But it also offers optional classes that provide opportunities for employees from different disciplines to meet and learn together. Screenplay writing, drawing, and sculpting are directly related to the business, while courses in Pilates and yoga are not. The courses are attended by employees with all levels of expertise—from novices to experts—which reinforces the idea that all employees are learning and it is fun to learn together.

Implications of Learning for Human Capital Development

The emphasis on learning has several implications. First, there is a recognition that to be effective, learning has to be related to helping the employee improve performance and the company achieve its business goals. This connection helps ensure that employees are motivated to learn and that the limited resources (time and money) for learning are focused in areas that will directly help the business succeed. Second, unpredictability in the business environment in which companies operate will continue to be the norm. Because problems cannot be predicted in advance, learning needs to occur on an as-needed basis. Companies need to move beyond the classroom and instead use job experiences, online learning, and mobile learning to help employees acquire knowledge and skills while they focus on business problems. Third, because tacit knowledge is difficult to acquire in training programs, companies need to support informal learning that occurs through mentoring, social networks, and job experiences. Fourth, learning has to be supported not only with physical and technical resources but also psychologically. The company work environment needs to support learning, and managers and peers need to encourage learning and help employees find ways to obtain learning on the job. Also, managers need to understand employees’ interests and career goals to help them find suitable development activities that will prepare them to be successful in other positions in the company or deal with expansion of their current job. Chapter Five, “Program Design,” discusses how to create a work environment that supports training and learning.

Creating and sharing knowledge refers to companies’ development of human capital. As discussed in Chapter One, human capital includes cognitive knowledge (know what), advanced skills (know how), system understanding and creativity (know why), and self-motivated creativity (care why).9 Traditionally, training has focused on cognitive and

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advanced skills. But the greatest value for the business may be created by having employees understand the manufacturing or service process and the interrelationships between departments and divisions (system understanding), as well as motivating them to deliver high-quality products and services (care why). To create and share knowledge, companies have to provide the physical space and technology (e-mail, websites, social networks) to encourage employee collaboration and knowledge sharing. Ford Motor Company has communities of practice organized around functions.10 For example, all the painters in every Ford assembly plant around the world belong to the same community. At each plant, one of the painters serves as a “focal point.” If a local painter discovers a better way to improve one of the sixty steps involved in painting, the focal person completes a template describing the improvement and its benefits. The template then is submitted electronically to a subject-matter expert located at Ford headquarters, who reviews the practice and decides whether it is worth sharing with other assembly plants. If so, the practice is approved and sent online to the other assembly plants. Ford has collected $1.3 billion in projected value for the company and has realized over $800 million of actual value from its communities of practice.

As companies recognize the value of training and development and view them as part of a broader learning strategy, seven key capabilities are needed.11 These capabilities are:

Alignment of learning goals to business goals.

Measurement of the overall business impact of the learning function.

Movement of learning outside the company to include customers, vendors, and suppliers.

A focus on developing competencies for the most critical jobs.

Integration of learning with other human resource functions, such as knowledge management, performance support, and talent management.

Delivery approaches that include classroom training as well as e-learning.

Design and delivery of leadership development courses.

These capabilities are part of the strategic training and development process, which is discussed next.

THE STRATEGIC TRAINING AND DEVELOPMENT PROCESS

Now that you understand how training is evolving in companies and have been introduced to the concept of business strategy and how training can support a business strategy, you are ready to study the process of strategic training and development. Figure 2.1 shows a model of the strategic training and development process with examples of strategic initiatives, training activities, and metrics.

FIGURE 2.1 The Strategic Training and Development Process

The model shows that the process begins with identifying the business strategy. Next, strategic training and development initiatives that support the strategy are chosen. Translating these strategic training and development initiatives into concrete training and development activities is the next step of the process. The final step involves identifying measures or metrics. These metrics are used to determine whether training has helped contribute to goals related to the business strategy. The following sections detail each step in the process.

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Business Strategy Formulation and Identification

Five major components are part of developing a new business strategy or changing an existing one.12 Figure 2.2 shows the components. The first component is the company mission, which is a statement of the company’s reason for existing. Company missions vary, but they typically include information on the customers served, why the company exists, what the company does, the value received by the customers, and the technology used. The mission statement is often accompanied by a statement of the company’s vision or values.

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The vision is the picture of the future the company wants to achieve, while values are what the company stands for. The second component is the company goals, which are what the company hopes to achieve in the medium to long term; they reflect how the mission will be carried out. Training can contribute to a number of different business goals, as shown in Table 2.2. Both for-profit and not-for-profit companies often include goals related to satisfying stakeholders. The term stakeholders refers to shareholders (if the company is publicly traded and for-profit), the community, customers, employees, and all the other parties that have an interest in seeing that the company succeeds.

FIGURE 2.2 Formulating the Business Strategy

TABLE 2.2 Possible Business Goals Influenced by Training

Productivity Reduced scrap and rework Increased customer satisfaction Reduced operational risks and accidents due to employee carelessness Increased employee satisfaction and retention Increased time and value-producing goods, such as increase in billable project time hours Better management decisions Increased development of human capital Succession planning needed for competitive advantage and growth

Sources: Based on R. Rivera, “How to Demonstrate Value: Key Measures Every Learning Professional Should Know,” in WLP Scorecard: Why Learning Matters (Alexandria: VA: ASTD Press 2007), pp. 17–24

The third and fourth components, external and internal analysis, are combined to form what is called a SWOT analysis. A SWOT analysis consists of an internal analysis of strengths and weaknesses and an external analysis of opportunities and threats to the company; these may currently exist or be anticipated. External analysis involves examining the operating environment to identify opportunities and threats. The business challenges identified in Chapter One can represent opportunities (or threats) to the company. Examples of opportunities include customers and global markets who are not being served, technology that can help the company, and unused or underutilized potential sources of talented employees. Threats might include changes in the economy, talent and leadership shortages, new competitors, and changes in legislation that can adversely affect the company. Internal analysis attempts to identify the company’s strengths and weaknesses. It focuses on examining the available quantity and quality of financial, physical, and human capital. The last component in formulating the business strategy is strategic choice. After completing the SWOT analysis, the company (usually managers involved in strategic planning) has all the information it needs to consider how to compete, generate several alternative business strategies, and make a strategic choice. The decisions that a company has to make regarding how to compete are shown in Table 2.3. The possible alternative strategies are compared based on their ability to achieve the company’s goals. The strategic choice represents the strategy believed to be the best alternative to achieve the company’s goals.

TABLE 2.3 Decisions a Company Must Make About How to Compete to Reach Its Goals

1. Where to compete? In what markets (industries, products, etc.) will we compete? 2. How to compete? On what outcome or differentiating characteristic will we compete? Cost? Quality? Reliability? Delivery? Innovativeness? 3. With what will we compete? What resources will allow us to beat the competition? How will we acquire, develop, and deploy those resources to compete?

Source: R. Noe, J. Hollenbeck, B. Gerhart, and P. Wright, “Strategy—Decisions About Competition,” in Human Resource Management: Gaining a Competitive Advantage, 9th ed. (Burr Ridge, IL: Irwin/McGraw-Hill, 2013), p. 77.

For example, the CEO of Texas Health Resources challenged all of the company leaders to make the company more competitive. Based on a SWOT analysis he stressed to the leaders that their functions needed to be more affordable, more innovative, and to contribute to providing consistent health care to customers.13 To contribute to the company’s competitiveness, the chief learning officer reduced the costs of staff training by

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eliminating redundant and poorly attended courses and programs. To make training more innovative he introduced web-based training and developed a long-term plan that provides recommendations of how technology can be used to make training more accessible but less costly. Learning and development contributed to enhancing the consistency of health care provided by creating courses focused on reducing errors and standardizing processes.

Although these decisions are equally important, companies often pay less attention to the “With what will we compete?” issue, resulting in failure to reach the goals. This decision includes figuring out how human, physical, and financial capital will be used. To use human capital to gain a competitive advantage requires linking the company’s human resources practices (such as training and development) to the business strategy.

Identify Strategic Training and Development Initiatives That Support the Strategy

Strategic training and development initiatives are learning-related actions that a company should take to help it achieve its business strategy.14 The strategic training and development initiatives vary by company depending on a company’s industry, goals, resources, and capabilities. The initiatives are based on the business environment, an understanding of the company’s goals and resources, and insight regarding potential training and development options. They provide the company with a road map to guide specific training and development activities. They also show how the training function will help the company reach its goals (and in doing so, show how the training function will add value).

There is a tendency to have a disconnect between the strategy and the execution of the strategy. To avoid this, learning professionals need to reach out to managers to ensure that the strategic training initiatives and training activities are aligned with the business strategy and that the necessary financial resources and support are provided to carry out the training activities.15

To contribute to a company’s business strategy, it is important that the training function understand and support it and provide value to its customers. Linking training plans to business plans is important because business plans describe company priorities (plans or initiatives) and include descriptions of who will be involved; the context and how it might affect the plan; how the plan will be carried out (operations); and what decisions have to be made, including those involving training and development, to increase the likelihood that the plan will succeed. At ICICI Lombard General Insurance Company Ltd., the learning and development function works with managers and executives to develop annual training plans that are then shared with business functions, teams, and employees. Based on the

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business strategy, the learning and development function determines the business capabilities needed and how learning can support them. All employees write development goals and identify the actions needed to achieve them, including on-the-job experiences and projects, formal training, and informal learning.16 The learning team at OptumRx, which specializes in health products and prescription medications, chooses strategic training and development initiatives that support the company’s five business goals—growth and retention, innovation, operational excellence, quality and compliance, and leadership and people.17 For example, to support the company goal of growth and retention, the learning team provided cross-training in computer systems and business processes following a merger that doubled the workforce. To support quality and compliance goals the learning team monitors quality data and error reports. As a result, it developed an e-learning course based on a need to train patient advocates on how to correctly prioritize the urgency of cases.

Table 2.4 shows strategic training and development initiatives and their implications for training practices. Diversify the learning portfolio means that companies may need to provide more learning opportunities than just traditional training programs. These learning opportunities include informal learning that occurs on the job through interactions with peers; new job experiences; personalized learning opportunities using mentors, coaches, and feedback customized to employee needs; and the use of technology (including web-based training). Such training is self-paced and available outside a formal classroom environment (these learning opportunities are discussed in Chapters Seven, Eight, and Nine).

TABLE 2.4 Strategic Training and Development Initiatives and Their Implications

Strategic Training and Development Initiatives	Implications
Diversify the Learning Portfolio	· Use technology, such as the Internet, for training · Facilitate informal learning · Provide more personalized learning opportunities
Expand Who Is Trained	· Train customers, suppliers, and employees · Offer more learning opportunities to nonmanagerial employees
Accelerate the Pace of Employee Learning	· Quickly identify needs and provide a high-quality learning solution · Reduce the time to develop training programs · Facilitate access to learning resources on an as-needed basis
Improve Customer Service	· Ensure that employees have product and service knowledge · Ensure that employees have skills needed to interact with customers · Ensure that employees understand their roles and decision making authority
Provide Development Opportunities and Communicate with Employees	· Ensure that employees have opportunities to develop · Ensure that employees understand career opportunities and personal growth opportunities · Ensure that training and development addresses employees’ needs in current job as well as growth opportunities
Capture and Share Knowledge	· Capture insight and information from knowledgeable employees · Organize and store information logically · Provide methods to make information available (e.g., resource guides, websites)
Align Training and Development with the Company’s Direction	· Identify needed knowledge, skills, abilities, or competencies · Ensure that current training and development programs support the company’s strategic needs
Ensure that the Work Environment Supports Learning and Transfer of Training	· Remove constraints to learning, such as lack of time, resources, and equipment · Dedicate physical space to encourage teamwork, collaboration, creativity, and knowledge sharing · Ensure that employees understand the importance of learning · Ensure that managers and peers are supportive of training, development, and learning

N2 Publishing creates community news publications that focus on stories about neighborhoods, local businesses, and community issues. Its training for new sales representatives is delivered online. The new sales representatives are each assigned a regional sales leader who contacts the trainees to answer any questions they might have and help them build their business.18 To facilitate continuous learning, Persistent Systems Ltd., an IT software company, provides different ways employees can access learning anytime and anywhere, including online learning, blended learning, and mobile learning. Also, the company encourages employees to engage in informal learning to share and gain knowledge. An online assessment tool can be used by employees to achieve skill certification.19

Expand who is trained refers to the recognition that because employees are often the customer’s primary point of contact, they need as much if not more training than managers do. Shaw Industries, a manufacturing company, annually provides more than one million training hours to its employees, which include machinists, marketers, scientists, sales representatives, designers, data scientists, nurses, and administrators.20 It does so to motivate employees to come up with innovative new products, encourage creative thinking, and encourage their commitment to quality.

Also, to provide better customer service to suppliers, vendors, and consumers, companies need to distribute information about how to use the products and services they offer. Companies are beginning to train suppliers to ensure that the parts suppliers provide will meet their customers’ quality standards. To be successful, companies have to be able to deal with changes in technology, customer needs, and global markets. Training needs have to be identified quickly and effective training provided. That is, companies have to accelerate the pace of employee learning. Also, companies are relying on performance support systems that provide employees with immediate access to information, advice, and guidance (performance support systems are discussed in more detail in Chapter Five). Performance support systems can be accessed through personal computers, tablets, or mobile phones

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whenever they are needed. To reduce the time it took new client services employees to learn their positions, Paycor redesigned its training from face-to-face to blended learning.21 The eight-week training includes instructor-led training, mentoring, e-learning, and guided practice. The blended learning approach means that new employees can start working on their tasks in the fifth week of the program (rather than having to wait until the end of the program). Their mentor supports them while they work and continue to learn new skills in the last three weeks of the program. Based on input from its business partners, Anthem Inc.’s learning and development team worked on designing training that engaged employees,

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gave them control over attending, and was efficient and cost effective.22 Anthem moved from face-to-face training to a flipped classroom which included self-paced online learning combined with sessions facilitated by trainers. This resulted in a 19 percent increase in the program completion rate and a cost reduction from reducing 22,000 classroom hours, yet its effectiveness was similar to that of the prior training program.

Employees must be prepared to improve customer service. Employees have to be knowledgeable about the product or service and they need to have customer service skills. Blue Cross Blue Shield of Michigan, Wipro Limited, and University Health Systems are using training to improve customer service.23 Blue Cross Blue Shield of Michigan believes that what distinguishes it from other health insurance providers is its consistent focus on its employees and customers. It designed a new training program to help its service representatives respond to customers with more empathy and flexibility. This resulted in a five-year improvement in the metrics it uses to assess customer focus and service representatives’ engagement. Wipro Limited’s CEO has two business strategies: modernize its talent development strategy by focusing on consolidation, elimination, and automation; and drive the future. One of Wipro’s talent development initiatives is to better serve customers who are facing business disruption due to digitization. To serve these customers requires employees to have knowledge of new technologies. To obtain this knowledge the learning and development team developed a serious game which allows employees to choose the skills they want to learn and earn points as they achieve different skill levels and types of skills. University Health Systems’s strategy of improving the patient experience, quality, efficiency, and access drives learning. For example, the learning team provided support for the Cultivating Compassion initiative. In addition to training on cultivating compassion, the learning support team provided increased customer service training and training in how to read and interpret patient satisfaction data.

Providing development opportunities and communicating them to employees is important to ensure that employees believe that they have opportunities to grow and learn new skills. Such opportunities are important for attracting and retaining talented employees. SinglePoint GI Inc. chooses top performing sales associates who are interested in other career opportunities with the company to attend a development program.24 Program participants select specific training courses that match their career interests. They also gain an understanding of the responsibilities and challenges of their desired positions and the skills and experiences they need to develop. Capturing and sharing knowledge ensures that important knowledge about customers, products, or processes is not lost if employees leave the company. Also, giving employees access to knowledge that other employees have may quicken response times to customers and improve product and service quality. For example, rather than “reinventing the wheel,” service personnel can tap into a database that allows them to search for problems and identify solutions that other service reps have developed. Cerner Corporation supplies its customers with health-care information technology.25 To help ensure its employees are aware of the latest advances in technology, safety, data, and safety tools, Cerner uses a social learning platform, uCern, that enables associates, clients, and partners to have discussions and share content including documents, blogs, videos, messages, and wiki pages. Technology updates now take only a few hours, compared to six weeks before uCern was available.

Aligning training and development with the company’s strategic direction is important to ensure that training contributes to business needs. Companies need to identify whatemployee capabilities (e.g., knowledge, skills) are needed and whether training programs and services are helping to improve these capabilities. Chief executive officers (CEOs) appreciate the value of learning but want training to be relevant, take less time, and enable employees to quickly use new skills and knowledge on the job.

Consider how training and development are aligned with strategic direction at Ricoh USA and iProspect.26 The learning function at Ricoh USA, Inc., is expected to help drive change as the company continues to move its business from sales to service provider. To help its sales force sell service-oriented business, increase operational efficiency, and make it easier for customers to do business with the company, the learning function provided numerous training programs such as Cross Training for Managed Service. iProspect, a digital media marketing company, has revenue growth as a business goal. To support this goal the company’s learning and development team created a six-month blended learning program that develops consulting skills. The program includes in-person and online training, webinars, coaching, mobile learning, and action plans used to help establish business growth goals, identify actions needed to reach the goals, and measure goal achievement.

Finally, a supportive work environment is necessary for employees to be motivated to participate in training and learning activities, use what they learn on the job, and share their knowledge with others. Tangible support includes time and money for training and learning, as well as work areas that encourage employees to meet and discuss ideas. Psychological support from managers and peers for training and learning is also important. Types of tangible and psychological support for training are discussed in Chapter Five. For example, at U.S. Security Associates, Inc., associates complete a three year training program to build their interpersonal skills and develop their job specific competencies.27 Managers coach employees to ensure they have acquired the competencies they need for their jobs.

How might a company ensure that its training and development initiatives are linked to its business strategy? Table 2.5 shows the questions that a company needs to answer to identify and develop its strategic training and development initiatives. To help answer these questions, trainers need to read the annual reports, strategic plans, earnings releases, and analyst reports for their companies. To understand the business strategy and its implications for training, it may be useful to invite managers to attend training and development staff

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meetings and present information on the company’s business strategy. Also, in companies with multiple divisions, it is important to understand each business, including how it measures effectiveness, how it monitors and reports performance, and what challenges it faces, such as supply chain management, new product development, competitive pressures, or service warranty issues.

TABLE 2.5 Questions to Ask to Develop Strategic Training and Development Initiatives

1. What is the vision and mission of the company? Identify the strategic drivers of the business strategy. 2. What capabilities does the company need as a result of the business strategy and business environment challenges? 3. What types of training and development will best attract, retain, and develop the talent needed for success? 4. Which competencies are critical for company success and the business strategy? 5. Does the company have a plan for making the link between training and development and the business strategy understood by executives, managers, and employees or customers? 6. Will the senior management team publicly support and champion training and development? 7. Does the company provide opportunities for training and developing not only individuals but also teams?

Source: Based on R. Hughes and K. Beatty, “Five Steps to Leading Strategically,” T+D (December 2005), pp. 46–48.

Provide Training and Development Activities Linked to Strategic Training and Development Initiatives

After a company chooses its strategic training and development initiatives related to its business strategy, it then identifies specific training and development activities that will enable these initiatives to be achieved. These activities include developing initiatives related to the use of new technology in training, increasing access to training programs for certain groups of employees, reducing development time, and developing new or expanded course offerings. For example, Verizon’s strategic priorities include providing a great customer experience, business growth and profitability, and building team culture.28 To support these priorities Verizon’s training and development team creates and executes strategic training and development initiatives that include defining the learning architecture, developing learning programs, delivering learning, and measuring how learning helps achieve business goals. Training and development helps ensure that employees, contractors, and resellers have the knowledge and skills needed to achieve the strategic priorities. For example, to improve the customer experience, Verizon developed training for retail store employees that focused on improving behaviors that lead to a positive customer experience. They also developed a course for store managers to help them coach and reinforce the behaviors that the employees were learning. The training resulted in increases in store revenue and customer satisfaction.

Identify and Collect Metrics to Show Training Success

How does a company determine whether training and development activities actually contribute to the business strategy and goals? This determination involves identifying and collecting metrics, business-level outcomes chosen to measure the overall value of training or learning initiatives. Examples of metrics include measures of employee retention, employee engagement, customer service, productivity, and quality. It is important to recognize the difference between training program outcomes and business metrics. Typically, training program evaluation involves measuring trainee satisfaction with the program, assessing improvements in trainee knowledge, skills, and abilities, or identifying if the program influenced business results such as productivity. Training evaluation, used for determining the effectiveness of training courses or programs, is discussed in more detail in Chapter Six, “Training Evaluation.” In comparison to training evaluation outcomes, metrics focus on results rather than on other outcomes. They are strategic business-related measures. That is, they are not linked to one course or program but are chosen to represent the expected value of several programs or learning initiatives.

The metrics should be directly linked to the business strategy and goals. For example, metrics might evaluate customer service, employee satisfaction or engagement, employee turnover, number of product defects, time spent in product development, number of patents, or time spent filling management positions. For example, at Genpact, a business service provider, metrics are used to show how training and development contributes to the company’s growth, profit margins, capability building, and transformational goals.29

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Training and learning initiatives at Genpact resulted in a 34 percent increase in service bookings and the development of current employees’ skills for positions that were difficult to hire for—resulting in a savings of $9 million. United Shore, a finance and banking company, uses training and coaching to improve business results.30 It implemented a team member skills coaching and development program and a certification program to develop the training skills of company leaders. These programs emphasize that leaders need to spend time working with and not just supervising team members and make themselves available to answer their questions. United Shore believes that its programs helped contribute to a $7 billion increase in loans. New York Community Bancorp’s various sales training programs have resulted in a $98 million increase in customer deposits and a $35 billion increase in loans distributed.31

Some companies use the balanced scorecard as a process to evaluate all aspects of the business. The balanced scorecard is a means of performance measurement that provides managers with a chance to look at the overall company performance or the performance of departments or functions (such as training) from the perspective of internal and external customers, employees, and shareholders.32 The balanced scorecard considers four different perspectives: customer, internal, innovation and learning, and financial. The emphasis and type of indicators used to measure each of these perspectives are based on the company’s business strategy and goals. The four perspectives and examples of metrics used to measure them include:

Customer (time, quality, performance, service, cost)

Internal (processes that influence customer satisfaction)

Innovation and learning (operating efficiency, employee satisfaction, continuous improvement)

Financial (profitability, growth, shareholder value)

Metrics that might be used to assess training’s contribution to the balanced scorecard include number of employees trained (employees trained divided by total number of employees), training costs (total training costs divided by number of employees trained), and training costs per hour (total training costs divided by total training hours). For example, EMC Corporation, a technology company, uses a balanced scorecard to track and measure learning.33 Company performance is tracked quarterly with metrics measuring business alignment, workforce readiness, time-to-market, globalization, and effectiveness. The company has also implemented performance metrics that are directly linked to present and future business needs. Employees are given individual development plans that are based on an analysis of their jobs. Ingersoll Rand requires its business units to make strong business cases for new spending.34 Following this model, Ingersoll Rand University (IRU) shows that learning makes a difference and contributes to the business strategy by using metrics such as expected benefits, one-time versus ongoing costs, shelf-life of learning products, and employee participation rates in its programs. Each year, IRU provides the company with an annual report communicating accomplishments, challenges, strategic directions, and operational efficiencies. For example, IRU has offered process improvement workshops related to Lean Six Sigma (a quality initiative), which is a business priority. IRU has been able to demonstrate that its workshops have saved the company hundreds of thousands of dollars by reducing vendor delivery costs by 76 percent.

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The process of identifying and collecting metrics is related to training evaluation, the final step in Figure 1.2 in Chapter One. Chapter Six discusses the different types of outcomes used to evaluate a training program’s metrics in more detail. Of course, showing that training directly relates to the company’s “bottom line” (e.g., increased service, sales, or product quality) is the most convincing evidence of the value of training.

Examples of the Strategic Training and Development Process

Consider the strategic training and development process in two very different companies: Dollar General and Mike’s Carwash. Dollar General’s stores are known for their low prices on products including food, health and beauty aids, cleaning supplies, clothing, and housewares.35

Dollar General’s mission, Serving Others, influences its customers, employees, and the communities in which it operates. For its customers, Dollar General works every day to deliver value and convenience through all of its neighborhood general stores. For its employees, this means respect and the opportunity to grow and develop their careers. For the communities, serving others means supporting them. Dollar General’s key to success is growing the business without sacrificing the company’s mission. In 2017 it planned to open two distribution centers and 1,300 new stores (three stores each day). This represented the largest one-year increase in the number of employees in the company’s history. One sign of the importance Dollar General places on training to support the growth of the business is that the company expects employees to spend more than 1.5 million hours in training.

To support the business growth, Dollar General’s training and development team engaged in several strategic training and development initiatives and activities. One of the strategic training initiatives related to accelerating the pace of employee learning. The training and development team worked with the vice president of store operations to improve the company’s process for onboarding new employees. To do so they evaluated, selected, and prepared high-performing store managers to become certified store training managers. This involved training activities including designing a series of train-the-trainer modules to prepare the managers to be effective trainers. Improvements in employee engagement and retention were the key metrics used to assess the effectiveness of the train-the-trainer program.

Another strategic training initiative focused on diversifying the learning portfolio, providing development opportunities, and ensuring that training is supported. In this case the training team designed new store manager training to include the opportunity to practice in an online simulated virtual store. The certified store training managers meet weekly with the new managers to discuss what they learned and how they can help. New store managers also attend a three-day classroom training session to improve their leadership skills. New store managers complete action plans that help them apply their skills. The company analyzed store manager retention as a key metric for this initiative. It found that retention rates had improved from the previous year when the program was not available, resulting in savings related to reduced hiring costs and productivity gains. Also, accelerating the pace of employee learning helps promote Dollar General’s mission of Serving Others, in this case by providing employees with growth opportunities. A key metric used to assess the extent to which this initiative is paying off is the rate of internal promotions and placements. Dollar General prides itself on its rate of internal promotions and placements, which is over 50 percent. This means that over half of Dollar General’s open positions were filled by employees already working for Dollar General.

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Additionally, to support its current and planned future growth, Dollar General invested in a new recruiting management system. To support the company’s efforts to attract talented employees, the training and development team developed a computer-based learning course and reference guides for all of the groups that use the recruiting system. This includes the human resources department, store managers, district managers, and job candidates who land on the career page of Dollar General’s website. Providing training support for the new system helped ensure its effectiveness. After the new system was implemented the number of job candidate applications doubled and the time to complete an application was reduced by 60 percent.

Mike’s Carwash, based in Indianapolis, Indiana, is a privately owned chain of car washes with 41 locations in Indiana, Ohio, and Kentucky.36 Opened in 1948, the first Mike’s was called “Mike’s Minit Man Carwash,” named after the type of equipment originally used. Mike’s later reorganized into two different companies, Crew Carwash and Mike’s Carwash, as part of the family’s succession plan. Mike’s Carwash’s mission and vision and examples of its values are shown in Table 2.6. Figure 2.3 shows how Mike’s Carwash links its business strategy to training and development.

TABLE 2.6 Mike’s Carwash: Vision, Mission, and Values

Vision “We will be the service leader by embracing innovation and providing opportunities for team members to reach their full potential, while ensuring profitable growth.” Mission To deliver the best value for our boss, the customer, by delivering a clean, quick carwash every time, with a smile. Values Safety, integrity, teamwork, fun, accountability, profitability.

Source: From www.mikescarwash.com, accessed March 30, 2018.

FIGURE 2.3 How Mike’s Carwash Links Training and Development to Business Strategy

The intent of Mike’s mission is to create lifetime customers by delivering a clean, fast, friendly experience through engaged and valued team members. Mike’s business strategy

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supports its mission: consistent and speedy service, return customers, and growing the business each year. Mike’s Carwash provides an automated carwashing service and features equipment, systems, and technology developed by Mike’s employees. Mike’s credits some of its success to the Dahm family’s business smarts but believes that most of its success comes from its employees and its hiring and training practices. Mike’s original founders, Joe and Ed Dahm, were known to tell employees that the company was truly in the people business—it just happened to wash cars. Its mission is to provide friendly and fast service to the boss (i.e., the customer) at a good value.

Customer satisfaction is very important to Mike’s, with the emphasis placed on repeat business by serving customers so they will come back again. The biggest challenge that Mike’s faces is providing a consistently enjoyable customer experience. Mike’s is constantly trying to improve the customer experience through innovation and new ideas. If a new idea works, it is implemented in all locations. Mike’s believes that the only way to provide a consistent customer experience is not only through finding great employees, but through training and development of those employees. The company website explains that it is “notoriously picky” when it comes to hiring. For every 50 people Mike’s considers hiring, just one is hired. Mike’s uses training and development to retain and engage its employees. Each employee has a development plan and receives performance appraisals twice each year. New employee training involves familiarizing them with best practices and how to help customers in different situations that they will encounter at the car wash. Before employees wait on their first customer, they receive two days of orientation and participate in workshops that focus on customer service, how to treat customers, how to recover from service errors and mistakes, and how to deal with difficult customers. Mike’s also provides training to help employees advance in the company. The career path from hourly associate to supervisor to shift manager to assistant manager is well defined. Movement on the career path is possible through good performance and completing internal certifications that include up to 12 weeks of training and three exams requiring grades of at least 80 percent. Employee engagement and satisfaction are measured by semiannual surveys, as well as by gathering information from employees who are leaving Mike’s. Employees play an important role in the choice and design of training and development activities. A 15- to 20-person team, consisting of members who have been nominated by their store manager, serve a one-year term as subject-matter experts in helping to develop new training programs and modify existing ones. Team members also are the first trainees in new programs, providing feedback about needed changes and feedback on program effectiveness.

In addition to its regular training programs for new employees and certification programs for advancement, Mike’s has developed programs to meet its emerging business needs. The recent economic recession resulted in a decrease in the volume of customers Mike’s served, as well as in revenue. As a result, Mike’s recognized the need to increase the spending of its customers by making sure that employees made them aware of value-added services such as underbody washes, tire treatments, and clear coat application. To do this, Mike’s developed an online training module and taught managers to encourage employees to complete their training and practice using their selling skills at monthly employee meetings.

Mike’s recognizes the important role that managers play in helping employees learn. At Mike’s, managers need to actively support and help deliver training. They are held accountable for training and developing employees in order to advance and succeed. In this program, managers were taught how to identify weaknesses in employees’ service recommendation

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techniques and use weekly coaching sessions to enhance them. Managers were also encouraged to observe and document employees making service recommendations to customers and to provide them with feedback. The results of this program were positive: overall revenue, revenue per customer, customer satisfaction, and “mystery shopper” scores all increased.

ORGANIZATIONAL CHARACTERISTICS THAT INFLUENCE TRAINING

The amount and type of training, as well as the organization of the training function in a company, are influenced by many factors, among them: company size; employee and manager roles; top management’s support for training; the company’s degree of integration of business units; the company’s global presence; business conditions; other HRM practices, including staffing strategies and human resource planning; the extent of unionization; and the amount of involvement in training and development by managers, employees, and human resource staff.37

Company Size

Training differs between small and large firms.38 Most training in small firms is usually informal and on-the-job. Company owners, managers, or more experienced employees take responsibility for training. Employees are trained to do their jobs in the way that the owner prefers. Training tends to focus on the knowledge and skills that employees need for their current job and not on developing skills needed for future positions. If any type of formal training and development is conducted, it is done through trade associations, short courses, and courses provided by the company’s owners and managers. This occurs for several reasons. In small firms (often considered to have between 0 and 250 employees), the owner rather than a trainer or training manager is more likely to make training decisions. Training and development may not be one of the key priorities of the owner because he or she is focused on running the business and may lack the money and skills needed to design effective courses and programs. Owners may be concerned that investing in training their employees prepares them to leave to join other firms. One of the benefits of informal and on-the-job training is that it allows small firms to be more flexible in adapting the type of training provided to employees as changes in business demands and new challenges and problems occur. As firms grow in size there is a greater need to provide more formalized training and development to prepare current employees for internal promotion opportunities and retain them. Also, formal training and development helps attract new employees.

Roles of Employees and Managers

The roles of employees and managers in a company influence the focus of training, development, and learning activity. Traditionally, employees’ roles were to perform their jobs according to their managers’ directions. Employees were not involved in improving the quality of the products or services. However, with the emphasis on the creation of intellectual capital and the movement toward high-performance work systems using teams, employees today are performing many roles once reserved for management (e.g., hiring, scheduling work, and interacting with customers, vendors, and suppliers).39 If companies are using teams to manufacture goods and provide services, team members need training in

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interpersonal problem solving and team skills (e.g., how to resolve conflicts and give feedback). If employees are responsible for the quality of products and services, they need to be trained to use data to make decisions, which involves training in statistical process control techniques. As discussed in Chapter One, team members may also receive training in skills needed for all positions on the team (cross training), not just for the specific job they are doing. To encourage cross training, companies may adopt skill-based pay systems, which base employees’ pay rates on the number of skills in which they are competent, rather than the skills they are using for their current jobs.

Research suggests that today’s managers are expected to do the following:40

Manage individual and team performance. Motivate employees to change performance, provide performance feedback, and monitor training activities. Clarify individual and team goals and ensure alignment with company goals.

Develop employees and encourage continuous learning. Explain work assignments and provide technical expertise. Create an environment that encourages learning.

Plan and allocate resources. Translate strategic plans into work assignments and establish target dates for projects.

Coordinate activities and interdependent teams. Persuade other units to provide products or resources needed by the work group, and understand the goals and plans of other units. Ensure that the team is meeting internal and external customer needs.

Manage group performance. Define areas of responsibility, meet with other managers to discuss the effects of changes in the work unit on their groups, facilitate change, and implement business strategy.

Facilitate the decision making process. Facilitate team and individual decision making. Encourage the use of effective decision making processes (e.g., dealing with conflict, statistical process control).

Create and maintain trust. Ensure that each team member is responsible for his or her workload and customers. Treat all team members with respect. Listen and respond honestly to team ideas.

Represent one’s work unit. Develop relationships with other managers, communicate the needs of the work group to other units, and provide information on work group status to other groups.

Regardless of their level in the company (e.g., senior management), all managers are expected to serve as spokespersons to other work units, managers, and vendors (i.e., represent the work unit). Of course, the amount of time that managers devote to some of these roles is affected by their level. Line managers spend more time managing individual performance and developing employees than mid-level managers or executives do. The most important roles for mid-level managers and executives are planning and allocating resources, coordinating interdependent groups, and managing group performance (especially managing change). Executives also spend time monitoring the business environment by analyzing market trends, developing relationships with clients, and overseeing sales and marketing activities.

To manage successfully in a team environment, managers need to be trained in “people skills,” including negotiation, sensitivity, coaching, conflict resolution, and communication skills. A lack of people skills has been shown to be related to managers’ failure to advance in their careers.41

Top Management Support

The CEO, the top manager in the company, and other members of the executive team, play a key role in determining the importance of training and learning in the company. The CEO is responsible for:42

Setting a clear direction for learning (vision).

Providing encouragement, resources, and a commitment to strategic learning (sponsor).

Taking an active role in governing learning, including reviewing goals and objectives and providing insight on how to measure training effectiveness (governor).

Developing new learning programs for the company (subject-matter expert).

Teaching programs or providing resources online (faculty).

Serving as a role model for learning for the entire company and demonstrating a willingness to learn constantly (learner).

Promoting the company’s commitment to learning by advocating it in speeches, annual reports, interviews, and other public relations tools (marketing agent)

Source: J. Meister, ’’The CEO-Driven Learning Culture,” Training and Development (June 2000), pp. 52–70.

Consider how the CEO and members of the executive team at Leading Real Estate Companies of the World, New York Community Bancorp, and Signature Consultant encourage and support training.43 At Leading Real Estate Companies of the World, all of the top company executives take responsibility for training and learning. The chief executive officer’s vision serves as the motivation behind the company’s online learning platform. The CEO also regularly meets with the company’s learning team to provide feedback on current courses and ideas for new ones. The chief operating officer supports the learning team by ensuring they have the in-house production resources needed to produce high-quality instructional materials, videos, and workshops. The chief financial officer monitors the training budget, helps the learning team determine the financial value of programs, and reports financial results. At New York Community Bancorp, the executive management team helps ensure the company’s training plan supports the company’s strategy. Every month the corporate director of employee development and training reviews key training goals and the progress toward meeting those goals with the chief operating officer and chief administrative officer. Signature Consultant’s founder and chief executive officer provides feedback on the training and development strategy and helps emphasize the importance of learning. The manager of the training and development team also worked in the operations part of the business, which helps ensure that training is linked to the business and is seen as credible and necessary.

Integration of Business Units

The degree to which a company’s units or businesses are integrated affects the kind of training that takes place. In a highly integrated business, employees need to understand other units, services, and products in the company. Training likely includes rotating employees between jobs in different businesses so they can gain an understanding of the whole business.

Global Presence

As noted in Chapter One, the development of global product and service markets is an important challenge for U.S. companies. For companies with global operations, training is

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used to prepare employees for temporary or long-term overseas assignments. Also, because employees are geographically dispersed outside the United States, companies need to determine whether training will be conducted and coordinated from a central U.S. facility or will be the responsibility of satellite installations located near overseas facilities. A key challenge is ensuring learning is effective for all employees regardless of the language they speak or their cultural background.

Consider how globalization has affected the training practices of Philips, TELUS, and Etihad Airways.44 Philips, the Dutch technology company, focuses on health-care, lighting, and consumer lifestyle products. Philips’s learning function has to serve employees in more than 100 different countries. As a result, the company has developed a standard global learning approach that is locally appropriate. Philips has global standards in place to ensure learning is high quality, but each business unit is encouraged to tailor learning to match learners’ needs at the location. For example, in India and China, employees are encouraged to learn using one-on-one coaching, but in Europe employees are more receptive to learning that is delivered online.

TELUS, the Canadian telecommunications company, provides learning and development to its contact center outsourcing subsidiary located in Central America. It provides a program that teaches English and job skills to students. The students are recruited from rural areas where there are few job opportunities. They receive wages while they train and are given jobs in the company when they complete the program. TELUS also benefits by having available a motivated and skilled workforce. All of the program participants want to stay with TELUS International to further their careers and they are in the group of top performing employees in the company.

Etihad Airways, a Persian Gulf airline, operates in English, which is the second language for almost all of its employees. As a result, Etihad revised its training program to include more visual learning for its employees, who come from 113 different countries. Interactive computer programs teach flight attendants how to set a business-class dinner table to the airline’s standards by clicking and dragging pictures rather than reading instructions. Also, Etihad has invested millions of dollars into full-motion simulators for flight attendants. The simulators can create turbulence, pour smoke into a cabin, and light fires in storage areas or overhead bins. Trainees have to learn how to evacuate the plane and open cabin doors from simulated bad landings that happen when nose wheels collapse or the plane lands on its side.

Business Conditions

When unemployment is low and/or businesses are growing at a high rate and need more employees, companies often find it difficult to attract new employees, find employees with necessary skills, and retain current employees.45 Companies may find themselves in the position of hiring employees who might not be qualified for the job. Also, in these types of business conditions, companies need to retain talented employees. In a knowledge-based economy (including the information technology and pharmaceuticals areas), product development depends on employees’ specialized skills. Losing a key employee may cause a project to be delayed or hinder a company’s taking on new projects. Training plays a key role in preparing employees to be productive, as well as motivating and retaining current employees. Studies of what factors influence employee retention provide the following top reasons for staying with a company: working with good colleagues, having challenging job assignments, and getting opportunities for career growth and development. Across all industries, from

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high-tech to retailing, companies are increasingly relying on training and development to attract new employees and retain current ones. For example, at Allianz Life Insurance Company of North America, the learning and development team partnered with human resources and operations teams to create a new hire training program designed to reduce turnover in the company’s call centers.46 The new training program is completed over 120 days. This gives call center employees the opportunity to learn a skill, apply it in customer calls, and then return to training to learn a new skill. Spreading training over a longer period of time helps call center employees reduce their anxiety and increase their skills in taking customer calls. As a result of the new program, new hire turnover decreased 20 percent.

For companies in an unstable or recessionary business environment—one characterized by mergers, acquisitions, or disinvestment of businesses—training may be abandoned, left to the discretion of managers, or become more short-term (such as offering training courses only to correct skill deficiencies rather than to prepare staff for new assignments). These programs emphasize the development of skills and characteristics needed (e.g., how to deal with change), regardless of the structure the company takes. Training may not even occur as the result of a planned effort. Employees who remain with a company following a merger, acquisition, or disinvestment usually find that their job now has different responsibilities and requires new skills. For employees in companies experiencing growth—that is, an increased demand for their products and services—there may be many new opportunities for lateral job moves and promotions resulting from the expansion of sales, marketing, and manufacturing operations or from the start-up of new business units. These employees are usually excited about participating in development activities because new positions often offer higher salaries and more challenging tasks.

During periods when companies are trying to revitalize and redirect their business, earnings are often flat. As a result, fewer incentives for participation in training—such as promotions and salary increases—may be available. In many cases, companies downsize their workforces as a way of cutting costs. Training activities under these conditions focus on ensuring that employees are available to fill the positions vacated by retirement or turnover. Training also involves helping employees avoid skill obsolescence. (Strategies to help employees avoid skill obsolescence are discussed in Chapter Ten.)

Other HRM Practices

Human resource management (HRM) practices consist of the management activities related to investments—time, effort, and money—in staffing (e.g., determining how many employees are needed, and recruiting and selecting employees), performance management, training, and compensation and benefits. Companies that adopt state-of-the-art HRM practices that contribute to business strategy tend to demonstrate higher levels of performance than firms that do not.47 These HRM practices contribute to the attraction, motivation, and retention of human capital (the knowledge, skills, and abilities embedded in people), which can help a company gain a competitive advantage. Training, along with selection, performance management, and compensation influence attraction, motivation, and retention of human capital. Training helps develop company-specific skills, which can contribute to productivity and ultimately company performance. Also, training helps provide the skills that employees need to move to new jobs within the company, therefore increasing their satisfaction and engagement. The type of training and the resources devoted to training are influenced by staffing strategy, the strategic value of jobs and employee uniqueness, and human resource planning.

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Staffing Strategy

Staffing strategy refers to the company’s decisions regarding where to find employees, how to select them, and the desired mix of employee skills and statuses (temporary, full-time, etc.). It is important for you to recognize that training and development and learning opportunities can vary across companies because of differences in companies’ evaluation of the labor market, their staffing strategy, or the strategic value and uniqueness of jobs or positions. For example, one staffing decision a company has to make is how much to rely on the internal labor market (within the company) or external labor market (outside the company) to fill vacancies. Two aspects of a company’s staffing strategy influence training: the criteria used to make promotion and assignment decisions (assignment flow) and the places from which the company prefers to obtain the human resources to fill open positions (supply flow).48

Companies vary in terms of the extent to which they make promotion and job assignment decisions based on individual performance or group or business-unit performance. They also vary in terms of the extent to which their staffing needs are met by relying on current employees (internal labor market) or employees from competitors and recent entrants into the labor market, such as college graduates (external labor market). Figure 2.4 displays the

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two dimensions of staffing strategy. The interaction between assignment flow and supply flow results in four distinct types of companies: fortresses, baseball teams, clubs, and academies. Each company type places a different emphasis on training activities. For example, some companies (such as medical research companies) emphasize innovation and creativity. These types of companies are labeled “baseball teams.” Because it may be difficult to train skills related to innovation and creativity, they tend to handle staffing needs by luring employees away from competitors or by hiring graduating students with specialized skills. “Academies” tend to be companies that are dominant in their industry or markets, such as Procter & Gamble (P&G), and rely primarily on training and developing their current employees (i.e., the internal labor market) to fill new positions and managerial roles. “Clubs” tend to be companies in highly regulated industries such as energy or health care that rely on developing talent from their internal labor market but also rely on team or department performance to determine promotions or opportunities to obtain important development activities or assignments. “Fortresses” include companies in industries that are undergoing significant change and struggling for survival. In these companies, financial and other resources are not available for development so they tend to rely on hiring talent from outside (i.e., from the external labor market) on an “as-needed” basis. Figure 2.4 can be used to identify development activities that support a specific staffing strategy. For example, if a company wants to reward individual employee contributions and promote from within (the bottom-right quadrant of Figure 2.4), it needs to use lateral, upward, and downward moves within and across functions to support the staffing strategy.

FIGURE 2.4 Implications of Staffing Strategy for Training

Source: Adapted from J. A. Sonnenfeld and M. A. Peiperl, “Staffing Policy as a Strategic Response: A Typology of Career Systems,” Academy of Management Review 13 (1988), pp. 588–600.

Strategic Value of Jobs and Employee Uniqueness

Another strategic consideration affecting how companies invest in training and development resources is based on different types of employees. For example, companies may distinguish between training and development activities for managers and individual contributors. Managers may receive development opportunities such as job experiences and international assignments that individual contributors do not because they are being evaluated and prepared for leadership positions in the company. Another way different types of employees can be identified is based on their strategic value and uniqueness to the company.49 Uniqueness refers to the extent to which employees are rare and specialized and not highly available in the labor market. Strategic value refers to employee potential to improve company effectiveness and efficiency. This results in four types of employees: knowledge-based workers (high value and uniqueness), job-based employees (high value and low uniqueness), contract employees (low value and low uniqueness), and alliance/partnerships (high uniqueness and low value).

Consider a pharmaceutical company, which includes many different employee groups including scientists (knowledge-based workers), lab technicians (job-based workers), secretarial and administrative staff (contract employees), and legal advisers (alliance/partnerships). Because knowledge-based employees possess valuable and unique skills, the company is expected to invest heavily in training and developing them, especially in developing skills specific to the company’s needs. Job-based employees are likely to receive less training than knowledge-based employees because although they create value for the firm, they are not unique. If they receive training, it tends to focus on skills that they require to perform their jobs. Their development opportunities are limited unless they have been identified as outstanding performers. The training for contractual workers is typically limited to ensuring

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that they comply with company policies and legal or industry-based licensure and certification requirements. Because they are not full-time employees of the company but provide valued services, training for alliance/partnership employees tends to focus on encouraging them to share their knowledge and using team training and experiential exercises designed to develop their trust and relationships with job-based and knowledge-based employees.

Human Resource Planning

Human resource planning includes the identification, analysis, forecasting, and planning of changes needed in the human resource area to help the company meet changing business conditions.50 Human resource planning allows the company to anticipate the movement of human resources in the company because of turnover, transfers, retirements, or promotions. Human resource plans can help identify where employees with certain types of skills are needed in the company. Training can be used to prepare employees for increased responsibilities in their current job, promotions, lateral moves, transfers, and downward moves or demotions that are predicted by the human resource plan.

Extent of Unionization

Unions’ interest in training has resulted in joint union-management programs designed to help employees prepare for new jobs. When companies begin retraining and productivity-improvement efforts without involving unions, the efforts are likely to fail. The unions may see the programs as just another attempt to make employees work harder without sharing the productivity gains. Joint union-management programs (detailed in Chapter Ten) ensure that all parties (unions, management, and employees) understand the development goals and are committed to making the changes necessary for the company to make profits and for employees to both keep their jobs and share in any increased profits.

Staff Involvement in Training and Development

How often and how well a company’s training program is used are affected by the degree to which managers, employees, and specialized development staff are involved in the process. If managers are not involved in the training process (e.g., determining training needs, being used as trainers), training may be unrelated to business needs. Managers also may not be committed to ensuring that training is effective (e.g., giving trainees feedback on the job). As a result, training’s potential impact on helping the company reach its goals may be limited because managers may feel that training is a “necessary evil” forced on them by the training department rather than a means of helping them to accomplish business goals. If managers are aware of what development activity can achieve, such as reducing the time it takes to fill open positions, they will be more willing to become involved in it. They will also become more involved in the training process if they are rewarded for participating.

Mountain America Credit Union’s commitment to employee learning and development is based on the goal to have well-prepared, highly qualified employees.51 The learning and development team is considered a strategic partner by the other business leaders, who expect the team to understand their training needs. As a result, the chief learning officer and senior vice president of talent and member development at Mountain America is involved in strategic planning discussions with other business leaders to understand their learning needs. Each business leader is asked to identify the business results they want to accomplish, important areas that need improvement, and how learning and development

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can help them improve and achieve the desired business results. Mountain America provides a number of different learning opportunities that contribute to the company’s success. They include new employee orientation that involves senior leaders sharing their history and experience in the company, an online knowledge center that provides information on company procedures, virtual teller training, and webinars. Individual development plans are used to help employees gain skills needed in both their current position and desired future roles. The contribution of the learning opportunities to business results is evaluated in several different ways using focus groups, employee surveys, and job performance and retention data. For example, data show that 90 days after new financial service representatives received training, they were exceeding Mountain America’s goal for avoiding loan defaults by 20 percent. This saved the company more than $360 million.

Today, companies expect employees to initiate the training process.52 Companies with a greater acceptance of a continuous learning philosophy require more development planning. These companies support training and development activities (such as tuition reimbursement and the offering of courses, seminars, and workshops) but give employees the responsibility for planning their own development. Training and development planning involve identifying needs, choosing the expected outcome (e.g., behavior change, greater knowledge), identifying the actions that should be taken, deciding how progress toward goal attainment will be measured, and creating a timetable for improvement. To identify strengths and weaknesses and training needs, employees need to analyze what they want to do, what they can do, how others perceive them, and what others expect of them. A need can result from gaps between current capabilities and interests and the type of work or position the employee wants in the future. The needs assessment process is discussed in greater detail in Chapter Three, “Needs Assessment.”

TRAINING NEEDS IN DIFFERENT STRATEGIES

Table 2.7 describes four business strategies—concentration, internal growth, external growth, and disinvestment—and highlights the implications of each for training practices.53 Each strategy differs based on the goal of the business. A concentration strategy focuses on increasing market share, reducing costs, or creating and maintaining a market niche for products and services. For many years, Southwest Airlines has had a concentration strategy. It primarily focuses on providing short-haul, low-fare, and high-frequency air transportation. It utilizes one type of aircraft (the Boeing 737), has no reserved seating, and serves no meals. This concentration strategy has enabled Southwest to keep costs low and revenues high. An internal growth strategy focuses on new market and product development, innovation, and joint ventures. For example, the merger between Continental and United Airlines created the world’s largest airline. An external growth strategy emphasizes acquiring vendors and suppliers or buying businesses that will allow the company to expand into new markets. For example, Amazon, the e-commerce company, acquired Whole Foods, the organic food grocery store chain. A disinvestment strategy emphasizes liquidation and divestiture of businesses. For example, GE is considering divesting its transportation and health-care information technology businesses as it reshapes its strategic direction under its new chief executive officer.

Table 2.7 Implications of Business Strategy for Training

Research suggests a link between business strategy and amount and type of training.54 Table 2.7 shows that training issues vary greatly from one strategy to another. Divesting

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companies need to train employees in job-search skills and focus on cross-training remaining employees who may find themselves in jobs with expanding responsibilities. Companies focusing on a market niche (a concentration strategy) need to emphasize skill currency and the development of their existing workforce. New companies formed from a merger or acquisition need to ensure that employees have the skills needed to help the company reach its new strategic goals. Also, for mergers and acquisitions to be successful, employees need to learn about the new, merged organization and its culture.55 The organization must provide training in systems, such as instruction on how the e-mail and company intranet work. Managers need to be educated on how to make the new merger successful (e.g., dealing with resistance to change). Business growth at Ascend Federal Credit Union meant that the company needed to identify and develop employees for management positions.56 Ascend designed a leadership program that develops employees using their current skills and experiences as the starting point for development. The program includes job rotation through which employees gain experience in different management roles. Aspiring leaders attend workshops that help prepare them to effectively manage human resource issues and understand the company’s strategic direction. Program participants have experienced a 42 percent promotion rate into management positions.

Companies with an internal growth strategy face the challenge of identifying and developing talent. HCL Technologies, an IT consulting firm, grew its business and as a result added new employees.57 To be successful, HCL employees must stay current on new tools and mobile and web technologies. To ensure that its employees’ skills are up-to-date, HCL developed a technical academy that provides online learning, classroom instruction, on-the-job experiences, and mentoring. To facilitate employees’ continuous improvement, employees are encourage to complete technical certifications through taking courses and learning through virtual online labs that simulate real technical environments. Ninety percent of the learning programs are developed internally. HCL has invested millions of dollars in learning, but through this investment, the company believes it can stay ahead of the competition and grow the business. HCL has found that employees who finish certification programs generate more billable hours, stay employed with the company longer, and are more satisfied.

When faced with a downturn in demand for its automobiles and trucks, Toyota Motor Corporation is known for retaining employees at its plants and encouraging them to participate in training programs designed to improve their job skills and to find more efficient and effective methods of assembling vehicles.58 Toyota uses downtime to improve employees’ quality control and productivity skills, keeping good on its pledge never to lay off any of its full-time non-union employees. The training has resulted in continuous improvements (also known as kaizen). For example, a Teflon ring designed by an assembly line employee helps prevent paint damage when an electrical switch is installed on the edge of a vehicle’s door.

A disinvestment strategy resulted in Edwards Lifesciences being spun off from another company.59 The new company’s management team developed a new strategic plan that described goals for sales growth, new product development, customer loyalty, and employee commitment and satisfaction. The company realized that it had to prepare leaders who could help the company meet its strategic goals. A review of leadership talent showed that leadership development was needed, and a leadership program was created in response. The program was designed to include 20 participants from different functions and company locations. Part of the week-long program is devoted to a simulation in which

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teams of managers run their own business and take responsibility for marketing, manufacturing, and financials. The sessions also include classes taught by company executives, who speak about important topics such as the company’s business strategy.

MODELS OF ORGANIZING THE TRAINING DEPARTMENT

Most companies want their learning or training function to provide some courses and programs to all employees regardless of their functional area, location, business unit, or division. These courses and programs are developed (or purchased from training vendors or suppliers) and delivered by learning staff working at corporate headquarters or at a corporate university. At the same time, companies want their learning function to provide learning that meets training needs that are unique to a business unit or product line.

One of the important decisions that companies have to consider in choosing how to organize the training department (or learning function) is the extent to which training and learning is centralized. Typically, companies do not choose to entirely centralize or decentralize training and learning. Rather, they organize the training department or learning function in a way that best supports the business strategy and helps meet its needs. This typically involves an approach in which some learning is provided by a corporate learning function or corporate university and other learning is customized, developed, and delivered specifically for a function, product line, or location (business-embedded). Centralized training means that training and development programs, resources, and professionals are primarily housed in one location and that decisions about training investment, programs, and delivery methods are made from that department.

Advantages of a centralized training function include: it helps drive stronger alignment with business strategy; it allows development of a common set of metrics or scorecards to measure and report rates of quality and delivery; it helps to streamline processes; and it gives the company a cost advantage in purchasing training from vendors and consultants because of the number of trainees who will be involved. Also, a centralized training function helps companies better integrate programs for developing leaders and managing talent with training and learning during times of change. For example, at SAP, the funding for learning is centralized for strategic programs that are important across business units.60 Separate learning groups at SAP are united under one brand, logo, learning technology, and instructional design philosophy. However, the learning function continues to be responsive to the learning and development needs of different business areas and types of employees. At STIHL, a producer of outdoor power equipment such as chain saws, blowers, and trimmers, learning has to be tailored to three different stakeholders: employees, wholesale distributors, and retailers.61 It provides online technical training through ToolingU and supports its dealers’ businesses and training needs through iCademy, a distance-learning program. The Professional Instruction Program is designed for professional landscaping, tree services, and public utilities to help commercial crews best use their equipment and avoid accidents.

The Corporate University (Corporate Training Universities)

To gain the advantages of centralized training, many companies use a corporate university as shown in Figure 2.5. The corporate university includes employees, managers, and stakeholders outside the company, including community colleges, universities, high schools, and

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grade schools. Corporate universities can provide significant advantages for a company’s learning efforts by helping to overcome many of the historical problems that have plagued training departments (see the left side of Figure 2.5). A corporate university can help make learning more strategic by providing a clear mission and vision for learning and ensuring that it is aligned with business needs. For companies with a strong business culture and values, it can help ensure that those qualities are emphasized in the learning curriculum. Also, the corporate university can control costs and maximize the benefits of learning. This occurs through providing consistent training activities, disseminating best learning practices throughout the company, effectively using technology to support learning, evaluating learning’s impact on employees and business results, and establishing partnerships with academia and other company stakeholders (community) to develop custom training and degree programs.62 For example, Aetna University, the corporate university for the insurance company, focuses on developing effective leaders. Its programs use a blended learning approach, including virtual training programs facilitated by top business leaders from other companies and prestigious universities such as Harvard. Aetna University also provides self-paced courses that cover topics such as leadership essentials, customer service and sales skills, and Microsoft and Adobe applications.63 In the discussion that follows, we consider how several different companies have used their corporate universities to contribute to the business.64

FIGURE 2.5 The Corporate University Model

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The Academy Program may be the most important program provided by DaVita University. During this program employees learn about DaVita’s culture. DaVita’s employees provide health and medical services around the world, and over 9,000 of them attend the program each year Employees who attend the program have a 12 percent lower turnover rate than their peers who have not attended, reducing turnover costs by an estimated $12 million per year.

At Underwriters Laboratories, a product testing and certification company, Underwriters Laboratories University (ULU) develops training programs, provides organizational development expertise to develop talent and promote customer service, and offers Lean Six Sigma expertise to support continuous improvement. The university also helps diagnose problems and propose solutions. For example, ULU has partnered with Yale University to create an action learning program that requires managers to identify a business idea and plans to introduce it. The United Laboratories Asia unit requested the ULU’s help in improving the delivery of learning in a way that would appeal to millennial employees. The university partnered with the Asian business leaders to enhance learning and transfer using social media technology. After taking training classes, participants were encouraged to work in groups to create a video showing how they applied the skills they learned in their jobs. The videos were sent to ULU, which posted them on a SharePoint site where they were viewed and voted on based on their content and application. The favorite video winners received awards.

Jiffy Lube, a company in the automobile lubrication industry, created Jiffy Lube University to provide e-learning, instructor-led training, and virtual instructor-led training to 20,000 Jiffy Lube service center technicians. Training is evaluated based on key performance indicators including customer satisfaction, percentage of training completed, and employee retention. Jiffy Lube University also provides service center employees with a development roadmap that gives them the opportunity to take responsibility for their personal development depending on their career goals. For example, to help further their careers, Jiffy Lube University offers service center employees courses that they can take to earn up to 25 hours of college credit at trade schools and colleges and universities.

Deloitte LLP invested $300 million to build a corporate university in Westlake, Texas.65 The corporate university includes state-of-the-art learning technology, 800 sleeping rooms, and even a ballroom. Such an investment runs counter to the cost savings and efficiencies resulting from training methods such as mobile learning, virtual reality, and e-learning, which require only that learners have access to a personal computer, smartphone, or tablet and eliminate the need to travel to a physical training site. Deloitte conducted extensive research before investing in a physical campus for its corporate university. The results suggested that its partners were supportive and most Generation Y (Gen-Y) employees wanted a physical location where they could meet and learn face to face. Also, the CEO believes that learning is an important investment that can provide a competitive advantage by aiding in the recruiting of talented employees and helping Deloitte LLP cope with the fast rate of change in the business.

The corporate university supports Deloitte’s culture of personal and professional development for its employees. Deloitte University provides training in technical, professional, industry, and leadership skills. Interactive instructional techniques are used, including case discussions and simulations that require a small instructor-to-student ratio (one instructor to every five students). D Street, Deloitte’s social networking system, is used by employees

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to interact before and after attending courses at the university to discuss what they have learned, explore potential applications, and find expertise across the company.

Hamburger University, the corporate university for McDonald’s, is charged with continuing to teach the core values that founder Ray Kroc believed were the key to success: quality, service, cleanliness, and value.66 Hamburger University is one of the oldest and most effective corporate universities. Founded in 1961, it is estimated that approximately 5,000 McDonald’s employees attend the U.S.-based Hamburger University each year, and more than 90,000 managers and owner-operators have graduated from it. Hamburger University is a global center for operations training and leadership development for McDonald’s. It also gives employees the opportunity to get a college degree. McDonald’s has a university in Oakbrook, Illinois, six global universities, and 22 regional training centers. To promote learning, the facilities and programs offered at Hamburger University are reviewed and revised. As a result, Hamburger University has transitioned away from teaching courses with a lecture format and is moving toward fewer large group sessions and more interactive learning in classes of 25 to 35 students, which are then further divided into small groups for discussion and exercises. McDonald’s changed its learning format to accommodate how most of its students (who would be considered Gen-Y) learn. The typical education level of front-line service workers has influenced curriculum design through the development of more easily understandable coursework. E-learning is used to deliver the basics of restaurant operations or management training, and classroom instruction and simulations are used to help the learner apply the basics on the job. Breakout rooms and smaller classrooms are available to facilitate collaboration and interaction. Virtual classrooms are used to connect instructors with McDonald’s employees around the world. Learners are provided with headphones that connect them to translators who provide instruction in the learner’s native language during class.

Besides classroom instruction, Hamburger University includes a simulated kitchen and drive-through window. Despite having learners at the university who are already familiar with behind-the-counter operations, everyone takes part in the simulation, making real food and filling orders just as they would at a real McDonald’s restaurant. Learners have performance goals to meet, and they receive feedback from fellow learners and trainers. Managers can support and track learner development by accessing online course completion reports of their scores on tests of their knowledge and behavior. All of McDonald’s restaurant management and middle manager courses are accredited, meaning that participants can receive college credit. The credits for these courses represent half of the credits required to earn an associate’s degree at a two-year college and a large number of the credits needed to receive a bachelor’s degree in business administration or management at a four-year college or university. The curriculum for department managers now allows them to test content they already know, and training time has been reduced from one-and-a-half years to two years to four to six months.

Are corporate universities effective? Corporate University Xchange surveyed corporate universities at 170 different companies.67 The top five organizational goals of corporate universities were to improve customer service and retention, improve productivity, reduce costs, retain talented employees, and increase revenue. The survey found that measuring business impact was a high priority; 70 percent of the companies measured business impact through product and service quality and customer service, and more than 50 percent measured reductions in operating costs and increased revenues.

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For example, the Ritz-Carlton Hotel Company manages luxury hotels worldwide.68 The Ritz-Carlton hotels and resorts are renowned for indulgent luxury. Beautiful surroundings and legendary award-winning service are provided to every guest. The Ritz-Carlton Leadership Center is designed to support the growth and expansion of the company’s products and services. The Leadership Center includes the School of Performance Excellence, which houses all the training and development for hourly employees; the School of Leadership and Business Excellence, which trains leaders; and the School of Service Excellence, which helps ensure high customer service. Programs at the School of Service Excellence are offered to other companies, which has resulted in yearly revenues for Ritz-Carlton of more than $1 million. These revenues help offset the costs of training and development for employees. For example, a new customized training certification system for housekeeping staff uses CD-ROM and web-based training. The training is linked to the results of room inspections that highlight defects for the day, week, and year. The housekeeper can then identify the correct processes that are needed to remedy the defects. This just-in-time training has helped increase customer satisfaction scores at Ritz-Carlton. One hotel increased its satisfaction score with cleanliness from 82 percent to 92 percent in six months.

Creating a Corporate University

Creating a corporate university from scratch involves several steps.69 First, senior managers and business managers form a governing body with the responsibility of developing a vision for the university. (This group answers questions such as, “What are the university’s policies, systems, and procedures?” and “What are the key functional areas for which training courses will be developed?”) Second, this vision is fleshed out, and the vision statement is linked to the business strategy. For example, Ingersoll Rand has a business goal of obtaining 38 percent of its revenue from new product innovation.70 As a result, most of the programs and courses offered through Ingersoll Rand University discuss how to get close to the customer, innovation, and strategic marketing. The programs are designed for teams working on real business issues. Subject-matter experts and managers teach these programs, which are scheduled based on key product launch dates. The third step in creating a corporate university involves deciding how to fund the university. The university can be funded by charging fees to business units and/or by monies allocated directly from the corporate budget. Fourth, the company determines the degree to which all training will be centralized. Many universities centralize the development of a learning philosophy, core curriculum design, and policies and procedures related to registration, administration, measurement, marketing, and distance learning. Local and regional on-site delivery and specialized business-unit curriculum are developed by business units. Fifth, it is important to identify the needs of university “customers,” including employees, managers, suppliers, and external customers. Sixth, products and services are developed. For example, the Bank of Montreal uses a service team that includes a client-relationship manager, a subject-matter expert, and a learning manager. The client-relationship manager works with the business units to identify their needs. The subject-matter expert identifies the skill requirements for meeting those needs. The learning manager recommends the best mix of learning, including classroom training and training based on, say, the web or CD-ROM. In the seventh step in creating a corporate university, the company chooses learning partners, including suppliers, consultants, colleges, and companies specializing in education. Eighth, the company develops a strategy for using technology to train more employees and to do

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so more frequently and more cost-effectively than instructor-led training. Ninth, learning that occurs as a result of a corporate university is linked to performance improvement. This involves identifying how performance improvement will be measured (tests, sales data, etc.). For example, Sprint’s corporate university, the University of Excellence, developed the Standard Training Equivalent (STE) unit, an evaluation tool for its customers who are internal business units.71 The STE unit is equal to one hour of the traditional instructor-led classroom time that would be required to deliver a course to a group of employees at a central location. An STE unit consisting of a one-hour course over the company intranet is worth much more than the same amount of time spent in the classroom. The STE program helps the University of Excellence demonstrate its value to Sprint’s business units, who fund the university. Finally, the value of the corporate university is communicated to potential “customers.” Questions about the types of programs offered, how learning will occur, and how employees will enroll are addressed.

Business-Embedded Learning Function

Most companies are ensuring that their learning function is centralized to some extent so that they can better control their training costs and ensure that training is aligned with the business strategy, but at the same time respond quickly to client needs and provide high-quality services.72 A business-embedded (BE) learning function is characterized by five competencies: strategic direction, product design, structural versatility, product delivery, and accountability for results. Strategic direction includes a clearly described goal and direction to the department, as well as a customer focus that includes customizing training to meet customer needs and continuously improving programs. A BE learning function not only views trainees as customers, but also views managers and senior-level managers as customers who make decisions to send employees to training and allocate money for training, respectively. Table 2.8 shows the features of a learning function that is business-embedded. BE means the learning function is customer-focused. A BE learning function takes more responsibility for learning and evaluating training effectiveness, provides customized training solutions based on customer needs, and determines when and how to deliver training based on customer needs. At Ryan LLC, a corporate tax advisory firm, learning consultants support the tax practice areas by developing courses, curriculum, and learning plans for each position based on the input of practice managers.73 Learning consultants also are part of committees involved in developing and implementing new business strategies. This allows the learning consultants to provide learning solutions to ensure employees have the necessary knowledge and skills to execute the business strategy.

TABLE 2.8 Features of a BE Learning Function

Strategic Direction Broadly disseminates a clearly articulated mission Recognizes that its customer base is segmented Provides customized solutions to its clients’ needs Understands product life cycles Organizes its offerings by competencies Competes for internal customers Product Design Uses benchmarking and other innovative design Implements strategies to develop products quickly Involves suppliers strategically Structural Versatility Employs professionals who serve as product and classroom instructors, managers, and internal consultants Uses resources from many areas Involves line managers in determining the direction of the department’s offerings and content Product Delivery Offers a menu of learning options Delivers training at the work site Accountability for Results Believes that individual employees must take responsibility for their personal growth Provides follow-up on the job to ensure that learning takes place Considers the manager the key player in supporting learning Evaluates the strategic effects of training and its bottom-line results Guarantees that training will improve performance

Source: M, Bolch, “Training Gets Down to Business,” training (March/April 2010), pp. 31–33; M. Weinstein, “Look Ahead:Long-Range Learning Plans,” training (November/December 2010), pp. 38–41. S. S. McIntosh, “Envisioning Virtual Training Organization,” Training and Development (May 1995), p. 47.

The most noticeable feature of a BE function is its structure.74 In BE training functions, all persons who are involved in the training process communicate and share resources. Trainers—who are responsible for developing training materials, delivering instruction, and supporting trainees—work together to ensure that learning occurs. For example, access to project managers and subject-matter experts can be provided by developers to instructors who usually do not have contact with these groups. The number of trainers in BE training functions varies according to the demand for products and services. The trainers not only have specialized competencies (e.g., instructional design) but can also serve as internal consultants and provide a wide range of services (e.g., needs assessment, content improvement, customization of programs, and results measurement).

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Current Practice: The BE Model with Centralized Training

Because many companies are recognizing training’s critical role in contributing to the business strategy, there is an increasing trend for the training function, especially in companies that have separate business units, to be organized by a blend of the BE model with centralized training that often includes a corporate university. This approach allows the company to gain the benefits of centralized training but at the same time ensure that training can provide programs, content, and delivery methods that meet the needs of specific businesses.

Consider how McKinsey & Company and Merck blend the BE model with centralized training.75 McKinsey & Co., the management consulting firm headquartered in New York, created centers of excellence (CoE) in its learning function. The CoEs focus on design and development, digitizing learning, and content delivery. Each CoE includes teams that work with internal business advisers and external experts. The CoEs have worked on several projects, including developing a catalog of short, digital videos and minicourses that McKinsey’s consultants can access using a mobile device. The minicourses can be automatically assigned to consultants when they are given a new client or project. Members of the learning and development team at McKinsey are constantly trying to reinforce the relationship between the business and learning teams by having frequent conversations with practice leaders and clients about their needs. The short videos and minicourses were

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developed based on these conversations, which revealed that consultants needed to quickly and continuously update their skills to better meet clients demands.

Merck’s learning function centralizes some learning processes for efficiency while decentralizing others to ensure effectiveness and adaptability. The learning function consists of two teams. The “front office” team includes learning professionals who are responsible for strategic aspects of operations, including performance consulting, developing the training curriculum, and managing annual learning plans. The front office learning team members work with each of the company’s business lines to identify and manage learning priorities and related initiatives. The “back office” team consists of both Merck employees and employees from GP Strategies, a company that provides training solutions, and focuses on content development, support for virtual learning, and evaluation. Organizing the learning function this way has helped reduce operating costs and improve efficiency.

Learning, Training, and Development from a Change Model Perspective

As was discussed in Chapter One, change involves the adoption of a new behavior or idea by a company. There are many reasons why companies are forced to change, including the introduction of new technology, the need to take better advantage of employee skills and capitalize on a diverse workforce, or the desire to enter global markets. For training and development programs and learning initiatives to contribute to the business strategy, they must be successfully implemented, accepted, and used by customers (including managers, executives, and employees).

Four conditions are necessary for change to occur: (1) Employees must understand the reasons for change and agree with those reasons; (2) employees must have the skills needed to implement the change; (3) employees must see that managers and other employees in powerful positions support the change; and (4) organizational structures, such as compensation and performance management systems, must support the change.76 For managers and employees, change is not easy. Even when employees know that a practice or program could be better, they have learned to adapt to its inadequacies. Therefore, resistance to new training and development practices is likely. Prior to implementing a new training or development practice, trainers should consider how they can increase the likelihood of its acceptance.

Figure 2.6 provides a model of change. The process of change is based on the interaction among four components of the organization: task, individual (employee), formal organizational arrangements (structures, processes, and systems), and informal organization (communication patterns, values, and norms).77 As shown in the figure, different types of change-related problems occur depending on the organizational component that is influenced by the change. For example, introducing new technology for training into a company (such as multimedia training using the Internet) might cause changes in the organization’s power structure. With the new technology, managers may have less control over access to training programs than they had with traditional methods of training. The result is tension related to the power imbalance created by the new system. If these issues are not dealt with, managers will not accept the new technology or provide support for transfer of training.

FIGURE 2.6 A Change Model

Sources: David A. Nadler and Michael L. Tushman, “A Congruence Model for Diagnosing Organizational Behavior,” in Organizational Psychology: A Book of Readings, eds. D. Rabin and J. McIntyre (Englewood Cliffs, NJ: Prentice Hall, 1979), as reprinted in David A. Nadler, “Concepts for the Management of Organizational Change,” in Readings in the Management of Innovation, 2d ed., eds. M. L. Tushman and N. Moore (Cambridge, MA: Ballinger Publishing Co., 1988), p. 722.

The four change-related problems that need to be addressed before implementation of any new training practice are resistance to change, loss of control, power imbalance, and task redefinition. Resistance to change refers to managers’ and employees’ unwillingness to change. Managers and employees may be anxious about change, feel that they will be

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unable to cope, value the current training practice, or not understand the value of the new practice. Control relates change to managers’ and employees’ ability to obtain and distribute valuable resources such as data, information, or money. Changes can cause managers and employees to have less control over resources. Change can also give managers and employees control over processes in which they have not previously been involved (e.g., choosing which training programs to attend). Power refers to the ability to influence others. Managers may lose the ability to influence employees as employees gain access to databases and other information, thus getting more autonomy to deliver products and services. Employees may be held accountable for learning in self-directed training. Web-based training methods, such as task redefinition, create changes in managers’ and employees’ roles and job responsibilities. Employees may be asked not only to participate in training, but also to consider how to improve its quality. Managers may be asked to become facilitators and coaches.

Senior managers often make three important mistakes in trying to implement change, which can result in failure to produce the desired results.78 These include telling or issuing communications for employees to “buy in” to the changes; believing that they know enough about the company to understand the impact of change on individuals and how the change should be managed to achieve the desired results; and ignoring or not giving enough consideration to barriers that may slow down or cause change initiatives to fail. Training departments are often in the best position to help senior company leaders implement change, especially if they play a strategic role in the company, because they interact and have the opportunity to hear from business leaders and employees about problems, challenges, and needs they are facing. Consider how Mendix, a technology company with 300 employees

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that specializes in helping other companies develop web and mobile applications, introduced a new learning system.79 Rapid growth in its business created the need to add and train new sales representatives, as well as reduce the time existing sales representatives took to make sales and increase the number of sales opportunities they generated. To do so, Mendix developed a new learning system that would enable it to create and distribute self-paced modules for its sales managers and sales representatives. Some members of the sales team, many of them more experienced employees, resisted the new learning system because they believed it would take time away from their primary responsibilities of identifying new customers and making sales to existing clients. Mendix took a four-step approach to help the sales team accept the new learning system. First, it introduced the learning system to top sales performers. The training helped enhance these employees’ sales. Next, it introduced the new learning system at the company’s annual sales meeting and shared the accomplishments of the sales force that had already completed the program. Second, it rolled out the learning platform to the rest of the sales force. Salespersons who had previously completed training using the new system (“champions”) were asked to help endorse the value of the new system and assist others in using it. Third, to help reduce resistance to the new system, the CEO made it mandatory for all sales representatives to complete training modules using the new system, publicly endorsed it, and changed the compensation model to provide a quarterly bonus for sales representatives who completed learning modules using the new system. Managers created friendly competition among the sales representatives by highlighting the top performers at different levels and company locations. Fourth, the company publicly recognized the first sales representatives to complete the learning modules. Mendix’s four-step approach to overcoming resistance to change was successful. Eight weeks after the new learning system was introduced to the entire sales force, 87 percent had completed the required training modules. The results of a survey of the value and use of the system showed that even more experienced sales team members reported that the system had helped them learn new skills that enabled them to generate new business relationships and close sales.

Table 2.9 shows seven key steps that training professionals can take to help senior managers effectively manage a change initiative.

TABLE 2.9 Steps in a Change Process

1. Clarify the request for change. Is the stated reason for change an important issue? How does the change fit into the company’s business strategy? Why are you making the change? How many people does this affect, and how does it affect them? What are the outcomes of the change? 2. Make the vision clear. Identify the reason for the change, what will be achieved, and how the change will be achieved. 3. Design the solution. What is the best mix of performance measures and feedback, support tools, learning plans, formal training, and job processes? Review the potential risks and benefits of different approaches. 4. Communicate and market for buy-in. Connect with other groups that will be involved, including communications, finance, and operations, to consider the impact of the change and develop an internal marketing plan. Employees need to know what is occurring. Use briefings, newsletters, discussion boards, websites, and informational meetings. Senior managers need to be visible and involved in communicating about the change. 5. Choose and announce the action as soon as possible. Employees affected by the change must hear about it as soon as possible. Employees need to know why and how the final action was selected, how the process has progressed, and what is going to happen in the next days and months. Communicating logic and reasoning can help overcome resistance to change. Provide short previews to employees so they know what changes are coming. 6. Execute and create short-term wins. Success requires management attention and the desire to do it right. Managers and change leaders must model new behavior and become enthusiastic supporters for the process. Leaders should involve employees and provide them with the necessary training and resources. If a pilot test or beta program is used, employees should be kept informed on its progress and asked for their opinions. Learning should occur from any mistakes. 7. Follow up, reevaluate, and modify. Be flexible and make changes if they are needed. Share information about mistakes or issues, and work with the employees affected to fix them.

Sources: Based on C. McAllaster, “Leading Change by Effectively Utilizing Leverage Points Within an Organization,” Organizational Dynamics 33 (2004), p. 318; L. Freifeld, “Changes with Penguins,” training (June 2008), pp. 24–28, N. Miller, “Brave New World,” T+D (June 2010), pp. 54–58.

MARKETING TRAINING AND CREATING A BRAND

Despite the increased recognition of the importance of training and learning in the achievement business goals, many managers and employees may not recognize the value of training. Internal marketing involves making employees and managers excited about training and learning. Internal marketing is especially important for trainers who act as internal consultants to business units. For internal consultants to survive, they must generate fees for their services. Some, if not all, of their operating expenses come from fees paid for their services. Marketing is also important for the successful adoption of new training programs in terms of helping to overcome resistance to change and misconceptions about the value of training. Here are some successful internal marketing tactics:80

Involve the target audience in developing the training or learning effort.

Demonstrate how a training and development program can be used to solve specific business needs. page 104

Showcase an example of how training has been used within the company to solve specific business needs.

Identify a “champion” (e.g., a top-level manager) who actively supports training.

Listen and act on feedback received from clients, managers, and employees.

Advertise on e-mail, on company websites, and in employee break areas.

Designate someone in the training function as an account representative who will interact between the training designer or team and the business unit, which is the customer.

Determine what financial numbers—such as return on assets, cash flow from operations, or net profit or loss—top-level executives are concerned with and show how training and development will help improve those numbers.

Speak in terms that employees and managers understand. Don’t use jargon.

Win a local or national training industry award or recognition.

Publicize learner or manager success stories or feature those who have earned certifications or degrees using newsletters or websites.

It is also important to develop and communicate the training brand. A brand includes the look and feeling of the training function that is used to create expectations for its customers.81 The brand is used to acquire and retain customers. To build a training brand, follow the suggestions shown in Table 2.10. The training function also needs to develop its own strategy and communicate it to its customers.82 The strategy should include what products and services it plans to offer, how training requests will be handled and by whom, how it will demonstrate partnerships with other departments and business units in the company, and the service level that it intends to provide to customers. Service before, during, and after training, development, or other learning initiatives needs to be considered. The training function strategy should be aligned with and contribute to the business strategy.

TABLE 2.10 How to Build a Training Brand

· Ask current “customers” of training, including managers who purchase or ask for training and employees who participate in training, what their perceptions are of the brand. For example, what emotions describe how they feel about the training brand? What words summarize their feelings? What conclusions have they made about doing business with you? Answers to these questions provide information regarding the strength of the training brand and whether it is being perceived positively or as intended. · Define how you want to be perceived by current and future customers. · Identify factors that influence your customers’ perceptions of the training function. · Review each of the factors to determine if they are supporting and communicating the brand to your customers in the way that you intended. · Make changes so that each factor is supporting the brand. · Get customers’ feedback at each step of this process (define the brand, identify factors, suggest changes, etc.). · When interacting with customers, create an experience that supports and identifies the brand.

Source: Based on M. Smith and M. Chilcote, “Take the Mystery Out of Marketing Your Learning Function”, (March/April 2018), pp. 14–15; A. Hand, “How to Enhance Your Training Brand,” T+D (February 2011), pp. 76–77.

For example, the learning and development team at Lincoln Financial Group, an investment management and insurance company, developed a marketing plan to promote its new program, Leadership in Action.83 The program was developed to give employees who work at six different locations easy access to training and career management. It included webinars, videos, articles, and other online content that employees could access on demand. To market the program before it was launched, the learning and development team promoted the program in company newsletters, intranet announcements, and e-mails sent to employees. Once the program started, the learning and development team sent reminder notes and promotions to advertise the addition of new content.

Training functions are beginning to become profit centers by selling training courses or seats in training courses to other companies.84 Companies sell training services for a number of reasons. Some businesses are so good at a particular aspect of their operations that other companies are asking for their expertise. Other companies aim training at their own customers or dealers. In some cases, the training department sells unused seats in training programs or e-learning courses. For example, Walt Disney Company sells training on customer service and organizational creativity at the Disney Institute in Florida. The institute gives employees from other companies the opportunity to understand how Disney developed its business strengths, including leadership development, service, customer

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loyalty, and team building. Zappos Insights is a department within Zappos that was created to share the Zappos culture with other companies.85 Zappos is known for its WOW customer service philosophy (see the end-of-chapter case in Chapter One). Zappos Insights provides programs about building a culture (3-Day Culture Camp), its WOW service philosophy (School of Wow), the power of a coaching-based culture (Coaching Event), how the human resources function protects the culture and how its programs support it (People Academy), and custom programs. The cost to attend these programs ranges from $2,000 to $6,000 for each attendee.

OUTSOURCING TRAINING

Outsourcing refers to the use of an outside company (an external services firm) that takes complete responsibility and control of some training or development activities or that takes over all or most of a company’s training, including administration, design, delivery, and development.86 Business process outsourcing refers to the outsourcing of any business process, such as HRM, production, or training. Survey results suggest that slightly more than half of all companies outsource instruction.87 Less than half outsource some or all of the responsibility for developing customized training content and courses. Why would companies outsource training? Some of the reasons are cost savings; time savings that allow a company to focus on business strategy; improvements in compliance and accuracy in training mandated to comply with federal, state, or local rules (e.g., safety training); the lack of capability within the company to meet learning demands; and the desire to access best training practices. Some companies choose a comprehensive approach, outsourcing all training activities. For example, consider the outsource provider Accenture Learning Business Process Outsourcing.88 Accenture Learning operates Avaya University for Avaya, a global leader in communication systems, applications, and services.89 Accenture helped Telstra, Australia’s leading telecommunications and information services company, develop self-paced e-learning, as well as virtual instructor-led training and podcasting to provide learning opportunities to its geographically diverse workforce.

Although some companies are beginning to outsource and the trend appears to be growing, most companies outsource only smaller projects, not the complete training and development function. Two reasons that companies do not outsource their training are (1) the inability of outsourcing providers to meet company needs and (2) companies’ desire to maintain control over all aspects of training and development, especially delivery and learning content. Table 2.11 shows some of the questions that should be considered when a company is deciding whether or not to outsource. Any decision to outsource training is complex. Training functions that do not add any value to the company are likely candidates for outsourcing (see Table 2.11, Questions 1–4 and 9). Many companies have training functions that add value to the business but still may not be capable of meeting all training needs. For example, a company that has a strong skilled training function, values training, and views it as important to the business strategy probably doesn’t need to outsource its entire training function. However, that company may turn to outsourcing providers for special training needs beyond staff capabilities or for certain training content that changes rapidly. Consider the case of McKesson, a health-care services company that markets an evidence-based clinical decision support system to its customers.90 In addition to selling

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the system, McKesson provides customers with instructor-led, face-to-face training on how to use the support system at their location. Customers can also contract for multiyear training on the system. McKesson found that its face-to-face training resulted in disruptions to its customers’ work day and that customers lost productivity when they had to attend training. It also resulted in inconsistency in training. For example, the amount of time spent and the importance given to some training topics varied across instructors. To improve the training, McKesson contracted with Aptara, a company that provides training solutions, to develop a blended learning approach that included self-paced web-based training combined with virtual or on-site instructor-led classroom training. The new training program resulted in an increase in the number of customers trained, increased customer satisfaction, and increased customer purchases of training contracts. Research suggests that company satisfaction with the outsourcing of training and development depends on company–supplier trust (e.g., managers of both the company and the outsource provider are loyal to each other and look out for each other’s interests) and the specificity of the contract (e.g., whether the contract clearly outlines responsibilities).91

TABLE 2.11 Questions to Ask When Considering Outsourcing

1. What are the capabilities of your in-house training function? Does the staff know enough that you can grow the training skills you need, or do you need to hire training skills from the outside? 2. Can your in-house training function take on additional training responsibilities? 3. Is training key to your company’s strategy? Is it proprietary? 4. Does your company value its training organization? 5. Does the training content change rapidly? 6. Are outsourced trainers viewed as experts, or are they viewed with cynicism? 7. Do you understand the strengths and weaknesses of your current training programs? 8. Do you want to outsource the entire training function? 9. Are executives trying to minimize training’s impact on your company? Does your company accept responsibility for building skills and talent? 10. Is a combination of internal and external training the best solution?

Sources: Based on G. Johnson, “To Outsource or Not to Outsource . . . That Is the Question,” training (August 2004), pp. 26–29; K. Tyler, “Carve Out Training?” HR Magazine (February 2004), pp. 52–57. N. Srivastava, “Want to Stay Competitive and Cut Costs? Consider Outsourced Training,” Workforce (January 2015), p. 47.

Summary

For training to help a company gain a competitive advantage, it must help the company reach business goals and objectives. This chapter emphasized how changes in work roles, organizational factors, and the role of training influence the amount and type of training, as well as the organization of the training functions. The process of strategic training and development was discussed. The chapter explained how different strategies (such as concentration, internal growth, external growth, and disinvestment) influence the goals of the business and create different training needs. The chapter included a discussion of different models of the training function. Because training makes a greater contribution to the achievement of business strategies and goals, the business-embedded and corporate university models will become more prevalent. Because learning, training, and development involve change, the chapter discussed the conditions necessary for managers and employees to accept and benefit from new programs. The chapter concluded with information about marketing and outsourcing the training function.

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Discussion Questions

How would you expect the training activities of a company that is dominant in its product market to differ from those of a company that emphasizes research and development?

What do you think is the most important organizational characteristic that influences training? Why?

Why could the business-embedded model be considered the best way to organize the training function?

Schering-Plough HealthCare Products Inc. decided several years ago to expand its product line by developing pocket-size sticks and sprays of Coppertone sunscreen, previously only available as lotions packaged in squeeze bottles. The company placed a strategic emphasis on developing markets for this product. The company knew from market research studies that its Coppertone customers were already using the product in its original squeeze container at the beach. Due to increased awareness of the dangers of excessive skin exposure, consumers who had not previously used sunscreen except when at the beach were looking for a daily sunscreen product. Company managers reasoned that their market could be expanded significantly if the product were repackaged to fit conveniently in consumers’ pockets, purses, and gym bags. Identify the business strategy. What training needs result from this strategy? What are the training implications of this decision for (1) manufacturing and (2) the sales force?

Which strategic training and development initiatives do you think all companies should support regardless of economic conditions? Why?

Are any of the strategic training and development initiatives more important for a small business? Explain.

How can a training function support a business strategy?

How do the strategic value of jobs and their uniqueness influence how training and learning resources are invested?

What is human capital? How is human capital influencing the changing role of training from skill and knowledge acquisition to the creation and sharing of knowledge? page 109

How could SWOT analysis be used to align training activities with business strategies and goals?

What are the training implications of the increased use of teams to manufacture products or provide services?

How would you design a corporate university? Explain each step you would take.

What are the advantages and disadvantages of a centralized training function?

What factors should a company consider in deciding whether to outsource its entire training function? Are the considerations different if the company wants to outsource a training program? Explain.

What is a training “brand”? Why is it important? How does it relate to marketing the training or learning function in an organization?

What does “change” have to do with training and learning? What four change-related problems need to be addressed for a new training program to be accepted by employees?

Application Assignments

Go to www.mcdonalds.com. Under “About Us,” review “Our History” and “Values in Action.” Under “Careers,” review the information provided about education opportunities. Watch the YouTube videos about Hamburger University at https://www.youtube.com/watch?v=g9nehPueARc and https://www.youtube.com/watch?v=sICEmBpAPq0.

Does Hamburger University support the company’s business? Explain why or why not. Is there a relationship between McDonald’s training and development efforts, employee attraction, employee retention, and customer service?

Identify the learning resources available at Hamburger University and how they contribute to the business strategy.

Find a company’s annual report by using the Internet or visiting a library. Using the annual report, do the following:

Identify the company’s mission, values, and goals.

Find any information provided in the report regarding the company’s training practices and how they relate to its goals and strategies. Be prepared to give a brief presentation of your research to the class.

Go to www.orkin.com, the website for Orkin, a company committed to providing the world’s best pest and termite control. Click on “Careers” at the bottom of the page. Investigate the company by clicking on “Who We Are,” “Benefits,” “Opportunities,” and “Community Involvement.” Click on “Orkin Training.” What type of training does Orkin offer employees? Is its training strategic? Why or why not? How does Orkin use training to contribute to the company’s competitive advantage?

Deloitte invested millions of dollars in building Deloitte University. Watch the YouTube video that highlights Deloitte University at https://www.youtube.com/watch?v=VnEGnK0lGEE. How does Deloitte University and the activities that happen there help to strengthen Deloitte’s business? To learn more about Deloitte’s business, go to https://www2.deloitte.com/us/en.html. page 110

Go to the website for Raytheon Professional Services, https://www.raytheon.com/ourcompany/rps-tailored-corporate-training-solutions, a training outsource provider. What services does Raytheon Professional Services provide? What are some of the potential advantages and disadvantages of outsourcing training to Raytheon Professional Services?

Watch the YouTube video about McCarthy Building Systems, a member of Training Magazine’s Top Ten Hall of Fame, at www.youtube.com/watch?v=m0AEJQKRQuo. What is McCarthy’s strategic focus? Identify McCarthy’s training and development initiatives and activities and the metrics it uses to show the value of training.

Watch the YouTube video on IBM’s Learning Administration at www.youtube.com?watch?v=LefBrIBEYSC. What is included in learning administration? What are the benefits that a company would gain by having IBM provide learning administration?

Case

Hitachi Data Systems Global Learning Team

Hitachi Data Systems Corporation provides information technology (IT) infrastructure, analytics, content, and cloud solutions and services to its customers. Its products include storage systems, networking solutions, and software products. The mission statement of the global learning team includes developing the skills, knowledge, and attitudes of its employees but also its partners, suppliers, and customers. The learning team at Hitachi Data Systems includes business interlock (BI) professionals who work with product marketing managers, engineers, and sales professionals to understand the strategic direction of each of these areas. The BI professionals also will work with clients, suppliers, and customers to understand the knowledge and skills that Hitachi Data Systems employees need to explain and provide them with appropriate and effective products and solutions. The learning team is in charge of several different programs. One program it leads is the Global Sales Boot Camp for new hires in sales and solutions consulting. This helps new hires understand Hitachi’s products and solutions. Another program provides product training to sales engineers that gives them the knowledge to deliver product demonstrations and suggestions about IT architecture to customers. A third program for field engineers provides them with the knowledge and skills they need to visit customers to install software, run cabling, set up servers, and get Hitachi’s products up and running. Keeping Hitachi’s employees current on product knowledge and solutions is difficult because they work in over 100 different companies. To meet this challenge the learning team has developed online access to virtual training programs and product learning spaces. Is it strategic to involve partners, customers, and suppliers in training? Explain why or why not? What model is Hitachi Data Systems using to organize its training function? Provide examples to support your answer.

Sources: Based on “Building Talent: The Very Best of 2017, “Hitachi Data Systems”, TD (October 2017), p. 35; “Company Overview of Hitachi Data Systems Corporation” from www.bloomberg.com, accessed February 19, 2018.

Case 1

Learning in Practice

Dow Chemical Develops Leaders by Sending Them to Work in Unfamiliar Surroundings

Dow Chemical’s mission is “To passionately create innovation for our stakeholders at the intersection of chemistry, biology, and physics.” It intends to do so by maximizing long-term value per share by being the most valuable and respected science company in the world. Its strategy is to invest in a market-driven portfolio of advantaged and technology-enabled businesses that create value for its shareholders and customers.

As Dow Chemical expands its global presence, it needs employees who have the ability to network and develop relationships with local commercial and government leaders. To develop global leaders, Dow had been sending high-potential employees to a week of leadership development classes at its Midland, Michigan, headquarters. After completing the classes, employees spent the next week in one of Dow’s international locations such as Shanghai, China; Sao Paulo, Brazil; or Dubai, United Arab Emirates. Each of these locations had Dow regional headquarters with work environments similar to what employees had experienced at corporate headquarters.

Dow’s global manager for leadership development and its vice president for human resources both recognized that the program had a major weakness. The program was missing a hands-on experience that would teach participants how to understand culture context. Exposing participants to problems within different cultural contexts helps get learners to self-reflect and consider how they deal with uncertainty and change. It also helps develop leaders who can understand what needs to be done in doing business in a new culture. Dow wanted to change the program to create a learning experience that would develop leadership skills, as well as the humility and integrity needed for doing business in new markets.

Dow developed a new leadership development program, Leadership in Action, with its first location in Accra, Ghana, where the company had recently opened its first office. The program is part of Dow’s approach to meeting the world’s basic needs by matching its employees with organizations that need support for sustainable development projects, especially in business growth areas for Dow. Accra, the western African country’s capital, was chosen because it provided a way to get potential leaders to understand a new business territory, develop a new market, and establish relationships in the local community. Thirty-six high-potential employees were organized into seven teams. Each team was assigned to work with a nongovernment organization to help with a project that the community needed. Projects included determining where to grow plants that could provide medicine for malaria and working with a trade school to develop an education curriculum including science, technology, engineering, and math. Program participants spent five months virtually planning and collaborating from their home offices. This helped them develop their consulting skills and adapt to unexpected events, such as the sudden loss of electricity or telephone service. After working virtually for five months, the group traveled to Africa to examine their finished projects.

Participants in the second class worked in Addis Ababa, Ethiopia, where Dow was considering opening an office. One of the teams worked with a team of IBM employees to develop marketing to promote hygiene and sanitation practices. These participants gained valuable skills in collaborating with both humanitarian groups and corporate partners. The teams working in Ghana and Ethiopia both had to learn how to solve problems in a culture and community that was extremely different from the one to which they were accustomed. They had to focus on understanding social structures and values of the people in the communities to create meaningful, accepted, and useful

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solutions. Both groups also represented Dow Chemical in news interviews, which enhanced their media relations skills and their understanding of how to best represent the company. Surveys completed after the program was completed show that participants feel they have a new view of the world. Almost all participants wanted to continue to be involved in some way working on Dow’s growth in Africa.

Dow employees have worked on a number of other projects in Ethiopia, such as identifying sustainable practices for converting solid and liquid waste into fertilizer and helping local agricultural start-up companies gain access to markets. These projects have included partners such as Precise Consult International and Population Services International, as well as universities and colleges. Dow has since deployed the Leadership in Action program to Indonesia in 2015 and the Phillipines in 2016. In 2017, forty-three employees were sent to Hanoi and Hai Phong in Vietnam. Teams worked on projects such as restoring and protecting the West Lake ecosystem and helping local citizens understand the importance of water resource monitoring to help address water pollution and flooding.

Questions

What competitive challenges motivated Dow Chemical to develop the Leadership in Action?

Do you think the Leadership in Action program contributes to Dow Chemical’s business strategy and goals? Explain.

How would you determine if the Leadership in Action program has been effective? What metrics or outcomes would you collect? Why?

What are the advantages and disadvantages of the Leadership in Action program, compared to more traditional ways of training leaders, such as formal courses (e.g., an MBA program) or increased job responsibility?

Source: Based on K. Everson, “Dow Chemical’s New Formula for Global Leaders,” Chief Learning Officer (April 2015), pp. 42–43, 49; “Mission & Vision,” from www.dow.com, accessed April 10, 2018; “Leadership in Action: Ethiopia,” from www.dow.com/en-us/careers/working-at-dow/learning-and-development, accessed April 10, 2018; “Vietnam 2017” from www.dow.com/en-us/science-and-sustainability/global-citizenship/dowcorps/leadership-in-action/vietnam, accessed April 10, 2018.