Human Resource- Only bid if you can meet budget

The following essay questions were developed using information from Chapters 1 and 2 of the text. Attached below chapters. Please provide substantive and meaningful responses to demonstrate your understanding of the topics presented. Responses should be 200 words or more per question. Apply APA citing protocol.

1. The CEO of ABC company has reviewed the annual productivity reports. The findings indicated that the actual organizational performance is less than the expected organizational performance. To close the gap, the CEO has decided to meet with management to discuss the development of a training program. The CEO’s decision to act was the result of what type of event? Does this type of event have to occur before training needs are identified? Explain your response.

2. Explain the difference between the organizational performance gap and the future oriented gap. Provide an example of each and discuss the impact of the different gaps on the organizational strategy.

3. why training professionals need OD competencies. Explain why OD professionals need training competencies. How do these two professions interrelate when it comes to training and development?

4.What factors might inhibit HRD managers from developing a strategic planning approach to training? How might these factors be overcome?

5.Consider the following problem-solving model. On the basis of the discussion in Chapter 1, describe how the training process model is or is not consistent with this model.

Problem-Solving Process

· Define and understand the problem.

· Define the cause of the problem.

· Identify potential solutions to the problem.

· Select the solution that provides the most benefits for the least cost.

· Develop an action plan for putting the solution in place.

One Training in Organizations

Learning

Objectives

After reading this chapter, you should be able to:

· ■ Describe the components of a general open systems model.

· ■ Describe how an open systems model applies to the training unit of an organization.

· ■ List and describe the interrelationships among the five phases of the training process model.

· ■ Explain how the training model can be applied to organizational improvement and problem solving.

· ■ Describe the challenges/opportunities facing training.

· ■ Define key terms used in the training literature.

· ■ Describe the benefits of integrating organizational development and training principles.

· ■ Describe the differences in how small and larger businesses might implement the training process model.

CASE TAKING CHARGE AT DOMTAR: WHAT IT TAKES FOR A TURNAROUND

Domtar is the third largest producer of uncoated freesheet paper in North America. In the decade prior to 1996, Domtar had one of the worst financial records in the pulp and paper industry. At that time it was a bureaucratic and hierarchical organization with no clear goals. Half of its business was in “trouble areas.” Moreover, the company did not have the critical mass to compete with the larger names in the field. The balance sheet was in bad shape, and the company did not have investment-grade status on its long-term debt.

In July of 1996, Raymond Royer was named president and chief executive officer (CEO). This was quite a surprise because, although Royer had been successful at Bombardier, he had no knowledge of the pulp and paper industry. Many believed that to be successful at Domtar, you needed to know the industry.

Royer knew that to be effective in any competitive industry, an organization needed to have a strategic direction and specific goals. He decided to focus on two goals: return on investment and customer service. Royer told Domtar executives that to survive, they needed to participate in the consolidation of the industry and increase its critical mass. The goal was to become a preferred supplier. The competitive strategy had to focus on being innovative in product design, high in product quality, and unique in customer service. At the same time, however, it had to do everything to keep costs down.

When Royer took over at Domtar, he explained to the executive team that there were three pillars to the company: customers, shareholders, and ourselves. He noted that it is only “ourselves” who are able to have any impact on changing the company. He backed up his words with action by hiring the Kaizen guru from Bombardier. Kaizen, a process of getting employees involved by using their expertise in the development of new and more effective ways of doing things, had been very effective at Bombardier. Royer saw no reason why it would not be successful at Domtar. Royer also knew that for the new strategic direction and focus to be successful, everyone needed to both understand the changes being proposed and have the skills to achieve them. The success of any change process requires extensive training; therefore, training became a key part of Royer’s strategy for Domtar.

This last point reflects the belief that it is the employees’ competencies that make the difference. The Domtar Difference, as it is called, is reflected in the statement, “tapping the intelligence of the experts, our employees.” Employees must be motivated to become involved in developing new ways of doing things. Thus, Domtar needed to provide employees with incentives for change, new skills, and a different attitude toward work. The introduction of Kaizen was one tactic used to achieve these goals.

Training at Domtar went beyond the traditional job training necessary to do the job effectively and included training in customer service and Kaizen. This is reflected in Domtar’s mission, which is to

· • meet the ever-changing needs of our customers,

· • provide shareholders with attractive returns, and

· • create an environment in which shared human values and personal commitment prevail.

In this regard, a performance management system was put in place to provide a mechanism for employees to receive feedback about their effectiveness. This process laid the groundwork for successfully attaining such objectives as improving employee performance, communicating the Domtar values, clarifying individual roles, and fostering better communication between employees and managers. Tied to this were performance incentives that rewarded employees with opportunities to share in the profits of the company.

Has Royer been successful with his approach? First-quarter net earnings in 1998 were $17 million, compared with a net loss of $12 million for the same time period in 1997, his first year in office. In 2002, third-quarter earnings were $59 million and totaled $141 million for the year. That is not all. Recall his goal of return on equity for shareholders. Domtar has once again been included on the Dow Jones sustainability index. Domtar has been on this list since its inception in 1999 and is the only pulp and paper company in North America to be part of this index. To be on the list, a company must demonstrate an approach that “aims to create long-term shareholder value by embracing opportunities and managing risks that arise from economic, environmental, and social developments.” On the basis of this, it could be said that Royer has been successful. In 2003, Paperloop, the pulp and paper industry’s international research and information service, named Royer Global CEO of the year.

It was Royer’s sound management policies and shrewd joint ventures and acquisitions that helped Domtar become more competitive and return their long-term debt rating to investment grade. However, joint ventures and acquisitions bring additional challenges of integrating the new companies into the “Domtar way.” Again, this requires training.

For example, when Domtar purchased the Ashdown Mill in Arkansas, the management team met with employees to set the climate for change. The plan was that within 14 months, all mill employees would complete a two-day training program designed to help them understand the Domtar culture and how to service customers. A manager always started the one-day customer focus training, thus emphasizing the importance of the training. This manager returned again at lunch to answer any questions as the training proceeded. In addition, for supervisor training, each supervisor received skill training on how to effectively address employee issues. How successful has all this training been? Employee Randy Gerber says the training “allows us to realize that to be successful, we must share human values and integrate them into our daily activities.” The training shows that “the company is committed to the program.” Tammy Waters, a communications coordinator, said that the training impacted the mill in many ways and for Ashdown employees it has become a way of life.

The same process takes place in Domtar’s joint ventures. In northern Ontario, Domtar owns a 45 percent interest in a mill, with the Cree of James Bay owning the remaining 55 percent. Although Domtar has minority interest in the joint venture, training is an important part of its involvement. Skills training still takes place on site, but all management and teamwork training is done at Domtar’s headquarters in Montreal.

Royer’s ability to get employees to buy into this new way of doing business was necessary for the organization to succeed. Paperloop’s editorial director for news products, Will Mies, in describing why Royer was chosen for the award, indicated that they polled a large number of respected security analysts, investment officers, and portfolio managers as well as their own staff of editors, analysts, and economists to determine a worthy winner this year. Raymond Royer emerged a clear favorite, with voters citing, in particular, his talent for turnaround, outstanding financial management, and consistently excellent merger, acquisition, and consolidation moves as well as his ability to integrate acquired businesses through a management system that engages employees. Of course, that last part, “a management system that engages employees,” could be said to be the key without which most of the rest would not work very well. That requires training.

*Swift, A. “Royer’s Domtar turnaround.” Financial Post (October 6 2003), FP3. Allen, B. 2003. The Domtar difference.

www.pimaweb.org/conferences/june2003/BuddyAllen

. Anonymous (January 2001) Partnership between Domtar and Cree First Nations brings results.

www.diversityupdate.com

. Richard Descarries, Manager, Corporate Communications and External Relations, Domtar, personal communication (2004).

OVERVIEW OF TRAINING

Everyone in an organization is affected by training. Everyone receives training at one time or another, usually multiple times. Managers and supervisors need to be sure that their direct reports have the competencies required to perform their jobs. Subject matter experts (managers and others) are asked to provide training. Significant budget dollars are allocated to training employees. Although the US economy has suffered significant losses over the last several years, companies still dedicate substantial resources to employee learning. In 2010, it is estimated that over $171.5 billion was invested in training activities. Most ($103 billion) was devoted to internal training services, with the rest allocated to external providers. The average expenditure per employee increased from $1,081 in 2009 to 1,228 in 2010.

Why do companies continue to invest in training, even in the most difficult economic times? Evidence shows that companies investing more in training produce improved financial results in terms of higher net sales, gross profits per employee, stock growth, and ratio of market to book value.

For example, in a Mutual of Omaha study, it was determined that those with higher levels of training generated, on average, an additional $150,000 of new business premium each year. However, training doesn’t always lead to an improved bottom line. Many companies report that they perceive little value from their training initiatives.

Obviously, companies that report

very positive improvements are using more effective training practices than those that do not. Effective training differs from ineffective training in terms of the processes used to determine what employees need to learn and how training is designed and implemented. The first three chapters of this book provide you with an understanding of the context and theoretical foundation on which effective training is based.

Chapters 4

through

provide you with an in-depth understanding of how to determine training needs and how to design, develop, and implement training to meet those needs. Even companies that have reported unsatisfactory results from their training efforts are doing at least one thing right—they are evaluating their training and can take corrective action. Companies that don’t evaluate their training don’t have a clue about its effectiveness. We believe that it is useful, first, to give an overview of what an effective training unit should accomplish in an organization. This chapter and the next cover a broad set of organizational issues that provide the context for developing and implementing effective training. As we discuss this context, we will be referring back to the Domtar case from time to time, to illustrate in concrete ways how training relates to organizational effectiveness.

Training System and Processes

Training provides employees with the knowledge and skills to perform more effectively. This allows them to meet current job requirements or prepares them to meet the inevitable changes that occur in their jobs. However, training is only an opportunity for learning. What is learned depends on many factors, such as the design and implementation of training, the motivation and learning style of the trainees, and the organization’s learning climate.

Training is also part of an integrated system in which performance is measured against criteria (best practices benchmarks) that are tied to strategic objectives. Training is used extensively to help employees understand how they can assist in meeting corporate objectives. Clearly, Domtar knows that. Recall, when Domtar purchased the Ashdown Mill, training was an immediate focus. Within 14 months, all mill employees completed a two-day training program so they would understand Domtar’s culture and know how to service customers in the appropriate manner. Always having a manager kick off the training and later return to answer questions shows the importance Domtar attached to training. But effective training requires more than just having key managers available. It requires that effective systems are in place to address the performance issues facing the organization. With that in mind, we turn to the design of an effective training system.

TRAINING AS AN OPEN SYSTEM

Figure 1-1

shows a general

open systems model

Open systems have a dynamic relationship with their environment; closed systems do not. Obviously, a business must interact with its environment, making it an open system.

As
Figure 1-1
indicates, an open system depends on the environment for the input that supports the system. A business, for example, needs raw materials, capital, and employees in order to operate. The environmental inputs are transformed into outputs by the system’s processes. For a business, these would include its products and services. The system’s outputs flow into the environment and might or might not influence future inputs into the system. In effective systems, the system output influences the environment to supply new supportive input to the system.

FIGURE 1-1 General Open Systems Model

A system, such as a business, must be responsive to the needs and demands of its environment because the environment provides the input needed for the system to replenish itself. For example, if a business is responsive to the needs of society by providing valued goods and services (output), it receives financial and goodwill credits (input). The business uses these inputs to continue operating. If the business does not provide sufficient value to its environment, it will fail because the environment will not provide the necessary input for the system to replenish itself.

FIGURE 1-2 Training as an Open System

Many open systems exist as part of another open system and, therefore, are called subsystems of that larger system. For example, a product assembly system is a subsystem of a manufacturing system, which itself is a subsystem of the company, which is a subsystem of the industry, and so on. Training can be seen as a subsystem within the larger human resources (HR) unit, which itself is a subsystem of the company.

Figure 1-2

illustrates some of the exchanges that take place between the training system and the larger organizational system. The organization’s mission, strategies, resources, and the like, all represent sources of input into the training subsystem. Of course, if the training department is part of a larger HR function, then these inputs would be filtered through that system. Organizational and employee needs, training budgets, staff, equipment, and so forth, are all inputs from the organization to the training subsystem. Training processes transform these inputs into usable output for the organization (improved knowledge, skills, and attitudes; job performance; and so on). Looking at the training unit from an open system perspective shows how interconnected training activities are with what is happening elsewhere in the organization. The point here is that the organization invests money in the training function, for which it expects a favorable return. Periodically, the organization will examine the returns from training and determine whether the training system is working properly and what further investment is appropriate.

Training in Action 1-1

demonstrates the consequences of a poor match between the training system and the organizational environment.

THE TRAINING PROCESS MODEL

This book will take you through the complete training process as it would be conducted under ideal conditions. Unfortunately, most organizations do not operate in ideal conditions. Insufficient financial resources, time, and training professionals represent just a few of the challenges faced by most companies. Recognizing these limitations, we also provide variations to training practices and systems that, although not ideal, do a reasonable job of accomplishing

training objectives

. Of course, these shortcuts exact a price, and we identify the major consequences associated with these shortcuts. Thus, we try to provide both “ideal” and more practical approaches to implementing the training processes. Nonetheless, even in less-than-ideal conditions, all of the training processes are critical to the success of training. Although less-than-ideal methods may be used to carry out the training processes, elimination of one or more of the processes places the entire effort at grave risk.

Effective training is not just running a lot of people through a lot of training programs. To view training this way is shortsighted. Instead, training should be viewed as a set of integrated processes in which organizational needs and employee capabilities are analyzed and responded to in a rational, logical, and strategic manner. When training is conducted this way, both the employees’ and organization’s performance will improve. This will increase the value of the training unit, and, as a result further investment in training is likely to occur. Our model of training processes, depicted in

Figure 1-3

, reflects this approach.

1-1 Training in Action Team Building Sizzles, Then Fizzles

The director of a city utilities department felt that creating employee problem-solving teams would improve the quality of operations and the efficiency of the department. All employees were provided the opportunity to participate in team-building and problem-solving training. About 60 percent of the employees, including the director and his management group, signed up for the training. Three-hour training sessions took place once a week for ten weeks. Working on a common process within their department, employees were grouped into teams for three weeks of team-building training and seven weeks of problem-solving training.

At the beginning of the problem-solving training, each team identified a problem in its area of operation. Each team then worked through the problem as they progressed though each step of the training. The team members were delighted to be learning new skills while working on a real problem. By the end of training, each group actually solved, or made significant progress toward solving, the problem it was working on. Evaluations taken at the conclusion of training indicated that trainees enjoyed the training and understood the steps, tools, and techniques of team building and problem solving. The director was pleased with the results and submitted a report documenting the successes of the training to the city manager.

Follow-up evaluation conducted six months later showed only one team still in operation. The other teams fell apart for various reasons, such as excessive workloads, little recognition being given when problems were solved, nontrained employees resisting making changes in work processes, or teams being ridiculed by those who had not participated in training. Clearly, the training did not achieve the desired outcomes. If the director had understood the system and what was and was not rewarding, a more successful outcome could have been achieved. By using the analysis phase of the Training Process Model, the relevant aspects of the system would have been identified and adjustments to either the system or the training could have been made.

Figure 1-3
is merely an overview of the process. A more detailed figure for each phase is provided at the beginning of each relevant chapter, with the input and output of each process described in considerably more detail. Our model is an adaptation of what has become widely known as the

ADDIE

model. ADDIE is an acronym for the major processes of training: Analysis, Design, Development, Implementation and Evaluation. Many, including your authors have attempted to find the original source for this model, but apparently there is no single source. It seems to have evolved over time to become an umbrella term without a fully articulated underlying structure.

Like others, we have used ADDIE as the generic basis for our own model of how training should proceed. In the following paragraphs, we will briefly describe each of the ADDIE phases and their relevant inputs and outputs. This model is used extensively throughout the book, so it is important to be familiar with it.

The training process begins with some type of triggering event. A

triggering event

occurs when a person with authority to take action believes that

actual organizational performance (AOP)

is less than the

expected organizational performance (EOP)

. For example, the quality standard (the EOP) at Company X is three rejects per thousand. An examination of the data for the previous month indicates that the actual quality level (AOP) was 17 rejects per thousand. If a person with authority to take action sees this gap as a concern, it would trigger an analysis of why the number of rejects is so high. This analysis is discussed next.

Analysis Phase

The

analysis phase

begins with the identification of the

organizational performance gap

(AOP is less than EOP). Things such as profitability shortfalls, low levels of customer satisfaction, or excessive scrap are all examples of a current performance gap. Another type of performance gap is future oriented. Here, the company is seen as likely to perform poorly in the
future unless changes are made. For example, if an organization wanted to install robotic equipment in six months but employees were not able to program the robots, then there is an expected performance gap in the future. Once a performance gap exists, the cause must then be determined.
*

FIGURE 1-3 Training Processes Model

Once the cause is determined, and its elimination is believed to be important, the elimination of the cause becomes a “need” of the organization

The analysis phase is often referred to as a

training needs analysis (TNA)

. However, both training and nontraining needs are identified with this process, so it is incorrect to say it only focuses on training needs. The cause of the performance gap might be inadequate knowledge, skills, or attitudes (KSAs) of employees. If so, then training is a possible solution. However, KSA deficiencies are only one of many reasons for performance gaps. Other reasons, such as motivation or faulty equipment, must be separated from KSA deficiencies, as these are nontraining needs and require a different solution. In the analysis phase, the causes of a performance gap are identified, whether due to KSAs or something else. Those performance gaps caused by KSA deficiencies are identified as “training needs” because training is a solution. All other causes are defined as nontraining needs, and require other types of solutions.

The analysis phase also attaches priorities to the training needs that are identified. Not all needs will have the same level of importance for the company. This process of data gathering and causal analysis to determine which performance problems should be addressed by training is the analysis phase of the training process. It will be discussed in great detail in

Chapter 4

Design Phase

The training needs identified in the analysis phase, as well as areas of constraint and support, are the inputs to the

design phase

. An important process in the design phase is the creation of training objectives. These provide direction for what will be trained and how. They specify the employee and organizational outcomes that should be achieved as a result of training and become inputs to the development and evaluation phases of the model. As such they become the evaluation objectives.

*There are often multiple causes of a performance gap, but we are using a single cause here for simplicity.

Another part of the design process is determining how the organizational constraints will be addressed by the training. Finally, identifying the factors needed in the training program to facilitate learning and its transfer back to the job are key outcomes from the design phase. All of these factors are used to create the guidelines for how the training will be developed. The design phase is the topic of

Chapter 5

Chapters 6

and

provide detailed descriptions of the various methods that can be used to deliver the content of the training.

Development Phase

Development

is the process of using the guidelines from the design phase to formulate an instructional strategy that will meet the training objectives. Obtaining or creating all the things that are needed to implement the training program is also a part of this phase. The

instructional strategy

describes the order, timing, and combination of methods and elements to be used in the training program to meet the objectives. The training objectives provide the focus for program development and the guidelines from the design phase set the parameters for what will and will not work. Outputs from this phase are all of the things needed to implement the training program. These include the specific content for of the training, instructional methods used to deliver the content, materials to be used, equipment and media, manuals, and so forth. These are integrated into a coherent, well-organized training plan focused on achieving the training objectives. These outputs of the development phase serve as inputs to the implementation phase. Both the development phase and the implementation phase are the focus of

Chapter 8

Implementation Phase

All the previous phases of the training process come together during the

implementation phase

. It is useful to conduct a dry run or even a pilot of the program before actually delivering the training. This dry run, or pilot program, allows for the testing of the training to determine if any modifications are necessary before it is ready to go live.
Chapter 8
addresses the key aspects of the dry run and delivery of the training.

Evaluation Phase

Although we discuss this phase of the model last, it actually begins during the development phase. Recall that evaluation objectives are an output of the design phase. In the design phase the training objectives were identified, and these were used in the development phase to create the instruments and measures that will be used to evaluate the training. These become inputs to the

evaluation phase

. More input comes from the organizational constraints. Time, money, and staff all affect how training is evaluated. Two types of evaluation are useful. First,

process evaluation

determines how well a particular training process achieved its objectives (i.e., outputs). In other words, did the trainer follow the exact training process suggested? For example, if role-plays were in the design, were they used properly? Collecting and analyzing process data can provide early warning of potential problems in the training program.

Outcome evaluation

is the evaluation conducted at the end of training to determine the effects of training on the trainee, the job, and the organization. This type of evaluation uses the training objectives as the standard. Outcome evaluation can also be used to improve training processes. Outcome evaluation data by themselves do not provide enough information for program improvement, but in combination with process evaluation data, they serve as a powerful tool for improving programs. For example, if one or more objectives are not achieved, the training process evaluation data can then be used to identify problems in the process and corrective action can be taken.

Chapter 9

provides a detailed discussion of the evaluation process.

TRENDS IN TRAINING

The business environment in North America will continue to change rapidly. These changes bring both challenges and opportunities. Successful companies in most industries must constantly realign their activities to meet new conditions while remaining true to their mission and strategic direction. As companies adapt, their training function also needs to adapt. Multiple surveys over the last several years have asked HR executives and human resource development (HRD) managers to identify their organization’s needs for the next several years. These are the major trends in training.

· • Aligning training with business strategy

· •

Advances in Technology

· • Managing talent due to changing demographics

· • Improving the training function

· • Quality

· • Legal issues

Each of these issues is discussed in subsequent paragraphs in terms of the opportunities and challenges it presents to the training function. The ways in which companies are addressing these issues are covered in more depth in

Chapter 10

, Key Areas of Organizational Training.

Aligning Training with Business Strategy

For the past five years, virtually all the surveys show that aligning training with business strategy is a top priority not only of training managers, but also of HR managers and other business executives. Why is it such a high priority? First, it is only in the last decade that reliable evidence of training’s impact on the bottom line has surfaced. Second, and just as important, the business environment over the last decade has been changing rapidly, and all signs indicate that this will continue. Most companies will need to continuously realign their activities to meet new conditions. This requires people at all levels in the organization to be able to make day-to-day decisions that support the business strategy. Training initiatives will need to support the strategic direction of the company and the people who carry it out. Organizations now realize that effective training is a tool for getting better job performance, better bottom-line results, and creating organization-wide adaptability.

What actions did Domtar take to align its training with its business strategy? One component was the institution of Kaizen methods and the associated training. This aligns with the strategic goal of “tapping the intelligence of the experts, our employees.” Was the money Domtar spent on this training worth it? It would seem so. Using the Kaizen approach, employees developed a new way of cutting trees into planks. The result was fewer wood chips to transport and more logs produced per tree. Since 1997, it is estimated that Kaizen has saved Domtar about $230 million in production costs. Two of their mills are among the lowest-cost mills in North America. Clearly, the training at Domtar was aligned with its strategic goals.

Companies are now realizing that worker knowledge is a competitive advantage and that training is a strategic tool. As Angela Hornsby, V.P. of learning and development at Carlson Restaurants Worldwide, says: “Things are changing so much more quickly these days, and companies have to adapt so much faster than before to remain competitive. The fact is that one of the most powerful tools we have at our disposal to change performance and help people to adapt more readily to that change is learning.”
7
Even though aligning training with business strategy is an important goal, it isn’t as easy to do. We will discuss this in more depth in

Chapter 2

, providing suggestions for how to meet this challenge and take advantage of the opportunities it affords.

Advances in Technology

The second biggest issue for training executives to deal with is the rapid advances being made in learning technologies. In addition to advances in Learning Management Systems, Intelligent Tutoring, interactive multimedia, and other tools that have been around for a decade or more, new possibilities for designing and delivering training programs are expanding exponentially. We will discuss these in depth in

Chapter 7

, so here we only identify some of the opportunities/problems these create for training executives and designers. The advent of Web 2 technologies can be applied to the design and delivery of training in a way that enhances trainees’ involvement and learning. Tools such as blogs, Twitter, Facebook, MySpace and Linkedin offer ways to enhance or in some
cases replace the traditional training that occurs in a classroom and even some earlier types of electronic-based training. Following are some of the ways these Web 2 applications can be used:

· • Social networking can provide support for on-the-job training.

· • Social networking and Web 2.0 tools can engage trainees before and after they attend a session and can be used to reinforce learning back on the job.

· • An online community can be created for trainees for reference, sharing information, and posting best practices. This allows trainees to continue learning beyond the classroom.

· • Blogs can be used to post examples and applications that keep participants engaged in the topic area.

Additionally, advances in mobile-device technology allow trainees to take all of these Web 2.0 tools, applications and more with them wherever they go.

Training executives must develop strategies for utilizing the available technology in ways that meet their business’ needs. Too often in the past, training executives have jumped on the latest technology bandwagon, only to find it wasn’t going where they wanted to go. The lessons learned from those early adopters provide a clear message of caution. However, the potential benefits of these technologies mean that a careful analysis needs to be made. The problem is the technologies keep morphing at such a rapid pace, it becomes very difficult to keep up.

Managing Talent Due to Changing Demographics

Major demographic shifts have occurred in North America that affect businesses now and will for the next 15 years. Principal among these demographic shifts are as follows:

· • Increased gender, ethnic, and age diversity in the North American workforce

· • Aging of the population (baby boomers)

DIVERSITY

Hispanics will soon become the largest minority group in the U.S. workforce. While all other minority groups are increasing in size, the percentage of Caucasians is expected to decrease. The number of women will increase to about 50 percent of the workforce.

Increased diversity brings both the opportunity for new ways of approaching business issues and the challenge of finding ways to integrate these differing perspectives. We will discuss the legal side of diversity in the “

Legal Issues

” section. Along with more diversity in terms of gender, ethnicity, and so forth, the workforce is becoming more diverse with respect to age. Four distinct generations are currently in the workforce. Each generation has a different set of values relating to the role of work in their life. The average age of the population is increasing with about 14 percent of the labor market aged 55 or older. By 2015, over 20 percent are expected to be in this range. As these people retire from their jobs, many will return to the workforce on a part-time basis because of the demand for knowledgeable workers and the insecurity of retirement income. However, these people will not be looking for traditional full-time jobs. Rather, they will be looking for jobs that allow them to enjoy significant periods of time away from job responsibilities. Younger workers want a more balanced work and nonwork life and are more conversant with technologies that allow them to work from anywhere. We are seeing more training focused on building bridges between the older managers and the younger subordinates and programs for team skills that focus on cooperation and problem solving. In general, there are increasing demands for these programs to be aligned with business goals rather than focusing on diversity for its own sake.

DEVELOPING THE RIGHT TALENT

Some have suggested that most companies, now or in the near future, will face a severe shortage of all types of labor. The worldwide economic recession that began in 2008 has certainly eliminated that concern, at least in the near term. Nonetheless, it is now and will continue to be important for most businesses to secure workers with the right skill sets.

Baby boomers with the highest knowledge and skill levels will be the ones most likely to leave the workforce, as they will have higher levels of retirement income. Because of changes in technology, job design, and the like, it is estimated that more than 75 percent of the workforce needs retraining just to keep up with the changes in their current jobs. It is projected that the forces identified earlier will combine by 2020 to create a shortage of 20 million workers, especially in jobs that require the most skill and provide the highest economic value.

A survey of senior executives in manufacturing firms indicates that replacing retiring skilled workers will cost their companies up to $20 million a year and will continue for at least five years.

Where will the needed talent come from in the next few years? The traditional source of talent coming out of the colleges and technical schools will be fought over fiercely, because there won’t be enough to go around. To make up the shortage, many companies will create their own talent. For example, in 2005, Hewlett-Packard addressed this issue by increasing their training budget by 16 percent, bringing the total to $300 million. Raytheon Vision Systems realized that over 35 percent of their workforce would be eligible to retire by 2009. This not only would create a huge loss of people, but also would represent a critical loss of institutional knowledge. Many of those set to retire were the inventors of the knowledge. Raytheon set up a “Leave a Legacy” program, pairing vital-knowledge experts with high-potential subordinates in mentoring relationships. In addition to the shortage of new talent, existing employees will need training to keep up with the changes brought on by new technologies. Thus, in many organizations, you will find the training function focusing on the following types of initiatives:

· • Programs that focus on the recruiting and selection process (such as recruiter training, behavioral based interviewing, etc.)

· • Programs that improve retention of knowledge workers (e.g., orientation, performance review)

· • Programs that assess and track job requirements and employee competencies (HRIS systems)

· • Development

of innovative knowledge delivery systems that increase the speed with which knowledge is obtained and provide an increased breadth of training opportunities is another way in which companies are creating more knowledgeable workers more quickly (computer-based and other electronic forms of training)

In addition to technological innovation, the competitive environment demands that organizations continuously upgrade the knowledge of their workforce. Consumer demands for higher-quality products and services and the fiercely competitive global economy require employees at every level who are more knowledgeable, more committed to quality, show better judgment, and demonstrate more competencies than ever before.

Tied to the increased level of knowledge expected of all workers is the speed with which knowledge is acquired. In today’s competitive business environment, most companies have minimized the time it takes to move a product from the idea stage to the marketplace. This, however, puts great strains on the ability of the employees to be up to speed on the new products and production processes. The smart companies are now making “time to knowledge” as important as “time to market.” By getting the training department involved early in the product development stage, companies are able to provide just-in-time training and increase the breadth of training opportunities.

Training in Action 1-2

describes how the United Farm Workers union was able to work with farm owners and managers to create more knowledgeable farm workers. This is especially interesting since many unions have resisted increased knowledge requirements for the jobs they represent.

Quality and Continuous Improvement

Training must be seen as an integral part of the organization’s performance improvement system. If not, it will continue to be seen as a cost center, providing less valued contributions to the organization. Training was a critical part of Domtar’s change process. It helped educate employees regarding the mission, strategy, and objectives of the organization and how these objectives translated to each employee’s job behaviors. Experienced trainers know that effective training is structured as a continuous performance improvement process that is integrated with other systems and business strategies, just as at Domtar. While several models exist for continuous improvement, common to them all are the following:

· • Identification of performance improvement opportunities and analysis of what caused the opportunity to exist (gap analysis)

· • Identification of alternative solutions to the opportunity and selection of the most beneficial solution. A training program is one of many possible performance improvement solutions

· • Design and implementation of the solution (training if it is one of the selected solutions)

· • Evaluation of results to determine what, if any, further action should be taken

1-2 Training in Action FIELD Partners with Growers

A more knowledgeable workforce is a double-edged sword for unions. On the one hand, union leadership demands that employers provide training for the rank and file to keep them up to date with modern operating methods. On the other hand, union leadership also understands that more knowledgeable workers improve the efficiency of the company, resulting in reductions in the size of the bargaining unit. A major challenge for the future is finding a way for both the company and the union to prosper under intensely competitive conditions, where a knowledgeable workforce is a competitive advantage. Some progress in this area is evident from the development of partnerships between unions and employers to create education and training programs that develop less skilled employees and increase productivity. Even at the lowest levels of the agriculture industry, more knowledgeable workers can improve the bottom line. The Farmworker Institute for Education and Leadership Development (FIELD) serves as an intermediary between management and community organizations and provides direct training to both current employees and potential employees. FIELD was founded by the United Farm Workers (UFW) union to foster the economic and social prosperity of the low-income and low-skill farm workers and their families. Working in partnership with agricultural owners and managers, FIELD provides classroom training, educational literacy programs, and cross training to prepare workers for jobs in agriculture. It also provides training for those already employed, on the basis of employer needs. These programs include upgrading job skills, communication, quality management, leadership development, and conflict resolution. For example, FIELD trained over 900 workers at seven companies in health and safety. FIELD also provides customized training, as it did for Monterey Mushrooms, a California-based distributor of fresh and processed mushrooms with a UFW workforce. The training developed by FIELD reinforced the company’s “be the best” principles and encouraged collaboration and conflict resolution. The company has benefited from the training with higher productivity and fewer accidents.

Each of these steps matches well when placed against the Training Process Model. That is because effective training is a continuous performance improvement process. Training does not stop and start with each program. The training function in organizations continuously searches for performance improvement opportunities, develops and implements solutions, and evaluates the effectiveness of the solutions.

Quality improvement is a key component of most continuous improvement processes. High-quality products and services are necessary to stay in business in today’s competitive markets and thus have high priority for most businesses. This is especially true for businesses that provide products or services directly to other businesses. Typically, these companies must demonstrate the quality of their products through quality systems developed by the purchasing company or by some globally accepted agency. For example, the major automobile manufacturers impose their quality systems on suppliers. The

International Organization for Standardization (ISO)

, located in Geneva, Switzerland, developed a set of worldwide standards to ensure
consistency in product quality by all companies that become certified. In general, there are five stages in the certification process:

· 1. Preaudit: assessing how you are doing now

· 2. Process mapping: documenting the way things are done

· 3. Change: developing processes to improve the way things are done to reach a desired level of quality

· 4. Training: training in the new processes

· 5. Postaudit: assessing how well you are doing after the changes and continuing the improvement process

Once certified, there are continuing audits to ensure company compliance with the standards. Thus, training is an important part of attaining ISO certification and is required on a continuous basis to maintain certification. The certification process also helps improve training. A research study showed improvements in TNA, design, delivery methods, and evaluation following certification.

This study also found that these companies provided more hours and more types of training and had a larger training budget following certification.

In addition to improved training processes, companies with ISO certification also find the following advantages:15

· • Improved efficiency

· • Higher productivity

· • Better internal communication

· • Improved quality image and market competitiveness

· • Increased customer preference

· • Increased awareness of opportunities for process and quality improvements

· • Reduced costs and improved ability to document quality control processes to their customers

Glen Black, president of the Process Quality Association in Canada, compared ISO-certified companies with those not certified. He found that certified companies are six times less likely to experience bankruptcy, average 76 percent lower warranty costs in customer-discovered defects, and allow 36 percent less bureaucracy within their company structure.

A cost comes with achieving these benefits, however. Once the company makes the decision to seek certification, it must be prepared to engage in a substantial amount of training that can be costly. Furthermore, training is only one part of the overall cost, so each business must determine whether the costs of ISO certification are justified by the benefits.

Legal Issues

Equal employment opportunity, affirmative action, sexual harassment, and related legislation have placed legal requirements on businesses regarding specific types of training. You will learn in detail the training issues related to sexual harassment and equity (specifically related to females in nontraditional jobs, the glass ceiling, and the disabled) in
Chapter 10
. In addition, trainers need to be aware of liability issues, copyright infringement, and other legal concerns. The discussion of these issues is not intended to provide technical legal information, but rather to provide a general (and understandable) description of the important legal issues related to training activities.

EQUAL OPPORTUNITY/EQUITY

In North America, federal, state, or provincial law and associated court rulings provide the complex legal framework within which businesses must develop their HR policies and practices. Even though legislation initially focused on the selection of people into the organization, there are many areas related to training that also require attention. This is especially true as the legal battlegrounds have shifted from employment to career opportunities over the last decade. Since this is not a text on training liability issues, we will address the topic only in a general way. Those wishing a more in-depth coverage might want to read “Avoiding Legal Liability: For Adult Educators, Human Resource Developers, and Instructional Designers.”

United States federal law makes it illegal to exclude people from training on the basis of gender, race, age (employees aged 40 or older), and disabilities. Generally, these categories are referred to as “protected,” as they belong to a “protected group.” Employers must make sure that criteria for selecting people into training programs are based on bona fide job requirements (not race, gender, age, etc.). Employees targeted for promotion generally receive training and developmental experiences to prepare them for the new position. The legal issue here is that those in protected classes may claim that they did not receive the training needed to be promoted. In general, the law says that those in protected groups must be given equal opportunity for promotions. If members of a protected group can demonstrate that they have been adversely affected (e.g., fewer promotions, lower pay) because they did not receive training that was provided to those who received those benefits (e.g., promotions), the burden of proof falls on the employer to demonstrate that its practices are job-related and consistent with business necessity. In the case of promotions, a company can avoid such claims by providing equal access to training for all employees in a job classification. Once it is determined that someone in the classification will be promoted, that person can receive additional training to prepare for the new position. The legal issue of equal opportunity then focuses on the selection process rather than the training opportunities.

For employees with disabilities (physical or mental), the employer must not only ensure equal opportunity for training, but also make reasonable accommodation. Reasonable accommodation means making training facilities and materials readily accessible and useable to those with a disability. Depending on the disability, this could include instructional media and/or providing readers. If the training is considered to be related to essential job functions and the disability prevents the person from participating in the training, then, unless undue hardship can be demonstrated, the employer is obligated to provide alternative training that develops the same set of competencies.

Not only do protected groups need equal access to training, they must receive equal treatment while participating in training. This means that the training must provide equal opportunities for learning, practice, and feedback.

REQUIRED TRAINING

Some training is required by law. Failure to provide this training will subject the company to sanctions from the courts or federal and state regulators. For example, the Occupational Safety and Health Act requires employers to provide periodic training on the handling of hazardous materials and the use of safety equipment. Flight crews on passenger airlines must complete a set of mandated training courses. In other cases, courts have ordered companies to provide specific types of training to redress problems identified in court proceedings. Companies that have lost employment discrimination cases have been ordered to provide diversity training, and those losing sexual harassment cases have been ordered to provide sexual harassment training.

In other cases, even though training is not legally required, it makes good legal sense to provide the training. In a 1999 ruling, Kolstad v. American Dental Association, the Supreme Court recognized the good-faith effort of employers to implement and enforce measures to prevent discrimination and harassment in the workplace.

Essentially, the court found that even though an individual might behave in a manner that violated the federally protected rights of another employee, no damages would be awarded if the company was shown to have made a good-faith effort to prevent the activity. One component of such a good-faith effort is to provide training aimed at preventing the illegal behavior. Another component is the implementation of policy and procedure for addressing the behavior, should it occur, and finally, the application of sanctions to individuals found to have engaged in the behavior. We discuss how this is done and provide examples in
Chapter 10
. The number of sexual harassment claims has decreased over the last few years, but the number of discrimination claims of all types has remained steady.

In designing training programs to deal with discrimination and harassment, trainers need to avoid training that itself is discriminating or harassing. For example, in the early 1990s, it was documented that women aircraft controllers who had to walk down long aisles populated by their mostly male colleagues would find themselves subject to jeers and/or sexual comments, and, on occasion, would have their dresses pulled up. After repeated complaints about such behavior, the Federal Aviation Administration (FAA) arranged for training to be provided to its 8,000 employees. A part of the training involved men walking down a gauntlet of women coworkers, who now did the jeering, sexual commentary, and groping. It was intended that the men get a firsthand understanding of what the women had experienced. One of the male participants was outraged by the experience. He stated that he did not treat others in this manner and did not expect to be treated that way himself. In the program he was accused, as a white male, of being in sexist denial. He complained to his supervisors in the FAA but little was done. Shortly thereafter, he filed a $300,000 lawsuit for sexual harassment. He won, and the FAA’s director of training was fired.

LIABILITY FOR INJURY OR ILLNESS

Some types of training programs have the potential to cause physical or psychological injury or illness to participants. For example, some simulations that require trainees to use tools or equipment might cause injury if they are used incorrectly. Training in other instances might involve the use of chemicals that can cause illness if inhaled. In many states, the employer is responsible for financial damages resulting from injuries or illness caused by participation in training. This is true even if the training is provided by an outside vendor. Trainees need to be warned of any dangers associated with training, be trained in methods of preventing the dangers from occurring, and be provided with safety equipment. Employers are also liable for injuries to nonemployees resulting from a poorly or incorrectly trained employee.

CONFIDENTIALITY

An employee’s performance during and at the conclusion of training is confidential in the same manner as other employee information. Thus, if performance in training is to be used in promotion or salary decisions, the employee must be informed that it will be used in that way. Unless permission has been granted, or the trainee is informed prior to training that such discussions would occur, trainers must also avoid discussion of the trainee’s performance with other employees.

COPYRIGHTED MATERIALS

The use of any copyrighted material without the permission of the owner is illegal. If your training vendors infringe on the copyrighted material of others while providing your company with services, your company could be liable for damages. Thus, as the training manager, you would want to make sure that your contract with the vendor required the legal use of any copyrighted materials.

CAREER OPPORTUNITIES IN TRAINING

In 2011, there were a little less than twelve training staff per 1000 employees for midsized companies.

To understand the types of career paths training offers, it is necessary to understand how the training unit fits in the organization. This can vary considerably across organizations. For example, large companies typically separate management training and development from the training of the nonmanagement employees. Each of these areas might be further divided into more specialized activities. For example, the employee development area might contain separate units focused on training in customer service, employee orientation, health and safety, and each of the organization’s major operation areas (sales, manufacturing, etc.). If the company is very large, it might also have specialists working in evaluation and research, program design, materials development, and needs analysis. The person in charge of customer service training, for example, would work with specialists in these areas to do the following:

· • Determine the customer service training needs in the organization.

· • Develop training programs to meet those needs.

· • Develop materials to support the instructional methods to be used in the programs.

· • Evaluate the effectiveness of the programs.

FIGURE 1-4 Career Path in HRD

Entry-level positions in a large company’s HRD department are usually at the specialist level. Thus, a new hire with little experience but a good education in the training area could start out as a materials designer or a stand-up trainer, depending on her KSAs. In a large organization, a career path might look like the one shown in

Figure 1-4

. The early rotation through the various specialist positions provides the novice trainer with firsthand experience in all aspects of the training system. When a person has a solid grasp of the system (i.e., how it is “supposed” to work and how it “actually” works), she is able to supervise or coordinate one of the specialist areas. Some large companies also require their HRD personnel to spend time in a line position, to better understand the needs of line personnel. Thus, at some point in the career ladder pictured in
Figure 1-4
, the training practitioner could find himself supervising or working in a line operation for a period of 6 to 12 months, although this requirement is still fairly unusual. Supervisors will often also rotate across specialist areas before moving into a manager’s role, such as manager of employee development. After sufficient experience and success as a manager, the trainer may be asked to assume responsibility for all training and development activity in the organization—the training executive position.

The smaller the organization, the greater the breadth of responsibility each person in the training unit will have. In a medium-sized company, with around 1,000 employees, the HRD activities of employee and management training may not be separated into separate units, but carried out by the same small group of people under the guidance of an HRD manager. Each individual is expected to perform all (or most) aspects of each of the activities. Smaller companies (100–300 employees) may not have an HRD or training department at all. Instead, a single individual may be responsible for all training activities. In even smaller businesses, many of the HR responsibilities, including training, are decentralized out to the line managers. HR departments may consist of only one or two people who handle the core HR activities and act as consultants and facilitators for the line managers in carrying out their HR responsibilities, such as training.

Another career path for a training and development professional is as a member of a training or consulting firm. Requirements here vary greatly. There are a large number of one- or two-person consulting businesses that do training. These people market some core set of knowledge they have acquired through their work experience, education, or both. There are also some very large training or consulting firms that operate on a national or global basis. These firms hire specialists in certain areas such as instructional design, materials development, and evaluation. However, these firms also prefer employees to have several years of experience as well as advanced degrees. Generally, they are able to recruit a sufficient number of applicants who meet the experience and education requirements, because their compensation package is typically much better than that of the smaller firms, although compensation levels vary considerably from firm to firm.

IMPORTANT CONCEPTS AND MEANINGS

The literature in training and development, as in other professional disciplines, is continually evolving. As such, you will often find different meanings attached to the same terms. Thus, it is important for us to be clear about the terms and concepts we are using. It is also useful for you, the reader, to have a good understanding of how terms are commonly used in the field and how they will be used throughout the text.

The basic terms and concepts used throughout the book are defined in the glossary at the end of the book. However, the following terms are the foundation for all that follows, and we need to be clear about meanings at the outset.

Learning

Definitions for learning found in the literature vary according to the theoretical background of the authors. Unless otherwise indicated, the term

learning

in this text means a relatively permanent change in cognition (i.e., understanding and thinking) that results from experience and that directly influences behavior. This definition, of course, reflects our own theoretical assumptions. We will discuss this definition and others at length in

Chapter 3

Knowledge, Skills, and Attitudes

What is learned can be separated into different categories. Again, how these categories are defined differs according to the source. Historically, organizational psychologists used the acronym KSAs to stand for the terms knowledge, skills, and abilities—the different types of learning outcomes. However, the term attitudes is increasingly being substituted for the term abilities. As it turns out, the definitions given to skills and knowledge, taken together, are not that different from the definition of abilities. Thus, the term abilities is redundant with knowledge and skills. Abilities, for example, are defined as “general capacities related to performing a set of tasks that are developed over time as a result of heredity and experience.”

Skills are defined as “general capacities to perform a set of tasks developed as a result of training and experience.”

The only difference seems to be whether heredity is involved. The existing scientific evidence suggests that skills are influenced by heredity as well as by experience. Some authors make a distinction by categorizing skills as being psychomotor (behavioral) in nature, whereas abilities are categorized as cognitive. In this case, abilities do not differ from how knowledge is defined. The most commonly accepted definition of knowledge covers both the facts that people learn and the strategies that they learn for using those facts. These are cognitive in nature. Although some would argue that abilities are still distinguishable from knowledge and skills, we believe the distinction to be of minimal value. On the other hand, attitudes are relatively easy to distinguish from knowledge or skills. In addition, it is scientifically well established that attitudes influence behavior, and they are learned.

Thus, to our way of thinking, attitudes must be part of any holistic attempt to describe learning/training outcomes.

In this book, the acronym

KSAs

refers to the learning outcomes,

knowledge

, skills,and

attitudes

. These three outcomes of learning are depicted in

Figure 1-5

. The ways in which the three types of learning occur are interrelated but quite different. We will discuss these in depth in
Chapter 3
. The definitions for the three types of learning outcomes are as follows.

KNOWLEDGE

Knowledge is an organized body of facts, principles, procedures, and information acquired over time.

Thus, learning refers to:
25

· • the information we acquire and place into memory (declarative);

· • how information is organized for use, into what we already know (procedural); and

· • our understanding of how, when, and why information is used and is useful (strategic).

Declarative knowledge

is a person’s store of factual information about a subject. Facts are verifiable blocks of information such as the legal requirements for hiring, safety rules, and the like. Evidence of factual learning exists when the learner can recall or recognize specific blocks of information.

FIGURE 1-5 Learning Outcomes

At a higher level is the person’s understanding about how and when to apply the facts that have been learned. This is referred to as

procedural knowledge

. It assumes some degree of factual knowledge, because some information must be known about an object or activity before rules for its use can be developed. For example, one could not know when to apply the steps in an employment interviewing process (procedural knowledge) if one does not know the steps (declarative knowledge). Procedural knowledge allows trainees to understand the underlying rationale and relationships surrounding potential courses of action so they can apply their factual knowledge appropriately.

The highest level of knowledge is

strategic knowledge

. This is used for planning, monitoring, and revising goal-directed activity. It requires acquisition of the two lower levels of knowledge (facts and procedures). Strategic knowledge consists of a person’s awareness of what he knows and the internal rules he has learned for accessing the relevant facts and procedures to be applied toward achieving some goal. When this type of knowledge is the focus of training or education, it is often called a “learning how to learn” program. For example, Bill has the task of ensuring that the hiring process for his company is both legal and effective at identifying the best candidate for the job. He would have to review and evaluate the various employment procedures to determine which, if applied correctly, would result in the selection of the best candidate and would fit within the law. He would have to have previously acquired procedural and declarative knowledge related to employment law and to effective hiring procedures. He would be using his strategic knowledge to access and evaluate the procedural and declarative knowledge to achieve his goal of a legal and effective hiring process.

SKILLS

Knowledge is a prerequisite for learning skills. A person must know “what” to do and “when” to do it. However, a gap separates knowing those things from actually being able to “do” them. A skill is a proficiency at being able to do something rather than just knowing how to do it. By skills, we mean the capacities needed to perform a set of tasks. These capacities are developed as a result of training and experience.

A person’s skill level is demonstrated by how well she is able to carry out specific actions, such as operating a piece of equipment, communicating effectively, or implementing a business strategy.

There are two levels of skill acquisition:

compilation

(lower level) and

automaticity

(higher level). These reflect differences in the degree to which a skill has become routine or automatic. When a person is learning a particular skill or has only recently learned it, he is in the compilation stage. Here he needs to think about what he is doing while performing the skill. After a person has mastered the skill and used it often, she has reached the automaticity stage. Here the person is able to perform the skill without really thinking about what she is doing. In fact, thinking about it may actually slow her down. Learning how to play tennis is a good example of the different stages of skill development. When you are first learning to play, you must constantly think about each aspect of hitting the ball, such as where to stand on the court, and so on. Gradually, changes in how you grip the racket and your movement on the court become automatic, and thinking about them actually might reduce your effectiveness. One of the values of “practicing” as a learning technique is that through practice the behavior becomes more automatic.

ATTITUDES

Attitudes are employee beliefs and opinions that support or inhibit behavior.

In a training context, you are concerned about employees’ attitudes in relation to their learning the training material and their job performance. The beliefs and opinions the person holds about objects or events (such as management, union, empowerment, and training) create positive or negative feelings about those objects and events. Thus, changing a person’s beliefs or opinions can change the desirability of the object or event. For example, if an employee has positive feelings about a supervisor, those positive feelings are likely to become associated with the employee’s job. If the employee learns from a coworker that the supervisor said negative things about her, job satisfaction is likely to be reduced, even though nothing about the job itself actually changed. What changed is the employee’s belief about the supervisor’s opinion of her.

Attitudes are important to training because they affect motivation.

Motivation

is reflected in the goals people choose to pursue and the effort they use in achieving those goals. Goals and effort are influenced by how a person feels about things related to the goal (i.e., attitudes). Because a person’s attitude influences behavior, attitudes that motivate employees to perform or learn more effectively need to be addressed through training. Do you think Domtar employees immediately embraced the new way of doing business? Were they eager to get involved in making the company more profitable before the training and other changes were implemented? It’s highly unlikely. That is why it is important to address attitudes as well as skills in a training program.

Consider the situation Lockheed Corporation faced about a decade ago. Concerned about the security of their products and product development processes, Lockheed realized that it needed either to significantly increase the current security force (which was costly) or include security in the job descriptions of all employees. Lockheed chose the latter approach, implementing security awareness training and annual security refresher training. The sessions were designed to change employees’ attitudes about their jobs. Employees saw workplace security as part of their individual responsibility rather than the responsibility of only the security department. Five years after the program started, the number of reports of “suspicious incidents” increased by 700 percent.

Training in Action 1-3

illustrates the importance of examining not only knowledge and skills, but also attitudes when designing training programs.

Competencies

competency

is a set of KSAs that enables a person to be successful at a number of similar tasks. In the broadest sense, a job is broken down into a set of tasks, and the competencies required to perform the job are determined through an analysis of the tasks. A competency is more than just KSAs; it is the ability to integrate and use the KSAs to perform a task successfully. A carpenter, for example, has knowledge about different types of wood, tools and their uses, and types of finishes that can be applied to wood. This knowledge alone will not make that person a good carpenter. The carpenter also might possess a set of skills such as cutting, shaping, joining, and finishing. These skills alone will not make a good carpenter. The carpenter might love working with wood, place a high value on quality, and find great satisfaction working on the details of planning a project. These factors alone will not make a good carpenter. It is the combination of these KSAs and others such as hand–eye coordination, visual acuity, patience, and judgment that allow the carpenter to become proficient. To be successful at carpentry, or at any other occupation, a person must acquire multiple competencies. A trainer can identify the key KSAs that make a master performer successful at a given job and then group these KSAs into appropriate clusters. This provides a broad set of competencies required for the job. Linking these competencies to a set of behaviors that allow trainers to “know it when they see it” provides a valuable tool for hiring, training, and determining pay rates for the job. We spend a great deal of time discussing KSAs because they are the foundation of competencies. Competencies are useful for understanding how the KSAs combine to influence job performance. The KSAs determine what types of training will improve competencies and, thus, lead to improved job performance.

1-3 Training in Action Training Needs in the Student Registration Office

The offices of the president and provost at a large university were receiving many complaints about the registration office being unresponsive to student problems during registration for classes. The director of registration felt that, because of the high turnover in customer service representatives (CSRs) who handled student problems, most CSRs did not know the proper procedure. The director wanted to initiate training in registration procedures immediately and called in a consultant to help develop and conduct the training.

After listening to the director’s description of what was wanted, the consultant said, “You’re probably right. Of course, we could conduct a training needs analysis to clarify the exact nature of the performance problem.” The director was concerned about the time required for a needs analysis and wanted to get training started right away. However, in agreeing that the needs analysis would determine specific problem areas, the director said, “Okay, do the analysis, but let’s get started on training right away. I want them to know exactly what they are supposed to do.”

The needs analysis revealed the steps and procedures that an effective CSR was required to complete in dealing with an unhappy customer. For example, one of the first steps for the CSR was to identify and clarify the customer’s problem and to acknowledge the feelings the customer was displaying (e.g., anger or frustration) in a friendly and empathetic manner. Once these feelings had been acknowledged, the CSR was to determine the exact nature of the customer’s problem through nonevaluative questioning (i.e., determining the facts without placing blame for outcomes).

Interviews with the CSRs established that they all knew the correct procedure and most could quote it word for word. However, observation of the CSRs at work showed marked differences in how the procedure was carried out. Further analysis of each CSR’s skills in performing these tasks revealed that the primary causes of unsatisfactory performance were low skill levels and inappropriate attitudes. Even though nearly everyone “knew” what to do, some were not good at doing it. Others did not believe that it was important to follow every step. One CSR said, “Hey, if they get their problem solved, what do they care if I acknowledged their feelings?”

Certainly training was required in this case, but not the “knowledge” training the registration director thought was necessary. For those CSRs who lacked the behavioral skill to carry out the procedures, demonstrations and practice sessions with immediate feedback were provided. For those CSRs who had the skill but did not understand the importance of all the procedures, training sessions were conducted in which the CSRs reevaluated their attitudes through various educational and experiential activities.

Training, Development, and Education

The terms training, development, and education are used in different ways by various authors. Here, the terms training and development refer to distinct, but related, aspects of learning. Training is a set of activities, whereas development is the desired outcome of those activities.

Training

is the systematic process of providing an opportunity to learn KSAs for current or future jobs;
development
refers to the learning of KSAs. In other words, training provides the opportunity for learning, and development is the result of learning. “Training departments” are now called Human Resource Development departments, and “management training” is called management development. These changes in terminology reflect the change from a focus on the process (training) to a focus on the outcome (development).

Education

is typically differentiated from training and development by the types of KSAs developed, which are more general in nature. While training is typically focused on job-specific KSAs, education focuses on more general KSAs related, but not specifically tailored, to a person’s career or job.

FOCUS ON SMALL BUSINESS

Most business texts, especially those covering human resource management (HRM), focus on medium- to large-sized businesses for a number of reasons, including the following:

· • Research typically requires a larger sample size.

· • Larger firms have the budgets to support research.

· • Policies and procedures are more formalized, thus easier to track.

· • Techniques described in HR texts usually require a formal HR function containing multiple areas of specialization, such as compensation, HRD, selection, and so on.

When small businesses are overlooked, a major component of the economic engine that runs North America is ignored. Small- to medium-sized business firms account for more than 60 percent of the private sector’s contribution to the economy. Most of the workforce is employed at companies employing fewer than 100 people. Almost all businesses (98 percent) employ fewer than 100 employees, and 93 percent employ fewer than 20. No size criterion is universally accepted in the literature for categorizing a business as large or small. We generally use the term

small business

to refer to organizations with fewer than 100 employees, but on occasion, we use examples with about 150 employees. Larger companies that employ between 150 and 500 people are usually considered to be medium-sized.

The model of the training process that we present is applicable to both large and small businesses, but the ways in which it is implemented can differ dramatically with the size of the company. One difference is the number of employees that need to be trained. Because larger companies train greater numbers of employees, they must use a more systematic and controlled method of determining what training needs exist. In smaller companies, the owner or president can have a close working knowledge of each employee and his training needs. Another difference is in developing training programs. The smaller business can easily determine what types of training are more or less important to the company’s objectives and can design training accordingly. In larger companies, again, a more systematic and formal approach is needed because the firm’s strategies and objectives are more complex. In larger companies, economies of scale can be obtained if common training needs across the workforce are identified, thus reducing the per-person cost of training. However, a more rigorous approach to identifying needs is required because more employees are involved.

Another difference between large and small companies is that small companies can use less costly and formalized methods for evaluating training because the results are more easily observed. Throughout the following chapters, where applicable, we will have a “Focus on Small Business” section. Here, we will identify strategies and practices that might be more appropriate for the smaller business. Where research results are applicable, we highlight their implications. When research is not available, we offer logic and applied examples.

Summary

Training was described in terms of an open system in which it receives inputs from other parts of the organization and the external environment. That input is transformed by processes in effective training units into output that meets the organization’s needs. Effective training occurs as a set of phases. In each phase, input is acquired, a set of processes are engaged, and output needed for subsequent phases is produced. The training process model provides a visual understanding of how the phases relate to each other. Although the model shows the phases occurring as sequential steps (needs analysis, design, development, implementation, and evaluation), in fact these phases occur in a dynamic
fashion with feedback from one phase leading to the next phase and recycling through some aspects of the previous phase.

Training faces increasing demands to demonstrate results in terms of return on investment. With these demands come increased opportunities for the training function to influence the direction and operations of the company. In higher-performing organizations, training activities are aligned with the organization’s strategies. The challenge for training units is to align its resources with activities that provide the best match with strategic objectives.

Changing demographics, steadily increasing market competitiveness, high demand for and short supply of knowledge workers, and customer demands for high-quality products and services all challenge companies and their training departments. Companies are becoming more concerned with creating their own talent, as significant losses to the workforce will occur from retirements over the next ten years. Successful companies build their training units to serve as a continuous improvement system and problem-solving tool. Evidence is accumulating that those companies that spend more on training are achieving better financial results. Improved operating methods (such as ISO and increased employee competencies are also resulting in declining union membership. This trend places the leadership of unions in the dilemma of demanding increased training for their membership to ensure job security, while at the same time recognizing that higher-skilled employees allow the company to do more with fewer people.

The legal environment places requirements on the training system in terms of providing mandatory training and ensuring equitable treatment of employees. Training units also have responsibilities for making sure that training is safe for trainees and that the training is consistent with protecting the safety of those with whom trainees come into contact after training. The increased use of outside training vendors requires due diligence to prevent copyright violations.

In large organizations, the training unit is divided into specializations. The most typical entry point into a training career is in a large company as a specialist in one part of the training process (e.g., needs assessment, instructional design). From there, the progression is much like any other functional area with rotation through the different specializations before moving into a managerial position. In smaller organizations, a few people will handle all training responsibilities, while in very small businesses, all HR functions are usually divided among the few people in management-level positions.

Important concepts and terms in the field of training were defined and discussed, including competencies, learning, knowledge, skills, and attitudes. The rationale for substituting attitudes for the “abilities” concept was provided. Though differing opinions exist in the field of training about what constitutes training versus development and education, training in this text will be considered to be the experiences provided to people that enable them to learn job-related KSAs. Education will be considered to be the experiences that enable people to learn more general KSAs that are related to, but not specifically tailored to, a person’s job. Development will be considered to be the learning that occurs as a result of training or education.

Key Terms

· • Actual organizational performance (AOP)

· • ADDIE

· • Analysis phase

· • Attitudes

· • Automaticity

· • Competency

· • Compilation

· • Declarative knowledge

· • Design phase

· • Development

· • Development phase

· • Education

· • Evaluation phase

· • Expected organizational performance (EOP)

· • Implementation phase

· • Instructional Strategy

· • International Organization for Standardization (ISO)

· • Knowledge

· • Knowledge, skills, and attitudes (KSAs)

· • Learning

· • Motivation

· • Open systems model

· • Organizational performance gap (OPD)

· • Outcome evaluation

· • Procedural knowledge

· • Process evaluation

· • Skills

· • Small business

· • Strategic knowledge

· • Training

· • Training needs analysis (TNA)

· • Training objectives

· • Triggering event

Case Questions

How did Domtar’s strategies align with its mission? Explain your answer.

Given the difficulty of organizational change, what factors contributed to the success at Domtar? How did Domtar’s management at all levels contribute to reducing resistance to change? What else might they have done?

What were the major HRD challenges associated with Domtar’s acquisitions and joint partnerships? How were these challenges addressed, and what were the risks associated with these approaches?

Take the critical facts in the Domtar case and place them into the appropriate phases of the training model presented in the chapter. Begin with the triggering event and provide a rationale for why each fact belongs in the phase in which you have placed it.

Exercises

Review the material in

Training in Action 1-3

. Assume that you were hired to develop a training program for these CSRs. Write down what you believe are the four most important KSAs your training must address and your reasoning for selecting these. If done as a group exercise, allow each member of the group to share the KSAs she identified and her reasoning. Then reach a group consensus as to the four most important KSAs and your rationale for including each KSA. Each group will then report to the rest of the class.

In small groups, discuss the training responsibilities of supervisors and managers who are not part of the HRD department. Prepare a list of what those responsibilities might be and a rationale for your choices.

Identify two organizations with different environments and core technologies. Describe what these differences are. Indicate how the HRD strategies of these companies might be similar or different. Provide a rationale for your conclusions based on concepts in the chapter.

Conduct an interview with a small business owner or manager. Get a good understanding of how the company approaches training. What differences do you see between how this company approaches training and what was described in this chapter? What are the reasons for this difference?

Questions for Review

Describe the relationship between the HR and the HRD functions in a large organization. How might a small organization handle the responsibilities of these two areas?

Consider the following problem-solving model. On the basis of the discussion in this chapter, describe how the training process model is or is not consistent with this model.

Problem-Solving Process

· •Define and understand the problem.

· •Determine the cause of the problem.

· •Identify potential solutions to the problem.

· •Select the solution that provides the most benefits for the least cost.

· •Develop an action plan for putting the solution in place.

· •Implement the solution.

· •Evaluate and, if necessary, modify the solution.

What are the significant legal issues that the training unit must take into consideration when conducting training activities? Describe how these issues might create challenges for HRD.

Describe ways in which training units can go about meeting the challenges they face, which were described in this chapter. Provide a rationale for your answers.

Define and provide an example that was not used in the text for each of the following:

· a.Each of the three types of knowledge

· b.Each of the two levels of skills

· c.An attitude

Web Research

Each year a number of companies are identified as the “Best Companies to Work For.” Conduct a Web search to find a company that has recently made the list. See if there is information about the company’s training. Conduct a second search to find any articles that have been written about this company’s training. Write a one-page report summarizing your findings. Include a separate page with your references.

Two Aligning Training with Strategy

Learning Objectives

After reading this chapter, you should be able to:

· ■ Describe the strategic planning process, its components, and their relationships.

· ■ Describe how the external environment influences strategic choices.

· ■ Identify the major factors influencing the alignment of internal strategies with external strategies.

· ■ Distinguish between an organization’s external and internal strategies, describe their relationship and the value of each.

· ■ Describe the benefits of including a human resource development (HRD) perspective in strategy development.

· ■ Describe the differences, similarities, and relationships among human resource (HR) and HRD strategies.

· ■ Describe the process for determining the training requirements of the strategic plan.

· ■ Describe the relationship between HRD and the other HR functions.

· ■ Describe the role of HR in outsourcing of training.

· ■ Describe the field of organizational development (OD) and its relationship to training activities, including the value of cross training between the two.

· ■ Identify possible HRD strategic alternatives and situations in which they might be appropriate.

CASE HERSHEY ALIGNS TRAINING WITH STRATEGY

Hershey Foods is the leading North American manufacturer of chocolate-related grocery products and exports those products to over 90 countries. Hershey sells its products to distributors (such as large grocery and drug store chains, small retailers, wholesalers, and brokers) who then sell these products to their customers. Hershey’s success depends on those retailers doing a good job of promoting Hershey products in their stores. As a part of its marketing strategy, Hershey has a variety of promotional programs for its distributors that are used to stimulate sales at various times during the year. One part of this strategy was a practice known as “trade funding,” which has the manufacturer reinvest some of its profits back into joint promotional programs with its distributors. For example, Hershey might provide financial support to a grocery chain to create displays promoting Mother’s Day specials or to promote “three for the price of two” specials. Hershey’s trade funding was often done on a promotion-by-promotion basis with each customer. Both Hershey and its customers sometimes felt that these types of promotional strategies were not effective enough. Furthermore Hershey’s executives felt that a better approach to allocating these funds would maximize mutual benefits. In addition, there wasn’t an effective-enough connection between a customer’s sales of Hershey products and how much funding they received. Negotiations over these promotional investments would also include agreements on other aspects of the customer’s relationship with Hershey, such as pricing, shelf space/location, placement of product, creation and use of promotional displays in stores, and joint promotion plans (for example, coop advertising), and these needed to be more effectively negotiated into the overall strategy for executing sales with each customer.

At the beginning of

002, believing that its current approach to allocating trade funding was not the most effective method for maximizing return on investment (ROI) and customer satisfaction, Hershey’s senior executives decided that significant changes were needed in its strategy. This was at a time when Hershey’s first-quarter financial numbers were down; they were in the middle of management reorganization; the union workers in the largest factory were on strike; and the sale of the company was being quietly explored.

Using information from a customer satisfaction survey along with their belief that a better trade funding method was possible, senior management came up with a new strategy with the following key elements:

· • Hershey and each customer would develop an annual promotional plan for which Hershey would allocate funds.

· • The annual plan would include a negotiated agreement on issues such as commitment to sales targets, pricing, shelf space, and other marketing issues outside of “special” promotional events.

· • The amount of funding customers would receive would be based on their past sales record and ability to execute the agreed-upon annual plan.

The new strategy was called “Blue Chip.” Successful implementation of the new strategy would require salespeople to change the way they interacted with customers. Some new task requirements would be

· • gaining access to key managers (sometimes different from their day to day buyers) and explaining to them the new trade funding approach;

· • getting the customer to share sales data and information about future plans that would be needed to help convince them of the advantages of the new Blue Chip approach;

· • negotiating a new and different pay for performance approach to receiving trade funding

· • motivating customers to engage in a new annual (rather than “promotion by promotion”) planning process;

· • gaining compliance to annual promotion plans after they’ve been negotiated; and

· • negotiating during the annual promotion period when mutual goals were not achieved, or when changes to the annual plans were needed

To accomplish these tasks the salespeople would require new KSAs. Some of these included

· • knowledge of the new program,

· • knowledge of all the factors that would be discussed in future agreements with retailers, and

· • negotiation skills to deal with the more complex agreements they would be required to execute with retailers.

The knowledge required would be provided through meetings, management communications, and manuals; however, to effectively implement the strategy, the salespeople would need to be adept at negotiating these new long-term deals. For the negotiation skills necessary to implement the strategy, Hershey went to an outside vendor, BayGroup International. BayGroup International developed an experiential negotiations workshop designed to give the salespeople the skills necessary to make Blue Chip a success, and give their managers the skills needed to coach their teams for optimal performance back on the job after formal training ended.

The Blue Chip strategy was introduced and the related training all took place at the May 2002 Sales Summit. The training focus was to provide the entire sales force with the KSAs needed to implement the strategy. Implementation of a strategy such as this is complex and difficult. Most companies would put the implementation (in this case the training) of a new strategy on hold until they had a clearer picture of how everything would “shake out,” given the labor strife and possible sale of the company noted earlier. What made Hershey decide differently? Hershey needed to put both its employees and customers on notice that they were changing how they did business. As Bernie Banas, VP of sales at the time, said, “We were going through a transition. . . . It is critical to both Hershey and our customers that we execute the transition flawlessly.” By combining the introduction of the strategy and the training required to implement it, Hershey showed that it was serious about the strategy. This wasn’t just training focused on skill gaps; it was training that connected directly to Hershey’s business goals and strategy.

So what did the training focus on? First, pre-training executive communication (reinforced at the start of each workshop) put the need for strategy change into a context that all the sales force could understand, and then provided an overview of how the Blue Chip strategy would address their needs. This was followed by BayGroup International’s negotiation training that was to provide salespeople with the skills and confidence to successfully implement the new strategy. This training used exercises based on typical challenging negotiation situations the sales team would encounter when they went into the field to deploy it.

Discussions of Hershey’s strategic business needs included the following:

· • The need for a change in strategy to improve results for both Hershey and its customers

· • The need for a shift in the selling process from a relationship-based one to a more data-driven one

· • The need for a new pay-for-performance–based approach for working with customers

· • The need to handle increased sophistication of customer buyers in terms of purchasing and negotiating knowledge and skill

· • The need to include all sources of value and negotiating leverage in discussions with customers

The Blue Chip strategy was then described in terms of (1) its benefits to customers, (2) its ability to motivate customers to plan better and to incorporate all aspects of product promotion within the plan, and (

) Hershey’s ability to gain compliance to the annual plans. The training was kicked off by the senior executives, who directly connected the training objectives to the business needs. These training objectives were based on what was going to be needed in terms of KSAs to effectively implement this new strategy. In other words, a future-oriented performance gap (need for effective negotiation skills) was evident based on the current salespeople’s KSAs. They would need to be adept at negotiating in order to implement the new strategic plan effectively. This made the negotiating training highly relevant and central to the success of the strategic change. The content of this training was based on the technical aspects of the Blue Chip program and its deployment through effective negotiation skills, tools, and sales management processes. The negotiation skills helped the sales force effectively balance Hershey’s interests with the maintenance of a collaborative relationship with the customer. All the training was focused on the practical application of the new KSAs. Experiential and discovery learning techniques were used

to deliver this training, which was particularly important to help the seasoned Hershey’s sales team see the weaknesses of their current negotiation approaches (built up over many years) and highlight the need for personal skill development.

The new strategy proved very successful for Hershey, as its financial numbers have improved and so have its surveys of customer satisfaction. Share price has improved as well. In May of 2002, Hershey was trading at $3

a share. In May of 2010, it was trading at $47. The new strategy would not have been successful had the sales force not implemented it correctly. The training provided at the summit, as well as the follow-up training and coaching of the sales teams was crucial to the strategies’ successful implementation. But just as critical were the changes to the internal reinforcement systems at Hershey that supported the changes required of the sales force. Hershey continued to build on its successes by implemented follow-up training in subsequent years, as well as consulting from BayGroup International experts for specific sales teams to help them execute their strategic account strategies.

As a side note, Hershey has an interesting training philosophy. They believe that visible short-term victories lead to credibility and future funding for long-term training and development projects. One rule of thumb is that every year’s training budget should include at least one key strategic initiative that is “close to return on investment (ROI).” Clearly the Blue Chip initiative met this criterion.

OVERVIEW

As indicated in

Chapter 1

, aligning training activities with the goals and strategy of the organization has been the top priority of HR and HRD leaders for many years. The Hershey Foods case exemplifies this process. Note how it was done. First, the specific strategic plan is analyzed and it is determined whether any new job requirements are needed. In this case some new tasks related to being able to convince customers of the value of the new Blue Chip strategy were identified. Once the tasks are identified, the KSAs necessary to complete these tasks are identified. Then training needs to be developed, or purchased, to provide these KSAs. In the Hershey case, the training was purchased from a well-known and well-regarded consulting firm.

Hershey realized that when you tie your training to specific strategic initiatives, it ensures that training dollars are put to the best use. This chapter provides a general explanation of business strategy and ways to make sure that training is aligned with that strategy. To better understand how to align training with strategy, it is first necessary to understand the strategic planning process.

STRATEGIC PLANNING

Formalized

strategic planning

is a process used to determine how best to pursue the organization’s mission while meeting the demands of the environment in the near (e.g., next year or two) and long term (e.g., next five to ten years). A

proactive strategy

focuses on the longer term, and its process is more formalized, typically involving sophisticated analytical and decision-making tools. This is the process Hershey used. Its purpose is to build a good fit between the organization and its future environment. However, strategy can also develop in a more reactive fashion, responding to short-term business conditions. In a

reactive strategy

less formal analysis and planning occur and more attention is focused on the immediate future. Many suggest that both reactive and proactive strategies are necessary for an organization to be effective.

The proactive process uses a best guess about what the future will bring, whereas the reactive process addresses how operations will confront what exists now and in the next year or two. A strategic plan that positions the firm for long-term expectations but is modified by the firm’s experience as it moves forward is preferable to either having a rigidly held long-term plan or reacting only to short-term experience.

FIGURE 2-1 Linkage Between Strategy, Tactics and Objectives

To be effective, strategic planning should occur throughout the organization, with each higher level of the organization providing direction to the lower levels. Once a strategic plan has been developed, organizational units develop or are given objectives by higher-level units that, when combined, will implement the strategy. The units develop their own strategies and tactics to achieve the organizational strategies. Individuals within the unit are given or develop objectives that will help achieve the unit’s objectives. Thus, from the HR unit’s perspective, the

organizational strategy

provides the direction for HR’s strategic objectives. HR develops supporting tactics that provide the HR staff with a set of objectives to achieve (see

Figure 2-1

). In this way, plans for implementing the organization’s strategy are developed and coordinated throughout the organization.

So imagine you are the vice president of HR at Domtar (the case from
Chapter 1
). You have your objectives from the strategic plan. What is the next step? Well you need to meet with the various HR units and provide them with objectives that will help the overall strategic plan come to fruition. The unit responsible for compensation will need to consider implementation of an incentive compensation system tied to the new strategic focus. To implement an effective incentive system requires an effective performance review and feedback process. But recall that such a system would also be required to attain one of the goals of the strategic plan; improving employee performance. Can you think of anything else? What about the organizational development unit? Implementation of Kaizen would be high on their list of objectives. What are the chances that all these HR projects would be approved and funded? Since they were all tied to the implementation of the strategic plan, all were funded.

Given all you now know, what will be required from the training department? A new incentive system will require some level of training for managers expected to implement such a program. Furthermore, suppose that the new performance appraisal system was focused on objective setting (i.e., Management by Objectives—MBO). This would require training in how to develop objectives with subordinates as well as effective feedback skills for the management meetings with subordinates. The new strategic focus espoused by Raymond Royer would require getting all managers on board with a solid understanding of this new focus through some level of training. Also the employee orientation program would have to be modified to reflect this new focus.

These are some of the ways in which organizational training is a key to implementing the strategic plan. What about the formation of Domtar’s strategic plan? Should the HRD unit have had any input on the front end? As you might have noted, the success of the strategy depended heavily on the competencies of the workforce. Without knowing the current capabilities of these individuals, Domtar does not know whether it has the capacity to successfully implement the strategy. The same can be said of Hershey’s strategic plan. Without Hershey having a workforce with the right competencies, the strategic plan would not get off the ground. HRD can and should be involved with strategic planning at the following three levels: organizational strategy,

HR strategy

(tactics), and

HRD strategy

(more tactics). We will review the factors that go into developing a strategic plan before covering these areas. Our goal here is to provide you with the basics needed to understand strategy development, so we will not cover the area in depth. For the sake of brevity and general understanding, we have simplified many of the concepts and principles.

Organizational Mission

Strategies are created to achieve the organization’s mission. A mission statement articulates why the organization exists. The mission is the focal point for strategy development because it outlines what the strategy is designed to achieve. Here are examples of relatively short and clear mission statements from two different types of organizations.

· MISSION OF OZONE HOUSE (A SOCIAL SERVICE AGENCY)

Ozone House is a community-based, not-for-profit agency that seeks to help youth lead safe, healthy, and productive lives through intensive prevention and intervention strategies. Since 1969, Ozone House has actively developed unique, high-quality housing and support programs and services that provide support, intervention, training, and assistance to runaway, homeless, and high-risk youth and their families. Through these support services, we help youth develop essential life skills, improve their relationships, and enhance their self-image so that they may realize their full potential for growth and happiness.

· MISSION OF HERMAN MILLER

Herman Miller, Inc., is a leading global provider of office furniture and services that create great places to live, learn, work, and heal.

These statements, though different, show many similarities. A good mission statement is a fairly general description of what the organization seeks to accomplish. It describes the products or services the organization provides, to whom it provides them, and what it wishes to accomplish.

Strategic

Choices

Strategies reflect choices that the organization makes about how to pursue its mission. An organization must choose from among several often contradictory strategies. The strategic choices a company makes have significant implications for where HRD should focus its resources. To effectively align the unit’s activities with the strategies, a manager will need to understand the factors that have led the organization to its strategic choices. The literature dealing with strategy contains a great many categorizations and terms that refer to different types and levels of strategy. For simplicity, we choose the term “competitive strategy.”

Competitive strategy

focuses on positioning the company’s products or services in the marketplace. This important strategy encompasses the internal and external choices the company makes to improve or retain its competitive position.

Two types of competitive strategy are market leader and cost leader. Firms that choose the

market leader

strategy are also referred to as prospectors

and innovators.

Their strategy is to find and exploit new product and market opportunities. Success depends on their capacity to survey a wide range of environmental conditions, trends, and events and to move quickly into windows of opportunity. Market leaders typically use multiple technologies capable of being used in many different ways.

Companies that adopt the

cost leader

strategy, also referred to as the defender strategy,

represent the opposite end of the continuum. This strategy’s main goal is to be the low-cost provider in the industry. Success depends on pricing competitiveness and having a product that is acceptable to (but not necessarily the best in) the market. Success is achieved by producing a standardized product or service efficiently, using economies of scale low-cost labor, and introducing innovative production methods.

Most organizations with multiple products or services will have different strategies for each product or service. Additionally, there are many ways to pursue a single strategy. For

example, one way to pursue a cost leader strategy is to aggressively pursue competing bids from as many suppliers as possible, then accept the lowest bids from as many suppliers as are needed to meet requirements. A different tactic is to develop long-term relationships with a few suppliers with capacity to meet your requirements, guaranteeing sole supplier status in return for meeting a specified price target. For the HRD unit looking for outside training, this might mean choosing between having a large number of external training contractors or a single contractor who guarantees a low price. Both tactics can reduce the cost of needed goods and services, but they result in different effects on the purchasing activities of the organization and on supplier relationships. Among the feasible alternatives, the company seeks to choose the one that will best achieve the mission. Which will be “best” depends on how the organization addresses the strategic contingencies described in the following sections.

EXTERNAL ENVIRONMENT

An organization’s external environment consists of elements outside the organization that influence the organization’s ability to achieve its mission, such as competitors, the economy, societal norms and values, laws and regulations, raw materials, suppliers, and technological innovation. Each organization must determine the threats and opportunities that exist in its environment and address those that are critical in the strategy. What kinds of environmental factors might be important in the Hershey Foods case? In addition to identifying the critical threats and opportunities, the organization must assess how stable these will be in the future.

Environmental uncertainty

is determined by two factors: complexity and stability.

Environmental complexity

refers to the number of factors in the environment and the degree to which they are interrelated.

Environmental stability

is the rate at which key factors in the environment change—the more rapid the change, the more unstable the environment. When the environment is more complex and unstable, it is more uncertain. When it is simpler and more stable, it is more certain.

Figure 2-2

depicts this relationship.

In more uncertain environments, the organization must be flexible and adaptable if it is to respond effectively. A market leader strategy is consistent with this situation. More certain environments reward “getting it right and sticking to it.” A more standardized operating system can minimize costs and maximize profitability, a situation consistent with the cost leader strategy. Uncertain environments generally favor strategies using more decentralized decision making, whereas external environments that are certain usually find centralized decision making more effective. Given two similar organizations, the one choosing the market leader strategy will, by definition, compete in a more uncertain environment. The cost leader competes best in established and more stable markets. This environment may be more hostile, but it will experience a slower rate of change.

9

Internal Alignment with Strategy

FIGURE 2-2 Factors Influencing Environmental Uncertainty

Once a company has chosen a competitive (external) strategy, it needs to align its internal environment with that strategy. It needs an

internal strategy

(such as becoming more flexible) that provides direction for internal systems. For example, in the Hershey Foods case, Blue Chip was the external strategy. Internally, this meant that salespeople would be required to negotiate effectively with their customers and that trade funding allocations would be based on new criteria. Thus, some of the internal changes required were the development of negotiating skills for the sales force (training needs), a reward system that acted to reinforce the appropriate behavior of the sales force, and the decision-making system for allocating the trade funding dollars (nontraining needs). Two key factors in the internal strategy are the organization’s core technology (how the principal products or services are created) and its structure (e.g., division of labor, policies, and procedures). Since the Hershey case didn’t require changes in the product, but rather in the behavior of employees, it was only the structure that needed to be changed to align with the new strategy.

Figure 2-3

represents the relationships among environment, strategy, structure, and technology.

10

As the figure indicates, strategy is the process of making internal adjustments to accommodate the demands of the external environment while remaining true to the mission. Note, however, that the arrow between strategy and environment shows influence in both directions, reflecting the fact that the choice of competitive strategy may change the environment in which the firm operates.

FIGURE 2-3 Relationships among Mission, Strategy, Technology and Structure

TECHNOLOGY

Technology is how the work is done in the organization. Each unit in the organization uses technology to accomplish its tasks.

Core technology

refers to the main activities associated with producing the organization’s principal products and services. Technology can be categorized in a number of ways.

11

Taking some liberties with these approaches, we use a simple continuum of “routine” to “nonroutine” technologies. At one end, the

routine technology

label is applied to tasks with outcomes that are highly predictable, demonstrate few problems, and use well-structured and well-defined solutions when problems do occur. High-volume assembly lines, such as in a garment factory or some automobile plants, are examples of routine technology. Such operations consist of highly specialized tasks and well-defined rules for coordinating activities. Decisions are usually top–down and highly formalized, leaving little discretion to the line employee. Routine technology is most often seen in the cost leader strategy. Even though the initial infrastructure required to put this technology in place can be expensive, its efficiency in high-volume production provides low production cost per unit.

A task using

nonroutine technology

is characterized by results that are difficult to predict, because problems occur unexpectedly, and solutions to these problems are not readily available and need to be developed on a case-by-case basis. With this type of technology, management needs to provide lower-level managers and line employees with more decision-making authority to meet the challenges encountered. This responsibility, of course, means that the firm needs employees with a higher level of KSAs. This technology also requires greater task interdependence, which increases the need for coordination and integration. Managers and workers need decision-making authority within their own areas, but their activities must also be coordinated with the activities of others. Thus, employees must be given clear goals and parameters for their work outcomes but also be allowed to determine the best way to meet them. This type of technology is more typical of market leader strategies in which the development and production of new products is key. The cost of the nonroutine technology might be high, but new products can command high prices in the marketplace.

STRUCTURAL CHOICES

The internal strategy should also address the ability of the organization’s structure to carry out the competitive strategy.

Organizational structure

refers to how a firm is organized (how labor is divided) in addition to the rules, policies, and procedures used for making decisions and coordinating its various activities. The organization’s structure defines how the internal operations interact with the external environment. To be most effective, the organization’s structure should funnel environmental input to those units best able to take advantage of opportunities and avoid threats. At the same time, it must facilitate the core technology. Although there are many structural components, we will examine only these three: organizational design, decision autonomy, and division of labor.

Organizational Design

The number and formality of rules, policies, and procedures created to direct employee behavior is the essence of

organizational design

. An organization’s design can lie somewhere on a continuum ranging from mechanistic to organic.

12

A highly

mechanistic design

reflects an organization with highly defined tasks, rigid and detailed procedures, high reliance on authority, and vertical communication channels. A highly

organic design

reflects an organization that has flexibility in its rules and procedures, loosely defined tasks, high reliance on expertise, and horizontal communication channels. Few organizations operate on the extremes of this continuum; most lean more toward one end or the other.

The organic design places more emphasis on KSAs, whereas the mechanistic focuses more on technical and financial systems and resources. In the mechanistic design, employees’ technical and interpersonal skills and behaviors are prescribed. In the organic design, these skills and behaviors are permitted to evolve (within broad parameters) to supplement and complement the unit’s technology. As you might suspect, the organic design is most appropriate for nonroutine technologies, whereas the mechanistic design is more appropriate for routine technologies.

13

Decision Autonomy

Decision autonomy

is the amount of authority given to employees in deciding how to complete a task, and the degree to which they are able to influence goals and strategies for their work unit.

14

Individual or small-group decision autonomy is a function of whether decisions are centralized or decentralized. Cost efficiencies are associated with more centralization, whereas flexibility/adaptability is associated with decentralization.

15

Thus, centralized structures are more appropriate for cost leader strategies and decentralized structures for market leaders.

Division of Labor

The way in which the work of the organization is divided among the units and organized is called

division of labor

. One way in which labor is divided is between line (those working directly with the core technology) and staff (everyone else); another is between management and labor. Some organizations divide their tasks by products, some by customers, and others by geography. Some divide work into functional areas, while others organize work around the processes in their core technology. Even though each of these divisions is important, our focus is on the degree to which duties and responsibilities within the organization are specialized. We place organizations on a continuum from narrowly defined (specialized) to generally defined (nonspecialized) duties and responsibilities. The more specialized the duties and responsibilities, the more centralized the decision making and the more mechanistic the organization. This results from the need to closely oversee and coordinate the activities of employees whose scope of responsibility is fairly narrow. In organizations with duties and responsibilities that are nonspecialized, a more organic and decentralized structure is appropriate. This allows employees to coordinate their activities less formally and provides more flexibility and adaptability for the organization. Again, you can see the close relationship between an organization’s core technology and division of labor.

Aligning HR and HRD with Strategy

The HR function must support and enhance the organization’s corporate strategy. This is accomplished by making sure that the various components in the HR system—such as staffing, HR planning, performance appraisal, compensation, health and safety, employee and union relations, and, of course, training—are aligned with the strategic plan. Each of these systems has a direct impact on the organization’s effectiveness. Integrated under the HR umbrella, each can enhance the organization’s ability to mobilize and motivate the employees to carry out the competitive strategy.

Why should companies invest in developing a strategic HR management capability? Two reasons. First, as Kristi Yowell, the former Training and Development Manager of Towson University says, “I always ensured at least 75 percent of all training had a strategic connection. Why? To ensure funding.” Second, evidence indicates that firms that do so will significantly increase their market value.

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Data collected from more than 2,400 firms show that when HR systems achieve operational excellence and are aligned with the firm’s strategic goals, the market value of the firm increases by about 20 percent. So investing in HR excellence and bringing HR systems into alignment with business strategies provides a clear competitive advantage.

HR should contribute to the development of the organization’s competitive strategy and of course support those strategies once they are adopted. Decisions about competitive strategy need to be reflected in HR strategy, and vice versa. For example, if the company’s operations are labor intensive and a strong union consistently demands high wages and restrictive work rules, it would be foolish to adopt a cost leader strategy without addressing these issues. Similarly, once the company makes the decision to adopt a cost leader strategy, HR must develop its own strategies for supporting cost leadership. Assume that a cost leader strategy requires a change in production technology that adds more automated equipment. This change would eliminate many labor-intensive jobs and add some technical jobs, thus providing a net labor saving. Such a change could be successful only if HR can fill the new technical positions with qualified people. Other HR factors would also need to be considered, such as the effect on labor relations and the financial costs associated with eliminating the old and staffing the new jobs. The HR department’s input into the strategy formulation process would be to assess the HR issues critical to the strategic alternatives. Failure to address the HR side of the strategy could lead to the purchase and installation of a new technology that, among other things, is too costly to staff, creates labor conflict, produces conflicts in the existing culture, or requires lengthy training, thus delaying the implementation of the technology. What were the critical HR issues at Hershey Foods and Domtar?

We are not suggesting that HR issues should be the only, or the most important, influence on the strategic direction taken by an organization; however, they should be part of the equation. The relative importance of strategic variables such as technology, financial assets, product mix, and HR varies from one context to the next. Likewise, the importance of HRD issues to competitive strategy depends on how central employee competencies are related to successful implementation.

Figure 2-4

shows how HR and HRD are related to the organization’s business strategy.

Training in Action 2-1

describes the experience of Hewlett-Packard Canada in strategy reformulation. As illustrated in this example, the external strategy must be supported by internal strategies that bring the structure and core technology into proper alignment. HR and HRD are typically key players in the development of these internal strategies.

HRD is a part of the HR unit and contributes to the development of new strategy by providing an assessment of employee strengths and weaknesses relating to the competitive strategy being developed. Unfortunately, many organizations do not think of HRD in this strategic sense. Business strategies are often formulated with little consideration of employee capabilities, and it is only after implementation problems surface that HRD considerations arise. These problems often result in costly delays in implementing the strategy, and in some cases, even doom the strategy to failure. If the competitive strategy requires increasing the competencies of employees, the various methods of approaching this task would need to be examined. As a part of this, HRD would make an estimate of the time and resources required for employees to be ready to implement the strategy. This allows the strategic planning group to determine the feasibility and cost/benefit of the strategy.

FIGURE 2-4 Strategy Development at Different Levels

2-1 Training in Action Back from the Brink17

In the early 1980s, Hewlett-Packard (HP) Canada was considered to be a slow-moving, inefficient company compared with its new competitors in the computer equipment business. Although it had state-of-the-art printers and other computer-related equipment, it was slow to get these products to the market, and its prices were comparatively high. Business results were poor and projected to worsen. Furthermore, a recession was in full swing. How did it manage to turn that around to become a market leader? A rethinking of the competitive strategy was necessary.

Top management

performed the normal strategic planning activities, but it also formed teams to target companies in need of computer equipment and to determine what HP Canada needed to do to win their business. After analyzing their environment and internal strengths and weaknesses, the HP strategic planning team adopted a strategy combining elements of both quality and cost leadership.

To address the internal weaknesses related to this strategy, HP Canada cut staff and streamlined operations. The sales force, for example, had been organized into separate groups specializing in one or a few products. Under the new structure, the groups were merged into a sales force organized around customers but familiar with all products. HP Canada also relied on developing economies of scale in the production of its printers and pricing them competitively rather than taking large profit margins on their popular models. This strategy of getting a smaller unit profit from a larger volume of units, combined with improvements in product quality, vaulted HP Canada back into a market leadership position. Profits increased in spite of a continued Canadian recession. By the late 1980s, HP Canada positioned itself to be one of the toughest competitors in a competitive industry.

You might think that hiring from outside the organization to improve the competency base of the organization wouldn’t involve HRD much. In this approach, competencies are imported through recruitment and hiring. Even here, however, HRD needs to be involved in orientation and any other new employee training. If current employees are to be terminated or reassigned, HRD is likely to be involved in outplacement or training for the new job.

In the Domtar case, it became clear that no one had the knowledge and skills to implement a Kaizen approach to quality management. Domtar brought in an expert from outside to oversee the implementation process, but he would not be able to train the workforce by himself. The company wanted to improve customer service skills throughout the organization. It also needed to instill the Domtar values in the new employees it had inherited from mergers and acquisitions. Clearly, HRD needed to be a part of these strategic discussions.

Of course, the HRD unit’s primary responsibility is to align itself with and support the organization’s strategies. It does this by developing training that focuses on critical competencies that are needed to meet strategic performance objectives and delivering that training to the right people. HRD can better align itself with the organization’s strategy by maintaining close connections to the product development area. Every business, whether it delivers goods or services, develops and delivers a product. New products are often a part of new strategy and require training for one or more of the following: the sales force, customers, and production employees. The earlier the training unit is able to understand the training needs relating to the new product, the better able it will be to meet those needs.

The HRD unit also plays a key role in identifying and assisting in the removal of barriers to desired performance. This last role is addressed in more depth in the next section.

OD, STRATEGY, AND TRAINING

The very best outcome that training, by itself, can achieve is the increase in trainee capabilities, that is, the trainee’s ability to perform. The value of this comes from the transformation of this capability into improved job performance. Getting improved performance from improved capability is a performance management challenge. The HRD unit is focused on achieving the “capability,” and

organizational development (OD)

is focused on the management of performance. Thus, the two should go hand in hand. The planning and implementation of strategy involves change—both in the way the organization interacts with its external environment and in how it manages its internal operations. OD deals with creating and implementing planned change. Thus, strategic planning and OD should go hand in hand. Unfortunately, in many organizations, these three sides of the organizational effectiveness triangle are not always aligned. In the sections that follow, we discuss what OD is and how it relates to strategic planning and training.

OD provides a research base and set of techniques related to organizational effectiveness and managing change. As the organization’s objectives and strategies change, the KSAs required of employees also change. However, it is not enough simply to provide new KSAs. The organization’s systems and procedures must change to support the use of the new KSAs if the desired change in performance is to occur. In the Hershey Foods case, what types of systems and procedures needed to change to make the new strategy successful? The reward system? The way Hershey is organized? The HRD process? The field of OD provides processes for identifying when systems and procedures need to change and how to manage the change. So let’s examine the strategic planning process and the ways that HRD and OD can support each other in the implementation of a strategic plan.

OD and Strategy

Whether an organization’s strategies are developed proactively or reactively, they require support from the internal systems. Organizational change is an inherent part of the process of developing and implementing strategy. Organizations must resolve the following three core issues in developing and implementing strategy:

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· 1.
Technical design issues.
These issues arise in relation to how the product or service will be determined, created, and delivered.

· 2.
Cultural/ideological issues.
These issues relate to the shared beliefs and values that employees need to hold for the strategy to be implemented effectively.

· 3.
Political issues.
These issues occur as a result of shifting power and resources within the organization as the strategy is pursued.

TABLE 2-1 Steps in a Generic Planned Change Model

· 1. Establish a compelling need for change.

· 2. Develop, in collaboration with the concerned parties, the goals to be achieved.

· 3. Determine what is causing the need for change.

· 4. Identify and evaluate alternative approaches for addressing the need for change.
· 5. Select an approach for addressing the need for change.
· 6. Implement the approach.

· 7. Evaluate the results.

· 8. Feedback the results to the organization.

· a. If results are favorable, go to step 9.

· b. If results are unfavorable, go back to step 4.

· 9. Internalize the change. The changes made become routine and the normal way the organization conducts its business.

These three issues are critical to the organization’s ability to achieve its objectives. In developing strategy, decisions such as what products to develop, how to manufacture them, and what marketing techniques to use will signal shifts in organizational values, power, and resources. These issues will need to be managed effectively to create support for, rather than resistance to, the strategic plan. The field of OD can help organizations manage change effectively. OD techniques provide methods for change to occur in an objective, goal-directed manner that addresses the needs of both the organization and the employees affected by the change. OD uses an open-system, planned-change process that is rooted in the behavioral sciences and aimed at enhancing organizational and employee effectiveness. A model of a generic planned-change process is provided in

Table 2-1

.

The strategic planning process, if done properly, is an OD approach to change. The first step, establishing a compelling need for change, occurs in strategic planning during the environmental scanning phase. The need for change is made apparent when the strategic planners identify the threats and opportunities in the external environment and compare that information with what the organization is currently doing. A need for change is established when a gap exists between what the organization is doing and what the external environment requires (or will require). Next, the company’s business objectives are set (step 2 in the change model). The company’s current strengths and weaknesses are analyzed to determine what internal changes are necessary (step 3). This information provides the compelling need for internal change, and internal strategic objectives are developed for these areas. The rest of the steps in the OD model concern the development of tactical activities to achieve the strategic objectives.

LEVELS OF CHANGE AND RESISTANCE

Whenever internal change is planned, the plan should address the following three levels in the organization:

· 1.
The organization itself:
The way the organization is put together (i.e., what we call structure and design) must be examined to ensure that work is allocated appropriately and organizational systems are supportive of the change. This level of analysis identifies how labor is to be divided and what rules and procedures will govern operations.

· 2.
Groups and their interrelationships:
The way work is performed in the organizational units (i.e., the sociotechnical systems) and how the outputs of the various units are integrated are the focus of this level of analysis. The issues here concern the design of jobs within units of the organization and the interrelationships of the jobs to one another.

· 3.
Individuals within groups:
The changes in performance that will be required of employees must be identified and mechanisms—facilities, machines, equipment, and KSAs—put into place to enable the desired performance to occur.

Resistance to change is a common occurrence. Without sufficient motivation to change, resistance is natural. Change requires effort, new learning, and possible shifts of resources and outcomes. Often, those satisfied with the status quo can create enough resistance to derail the change effort, even to the point that the business fails. A major factor in this resistance is the failure of the change process to address all three levels of change. For example, instituting a work-team system in the organization without addressing the performance appraisal system will naturally cause resistance to the new approach. People may ask, “Why should we work as a team if we’re getting evaluated as individuals?”

Training in Action 2-2

provides a good example of what can happen if all three levels are not addressed in the change strategy.

Achieving successful change at one level can require analysis and possibly interventions at the other levels. Consider the effect of a change in the organizational structure. Work would be allocated differently so that some units might get work they have not done before while others might have certain jobs taken away. The affected units would need to change their work processes because they would have different amounts or types of work to do. These changes would require OD interventions at the group level. Here, the OD practitioner is involved in the design or redesign of jobs and work systems and the associated interpersonal relationships. In addition, changes in how these work groups interact with others would be required because they would now be producing something different. Employee resistance to new procedures would need to be addressed as jobs are being redesigned. At the individual level, employees would also need to acquire the knowledge and skills necessary to perform their redesigned jobs.

You might think that these three levels of change are intertwined only if the change occurs at the organizational level. However, they are integrated no matter where the initial change takes place. This is why it is important to take a systems perspective. Suppose you want employees to increase their skill at integrating quality control (QC) into their production work. Of course, training at the individual level is required. But is it the only thing necessary for the change to be successful? Even if employees’ KSAs are developed, the job itself and the organizational systems must support using the KSAs. The company will need to ensure that the design of the job supports the performance desired from its employees. For example, the equipment and tools might need to be changed. Also, if employees feel that QC is just a way for management to eliminate their jobs, they might resist this intervention, and providing new KSAs will not be enough. Work group norms (i.e., attitudes) will need to be changed to be consistent with QC objectives. At the organizational level, reward and appraisal systems would need to support the desired performance outcomes and work procedures. If the focus of the appraisal system does not assess the quality of the employees’ work but only the quantity produced, employees will not be likely to sacrifice quantity for quality. The appraisal system needs to reflect the importance of quality as well as quantity. The point is that the components of the organization (structure and design, jobs and employees) are interdependent, and changes in one need to be addressed as part of the overall change effort. The training needs analysis process (

Chapter 4

) provides a model for determining not only what training is needed, but also what other changes are necessary to manage performance so that increased capabilities get transformed into increased job performance.

2-2 Training in Action Self-Managed Work Groups at an Automotive Parts Plant

A southeast Michigan automotive parts manufacturing plant was divided into three manufacturing areas (Areas A, B, and C). The Area B manager, after some initial research, decided to install self-managed work groups (SMWGs). An outside consultant was brought in by the manager to assist in the change. The following activities were carried out in the order presented:

· 1. A steering committee was formed consisting of the plant bargaining committee chairperson, and two other United Auto Workers (UAW) representatives, the area manager, the plant industrial relations manager, two area superintendents, and the consultant. This group developed and managed the change process.

· 2. An analysis of Area B employees, supervisors, and production systems was conducted to identify areas for piloting the SMWG concept. Three production processes were selected on the basis of employee and supervisor interest and on the ability of the production process to create natural groupings of employees. While the equipment in these areas would remain the same, some of the tasks, and how work was assigned to individuals, would change as a result of the team concept.

· 3. Training was provided as described here, with duration indicated in parentheses.

· a. All Area B employees received a general orientation to SMWGs. This orientation included an overview of the changes that would occur in the pilot groups, the process of determining how those changes would occur, the role of staff support functions (e.g., engineering, accounting, etc.), and a question-and-answer period. (2 hours)

· b. Supervisors and line employees in the SMWGs were provided with the following:

· • A more in-depth orientation, including the goals, roles, and expectations for the SMWGs and the salaried coordinator (formerly supervisor).

· • In addition, each SMWG developed a team mission and set team goals. (4 hours)

· • Basic team skills: interpersonal communication, interpersonal relations, conflict management, and problem solving. (16 hours)

· • Team-building training for each group consisting of both instruction and trainer-facilitated application. After each component of training (e.g., development and assignment of roles), the team would apply the concepts and principles to their team. For example, after presentation of the team procedures material, the team developed an “operating plan,” describing how work would be assigned, how team meetings would be conducted, how coordination between shifts would occur, and so on. (20 hours)

· • Training in information management, group facilitation, meeting management, and stress management to prepare supervisors for their new roles as salaried coordinators. Time was also provided for them to identify problems in carrying out their new roles and to develop potential solutions. (8 hours)

· c. Consultation for SMWGs and salaried coordinators was ongoing for a year after completion of the training.

This applied example demonstrates elements of effective change management at the group and individual levels. However, problems were encountered at the organizational level.

Group Level

All SMWGs were informed of why the change was desirable and understood what the change would mean to them personally and how Area B and the plant would benefit. Their representatives on the steering committee (UAW representatives for the line employees and management for the supervisors) ensured that all voices would be heard. Each work group helped shape the way the change was implemented in that group by developing the team mission statement, goals, operating procedures, and so on.

Individual Level

Prior to implementation, each individual could choose to remain in the work group or move to a different work group in the plant. Only a few individuals chose to leave their work groups. Extensive training provided each individual with the KSAs needed to be successful in the SMWG concept.

Organizational Level

This effort ran into problems in two areas. First, no changes were made in the performance appraisal system, so salaried coordinators were still evaluated on the criteria used for supervisors. Thus, coordinators began reverting to their old supervisory behaviors, telling SMWGs what to do rather than helping the groups learn what to do. Second, no changes were made in support systems such as engineering and accounting. Accounting would not furnish the SMWGs with cost and operating efficiency information in a form they could understand. Without this information, the SMWGs were unable to determine whether they were meeting their goals. Equally troublesome was the relationship with engineering. Engineers were used to coming into an area and telling the employees what was wrong and how to fix it. The new system required them to work with the SMWG to determine both the problem and the solution. Engineers saw this process as a waste of their time as they already knew what to do. As a consequence, engineers frequently would not show up at team meetings and would implement changes without consulting with the SMWG that was affected by the changes. Because the engineers did not report to the area manager, he had little control over how the engineers interacted with the SMWGs.

These problems could have been prevented if organizational systems had been addressed as a part of the steering committee’s change management plan. The plant manager needed to be a part of the steering committee as he was the only one with the authority to make systemwide changes.

Training and OD

Using OD’s principles-of-change management will increase the probability that your organization’s strategic plans will be effectively implemented. But training also focuses on change, so change principles also apply to training efforts. By including an analysis of organizational issues as an integral part of the training needs analysis, the organization ends up not only with programs that address the KSA needs of employees, but also with an increased awareness of what other problems (the nontraining needs) have to be solved by other means. Trainers also use organizational information to better design programs so that problems related to applying the training are addressed in the training rather than becoming surprises after training ends.

Despite the seemingly obvious advantages of collaboration between OD and training professionals, a gulf sometimes seems to separate the two. Consider the following examples:

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· • An executive complains that his training and OD people cannot seem to work together.

· • Training staff complain at length about a manager they consider unreasonable and attribute her faults to her background in OD.

· • A training staff member objects strongly when told that training needs analysis data could be used to identify performance problem solutions other than training.

Table 2-2

provides some insight as to why conflict such as in the preceding examples exists. OD practitioners are typically strategic, and executives are usually their clients. Trainers are typically tactical, and their clients are lower in the hierarchy (see

Figure 2-1

for differences between strategy and tactics). It is the nature of the OD practice to challenge assumptions underlying organizational practices. Trainers typically take organizational procedures and practices as givens, trying to make people more effective within those practices. For example, suppose that the needs analysis data show that the problems in a work unit are a result of its manager acting inconsistently and arbitrarily. OD professionals more than training professionals would be willing to be guided by the data and confront the manager. Training professionals might be willing to say that no employee training needs were identified, but they are less likely to tell the manager that his or her behavior needs to change. OD professionals, however, are much more likely to get tagged with the “analysis paralysis” label than are trainers, who are seen as “doers.” Yet as
Table 2-2
suggests, each would benefit by working closely with the other because one’s apparent weakness is the other’s strength.

TABLE 2-2 Differences Between OD Practitioners and Trainers

Issue

OD Practitioner

Trainer

Role
Strategic
Tactical

Client
Top management
Middle-to-lower-level management

Response to problems with organizational politics, structure, etc.

Challenge and Confront

Work around or within the system

Organizational perception

Overly analytical

Gets things done

WHY TRAINERS NEED OD COMPETENCIES

Trainers can benefit from using OD, if only because its planning procedures help clarify what is needed in a given organizational situation. We believe that training programs will also benefit from the application of many other OD concepts and principles. The emphasis OD places on participative approaches to problem solving suggests that training is better when trainees take an active role in selecting their training opportunities and in the training itself. When trainees are involved in the planning stages, they are less likely to demonstrate resistance. This learner-focused orientation opens communication channels and results in higher levels of motivation during the training program. A participative orientation also ties line managers directly to the training process by involving them in assessing their employees’ needs, developing the training, and developing support systems for applying the training back on the job.

In

Chapters 4

and

5

, we emphasize an open systems approach.

Chapter 4

focuses on understanding training needs in the context of organizational systems.

Chapter 5

emphasizes connections between the training program and other organizational systems. These connections help ensure transfer of the training to the job. Many trainers have told us of their frustrations when trainees were excited about what they learned, but at the conclusion of training, nothing had changed. The design chapter describes why this can happen and how to avoid this type of training disaster.

Force-field analysis

is one among a multitude of OD techniques but can serve as an example of how these techniques can be of substantial benefit to trainers. The underlying concept is that any situation can be explained by the sets of counterbalancing forces that hold it in place.

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Force refers not only to physical forces but also to psychological forces that influence individual behavior. For example, if you wanted to understand why a work group is not following the new company procedures, you might examine the forces acting within and outside the group that influence the members’ behavior. Tradition, reward systems, and group norms are forces that often exert strong pressure on group members, preventing them from trying new ways of doing things. Other forces that can influence group behavior are economic factors; individual KSAs; stereotypes of race, gender, and religion; and group conflict.

FIGURE 2-5 Force Field Assessment

To understand a particular situation, first you must identify all the factors that exert influence on that situation. Then you must determine whether each factor is exerting force toward change (drivers) or against change (restrainers). All the steps for using the force-field analysis are listed in

Figure 2-5

. The arrows show forces that are driving and restraining change. In this figure, the restraining forces are more numerous and larger than the driving forces, a combination that would create resistance to change in the people operating within the force field. The line of interaction, where these forces meet, symbolizes the current state: This line reflects the array of forces on either side, which have created the current situation you are trying to change. Thus, for change to occur, actions must be developed to shift the force fields so that the forces for change are larger than the restraining forces.

This model helps trainers understand the actions needed to overcome resistance to change. As we detail in

Chapter 3

, training is often met with resistance, as it is one of the most personal types of change. Research indicates that change occurs more smoothly and quickly if the forces that are restraining change are reduced before or at the same time as driving forces are increased. Simply increasing the driving forces (putting on more pressure) often results in escalated conflict. This conflict then becomes another force for resisting change as individuals become more defensive and positions harden.

WHY OD PROFESSIONALS NEED TRAINING COMPETENCIES

Although generally successful, OD has experienced some glaring failures, many of which could have been avoided with more attention to training principles.

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Earlier, we identified the types of training required as a prerequisite or supplement to various OD techniques. OD interventions nearly always involve groups of employees in structured activities such as planning, problem solving, and intergroup conflict management. It is naive to assume that one can bring people together to solve new problems, in new relationships, in new situations, with new processes, and without prior training. These employees need to

· • have a common KSA base in these areas,

· • understand group dynamics and be skilled at working in groups, and

· • understand and be skilled at using a common problem-solving model.

If OD practitioners are not skilled in designing and implementing training programs, they must develop collaborative relationships with trainers who are. Such collaboration provides an excellent opportunity for involving internal training resources in change efforts. It is especially helpful when an OD consultant, familiar with good training practices, is retained from outside the organization. When HRD and OD work together in a collaborative fashion, they will go a long way toward defusing any conflict between external consultants and the HR function.

If OD is to be a long-term effort, the change must be institutionalized into the way the company does business. In one study, only about one-third of the OD efforts examined lasted more than five years.

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This finding indicates that training is a critical component to institutionalizing the change. Three situations are identified as key times for training:

· 1. When the OD process is started, training is needed to provide education about the change process and to provide the necessary KSAs.

· 2. After the process has been in place for a while, some retraining or upgrading of KSAs is required to sustain the process.

· 3. As new employees enter the organization, they need an understanding of the process and the KSAs.

Although most organizations provide the initial training, few conduct follow-up training or modify their new-employee training to include the new process and the related KSAs.

PUTTING IT ALL TOGETHER

Recall from
Figure 2-1
that it is not enough for the organization to develop competitive strategies—these strategies must be followed with action. The strategies are implemented through a tactical action plan consisting of the actions required and the unit(s) responsible for those actions. The process begins with assigning objectives to the different work units of the organization. The units must then develop strategies and implementation tactics to achieve the objectives. Eventually, they are translated into individual employee objectives. The objectives for the HRD unit, as for all functional areas, must be tied directly to organizational strategies. Of course, for HRD, these will be filtered through the strategies the HR unit developed to achieve its objectives.

HRDs Relationship with Other HR Functions

The HRD function is intractably tied to the other HR functions. Recruitment and selection require an orientation and often some job training for new hires. As advancements are made in these areas, recruiters and hiring authorities will need training in the use of the new methods. Anytime a performance appraisal system is modified, an organization will need to train those who will be using and administering the system. For example, pay for performance systems require the setting of objectives jointly between managers and subordinates and then evaluating the achievement of those objectives later on. These processes require managers to have interviewing and feedback skills prior to the implementation of the system. Furthermore, any good performance appraisal system should also have a developmental component. Training needs to be available for those wishing to improve.

If there is any form of incentive pay, training in its proper use will be necessary. The health and safety unit requires HRD to supply necessary training for assuring a safe work environment. If the OD unit uses surveys to assess employee attitudes, then managers will need to be competent in feeding back results to their employees in an effective manner.

A great deal of training is often required for first-line supervisors in the most effective methods of supervision to assure a positive labor relations climate. In a unionized environment, they also may require training in effective interactions with union officials, as well as having a good understanding of the union contract and the grievance procedure. Some non-union companies also have grievance resolution systems in place. Competency in working these systems is needed.

So as you can see, training is a key aspect of most of the other HR activities. Without an effective HRD unit, much of what HR does would not be very effective.

Developing an HRD Strategy

Without a strategic plan, training is likely to be managed in a haphazard manner, its resources underutilized, and its full strategic value not realized. At the most basic level, the training function must make strategic decisions about where it will focus its resources and energies. It also depends in part on the environment in which training operates, the resources available (financial, material, and personnel), and the core competencies contained within the training function. Analysis of these areas leads to strategic decisions about the technology that should be used to develop necessary employee competencies. The organization and its HR unit form the bulk of HRD’s environment. Thus, in developing an HRD strategy, these areas must be analyzed. How to conduct this analysis, and sources from which data can be obtained, are detailed in
Chapter 4
. For now, we will provide some examples of how HR and HRD strategy might be developed based on the competitive strategy of the organization.

ORGANIZATIONAL AND HR STRATEGY

The market leader strategy depends on innovation; therefore, employee knowledge and skills are critically important. Highly skilled and knowledgeable people must be hired and developed. They need to work under a structure that allows them latitude in how they go about their work. Reward and feedback systems must focus on long-term rather than short-term performance. Some amount of failure must be expected as employees try out new ideas. The failure of an experiment can be positive if it brings the organization closer to realizing its objectives through the learning that occurs. If failure is punished, employees will be reluctant to attempt new things. Hewlett-Packard, Raytheon, and PepsiCo illustrate this philosophy by selecting highly trained and skilled employees, being committed to their long-term development, and developing systems that evaluate and reward employees for their contributions to the company’s objectives.

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HRD in the market leader organization must adopt a strategy that builds on the already high level of competency brought into the organization.

Cost leader organizations, in contrast, emphasize tight fiscal and management controls. Because their leadership position is dependent on their ability to produce high volumes at low cost, efficiency and productivity are critical. Strategies for reducing costs include reducing the number of employees, reducing wages and salaries, using part-time and contract labor, and improving work methods. Conforming to standardized procedures is emphasized in these organizations, and training helps ensure conformance. On-the-job training (OJT) techniques are used more frequently for line employees. Typically, in these organizations it is only at the middle-management levels and higher that more autonomous decision making occurs and that higher-level competencies are emphasized. In these organizations, training is more likely to be focused on management due to the high structure imposed on job tasks at lower levels.

INTEGRATING HRD AND OD ACTIVITIES

Most organizations’ competitive strategy calls for some type of performance improvement, both for the organization as a whole and for individuals. Perhaps the most effective way to ensure the seamless implementation of performance improvement plans is to integrate HRD and OD. Trainers and OD professionals have legitimate differences in the nature of the change they are responsible for, but their interests are intimately connected. Each can provide valuable service to the other. Nonetheless, as we noted, they are often at odds with each other. One reason for the division between them is that companies typically organize around their different functional activities, and OD and HRD departments are often separated.

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This separation increases the differences in perspective, role, value of service, clients, and so on. An obvious solution is to house them together in something like a performance improvement department within HR. This would be an example of a structural change to align the organization’s internal structure with its strategic direction.

Of course, this type of organizational change effort will require attention to critical change management issues. For example, such a department would need different measures of success than either currently uses. Success could be measured by contribution to business results, rather than by the number of bodies passing through training courses or the number of teams built and facilitated by OD staff. This overarching goal would require trainers to identify system deficiencies that are likely to interfere with training, and OD staff to identify KSA deficiencies that are likely to interfere with system changes.

Companies such as Universal Card Service made these changes and improved their business operations.

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They found that integrating OD and training activities requires sponsorship from the top HR and other executives. One way toward full-scale integration of these activities is to develop pilot collaborations focusing on a particular business problem. This approach allows staff from each discipline to learn more about how the other operates and where the synergy exists. In addition, the HR executive needs to encourage people in both disciplines to learn as much as possible about the other. Another process that should lead to better integration of training and OD activities is having the staff in both areas work together to identify both barriers to collaboration and ways to remove those barriers. This activity not only creates familiarity but also uses the OD principle of involving those affected by the change in the change process. By integrating the two activities, the organization also has the potential benefit of cross-functional training, increasing the KSAs of both groups. At Domtar, Claude Belley is the senior vice president of human resources and organizational development. Do you think he understands the importance of this type of integration? Might this have contributed to Domtar’s success?

SOME STRATEGIC TRAINING ALTERNATIVES

The number of possible strategic choices an HRD unit might make is far too large to cover them all. We will look at one key strategic decision: whether to outsource training, keep it in-house, or some of both. This example will show you how HRD strategy is tied to both the HR and competitive strategies of the business.

Internal Provider Strategy

Large organizations in a stable environment, where training needs do not change rapidly, often choose to do most of the training themselves. The “in-house”
strategy directs all, or nearly all, training to be developed and provided by the internal HRD unit. The types of training needs that will be addressed, the development of programs to address those needs, and the evaluation of those programs are typically determined by a centralized HRD function in consultation with the HR executive. Because it is most effective in a stable environment where training needs do not change rapidly, it is most appropriate for cost leader companies. The principal advantages of this strategy are the control over the training content, consistency in delivery across the organization, and reduced training costs. In this strategy, a single program is developed to meet a particular training need across many groups of employees. As a result, the content and delivery can be controlled for consistency across the organization. Because in-house specialists develop the content and design of the program, it is tailored to the company’s needs. Because the cost of development can be spread across a large number of employees, the cost per employee is reduced.

This strategy requires a fairly large centralized training staff. Core competencies for HRD departments using this strategy include all those necessary to identify training needs; design, develop, and conduct training programs; evaluate the programs; and manage the training processes and systems. Because of the resource requirements, typically only larger companies adopt it. This is not to say that all large companies adopt this strategy, only that they are more capable of adopting it.

A way to reduce centralization but maintain a low cost is to have training developed by the corporate HRD staff but delivered by other employees or electronically. This system places a higher reliance on train-the-trainer and self-learning methods (e.g., videos and computer-based training). In this approach, after the training programs are developed and handed off to the various business units, the training is completed by the trainee alone or facilitated by a business unit representative (e.g., supervisor or in-house technical expert). Those programs with face-to-face components will need to have facilitators go through a train-the-trainer course to familiarize themselves with the content and methods.

Suppose Hershey identified “listening skills” as a problem area for the sales force in dealing with customers. In response, HRD developed a listening skills training program and decentralized the training so it was conducted by team managers within the division. This type of training includes many experiential exercises and some behavior modeling. These managers would, therefore, need to demonstrate effective listening skills, be familiar with the exercises and skilled at facilitating them, and be skilled at providing constructive feedback. Because there are differences in managers’ training capabilities, different locations would receive different levels of training. For this reason, evaluation would become especially important. Often the strategic KSAs that training is intended to provide are subverted through modifications in the training content and design at the work unit level. One solution to this problem is to provide extensive training and develop reward systems that motivate the work unit trainer to be consistent in presenting the material and applying the methods built into the training. However, this level of monitoring can substantially reduce the cost advantage.

Outsourcing Strategy

This strategy employs outside training vendors for all, or almost all, training activities. The HRD unit’s role is to select and manage training suppliers. Suppliers may be training firms, consultants, professional seminars, college/university courses, and the like. A full commitment to this strategy would use outside vendors to conduct all aspects of the training process from the training needs analysis through evaluation.

The outsource strategy is appropriate for larger organizations whose training needs vary dramatically over short periods of time and for small businesses and organizations with a small or nonexistent training function. Large market leader firms, for example, will find many advantages in this strategy. Small businesses adopt outsourcing primarily for budgetary reasons. This strategy provides a flexible way of meeting changing and diverse training needs with professionally developed and administered programs. It also fits well with a decentralized HRD structure. A small central HRD staff is involved in the budgeting process, monitoring of training-related policies, and providing consultation and support to the various units. For example, compilation of lists of approved vendors, payment of vendors, and mandated training are decisions that might be made by the central HRD group. In a decentralized organization, the different operating units of the organization (business units, divisions, geographical units, and the like) are then free to select from the list of approved vendors and programs those best suited to their needs and within their training budget. In a more centralized structure, the HRD unit would select and manage the vendors for each location. Program selection would derive from mutual agreement between the central HRD unit and the operating unit.

The core competencies required of the HRD unit in this strategy include a thorough understanding of the training process, skills in evaluation and selection of appropriate training providers, and general management KSAs. As a large number of firms and individuals offer training services, the manager must carefully screen potential providers. Obviously, cost is one factor to consider. Typically, the low-cost providers are those who recently entered the field. However, the fact that a provider is more expensive or experienced does not mean that its quality is higher. Within your budgetary limits, the primary criterion should be the ability to provide the desired KSAs to your employees. Some key questions for making this determination are listed in

Table 2-3

. Of course, this list is not sufficient to evaluate the provider fully, but it provides a good start for making comparisons. These issues will be discussed more completely in

Chapter 8

.

Managing the training providers requires typical management competencies. The provider must be given clear direction—that is, the goals and expectations must be clearly spelled out. The various training providers and their programs need to be organized in a logical flow with minimal disruption to the activities of the company. The providers’ activities need to be monitored to ensure that they are acting to plan and that goals are met. An open communication system must be established between the training function and the training providers so that both parties can access the needed information.

Even though flexibility is a key advantage, the outsourcing strategy can also reduce costs. It can translate into substantial savings on HRD staff salaries, benefits, and taxes. The cost per training session is usually higher because the cost for training vendors is almost always higher than the comparable cost of internal training staff (even including benefits and taxes). However, the vendor is paid only for the contract period. With this strategy, no layoffs or staff relocations are required when the need for training slacks off. Also, because vendors can spread program development costs across clients, the company typically pays less for program development.

TABLE 2-3 Questions to Assess Training Provider Capabilities

What is the trainer’s background (education, experience, etc.)?

Has the trainer ever provided these particular training programs or services before?

Has the training been evaluated? If so, what levels of outcomes were evaluated, and what have been the results?

Can the trainer give you the names of people in these companies who could speak knowledgeably about the trainer’s products and services?

Can the trainer give you names of and permission to contact the following people?

· • Trainees who received the training

· • The person who was the trainer’s primary contact in the client organization

· • The person who monitored or coordinated the training

How does the trainer go about developing a program, delivering training, or providing a training service? Can the trainer provide examples or an outline of his approach or process? Will this fit your organization’s culture and budget?

If the training is already developed, can the trainer show you materials, such as handouts, exercises, and videos?

If these materials are not specific to your organization, how will the trainer alter them to make them appropriate for your situation?

To reduce costs further, a train-the-trainer approach can be used with the outsourcing strategy. In this case, a training vendor (rather than HRD staff) trains one or more employees to use the vendor-developed program. For example, it might be too costly and disruptive for a small business (of, say, 15 employees) to send all its employees to a customer service seminar and workshop. Instead, the company might send the general manager to the workshop and then to a train-the-trainer session conducted by the workshop provider. When the general manager returns to the company, she can train the rest of the employees as time allows and for little additional cost (such as paying a fee for using the materials, etc.). The general manager can also modify the training, customizing it for the specific needs of the organization.

The Mixed Strategy

Most firms use some combination of the two preceding strategies, providing some training internally and contracting some to external providers. Decision making is centralized for some training activities and decentralized for others. Different philosophies suggest where centralization should take place and what training should be developed or conducted internally. One approach is to conduct ongoing training internally and contract to external providers all new training. New training is usually required when some aspect of the environment changes. This strategy allows the firm to be adaptable to changing aspects of the environment while focusing its internal efforts on ongoing training. If uncertainty surrounds the training that is required or how quickly the need will change, this strategy puts the company in a more flexible position to respond. In addition, less of the development costs of new training are borne by the company. A negative aspect, however, is that training developed by outside vendors can be less directly relevant to the employees, and additional resources might have to be allocated to tailor the training to the organization. Also, if the training need becomes ongoing, plans should be developed to provide it internally, an action that will require agreement from the external provider. Another approach is to develop all new training internally and contract out ongoing training.

The mixed strategy reduces the size of the organization’s training staff somewhat. Typically, trainers are individual consultants who are willing to work as contract employees for the firm. This strategy ensures the fit between the training and the training needs, but the organization must shoulder all the development costs. These costs may be offset by the reduced staffing needs. A careful break-even analysis would determine whether reduced staffing would adequately compensate for increased development costs. Many companies find they do, as the use of vendors for training has been increasing. For example, General Motors doesn’t provide “Mr. Goodwrench” training, an outside vendor does. Firms such as Avaya, Cisco, Nokia, and Hewlett-Packard all have outsourced significant amounts of their training.

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The mixed strategy might be appropriate for organizations with training needs that are extremely diverse from one sector of the organization to another. MASCO Corp., a home improvement and building products company, is a good example. MASCO consists of an assortment of divisions producing different products and services. The corporation has adopted elements of both the market leader and cost leader strategies. The training needs of the different divisions are unique for the most part. It would be expensive for MASCO to hire a centralized HRD staff to handle all the training needs for its divisions. It makes more sense for the HRD function to be decentralized to the divisions. On the other hand, when MASCO was in the process of redefining its culture after a period of strong growth, the company instituted an executive development program that was centralized in its corporate headquarters. This centralized program, in which key executives and high-potential managers are given the opportunity to earn an MBA, is provided by an outside vendor (Eastern Michigan University [EMU]). The company’s HR executives and training staff worked closely with EMU to ensure that course materials met MASCO’s strategic KSA needs while reflecting the breadth and rigor of a traditional MBA program. Materials were customized to reflect problems and issues MASCO faced. It wasn’t the only training that the company centralized. As part of its strategy to realize synergies among its divisions, it instituted a training program in logistics in which the content was customized by a different outside vendor (Michigan

State University) to meet MASCO’s strategic needs. Again, sets of employees from all divisions take part in the program. Thus, MASCO’s mixed training strategy takes advantage of centralized programming for some of its strategic training while decentralizing the rest.

We have looked at just one of the myriad HR and HRD strategy implications. The most important point is for you to understand that the organization’s competitive strategy and the supporting HR strategies determine HRD’s strategic direction.

One final note. The role of HR should not end with the selection of an outside vendor. Someone should be assigned to work closely with the vendor for the following reasons. Someone inside the organization has a thorough understanding of the organizational culture and how things work. This person can be a valuable asset to the outside vendor through their knowledge of the inner workings of the organization; thus providing direction, cutting through red tape, and generally providing the vendor with insight into how best to get things done. She would be able to provide important insights into the employees to be trained and how the customized training should look. She would also be able to provide information as to the value of performance reviews in needs assessment, as well as assist in the design of such an assessment. Assisting in the development of the training objectives would assure that the training was on track. In the development of any role-plays or cases for use in the training, the HR person would be able to provide guidance to assure these exercises are relevant to the trainees. Finally, by having someone working closely with the vendor throughout the process, two outcomes are likely. First, the final product will be what was expected; no surprises. Second, working closely with the vendor at all levels of the training (needs assessment, design, development, etc.) will require a great deal of communication between the HR person and the vendor. Evidence suggests that those organizations that are communicating on an ongoing basis with their vendor typically enjoyed better results than those that do not. These organizations reported better training designs and higher overall satisfaction with their vendors than those that did not communicate in that manner.

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FOCUS ON SMALL BUSINESS

Is it necessary for small businesses to get involved in strategic planning to be successful? The answer is yes. There is evidence that those that do not do strategic planning have a higher incidence of failure than those that do.

28

Furthermore, strategic planning is positively related to small business performance.

29

In spite of this benefit, many small business owners and managers do not engage in strategic planning.

30

Some of the reasons are outlined in

Table 2-4

.

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What can be done to encourage small businesses to become more involved in such planning? First, education about the advantages of such efforts would be useful. Even large organizations use the excuse that they are too busy fighting fires to find time for planning. However, if they spent time planning, they might see fewer fires. Bringing small business owners and managers in touch with those who use strategic planning successfully in their small businesses is a good start for this education.

TABLE 2-4 Small Business Owners’ Reasons for Not Planning Strategically

Not enough time

Too busy with day-to-day operations and concern about tomorrow are the excuses for not planning for next year.

Unfamiliarity

Lack of awareness of strategic planning or failure to see its value. See it as limiting flexibility.

Lack of skills

Do not have the skills or time to learn them. Do not wish to spend money to bring in consultants.

Lack of trust

Want to keep key information confidential. Do not wish to share this information with other employees or outsiders.

TABLE 2-5 Strategy Questions for Small Business

· 1. Why are we in business?

· 2. What are the key things we are trying to achieve?

· 3. Who is our competition, and how can we beat them?

· 4. What sort of ground rules should we be following to get the job done right?

· 5. How should we organize ourselves to reach our goals and beat the competition?

· 6. How much detail do we need to provide so that everyone knows what to do? How do we make sure that everyone gets the information?

· 7. What are the few key things that will determine whether we make it? How do we address and keep track of them?

The skills issue can be addressed by using a less formal and rigorous process. Evidence indicates that small businesses that use a more informal strategic planning process can be more effective than those using more formal processes.

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Additional evidence suggests that, at the very least, a formalized process produces no better results.

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The emphasis on structured written plans in strategic planning might be dysfunctional for the small business. A less formal way to approach strategic planning for the small business is provided in

Table 2-5

. By researching and answering these questions, the small business owner will be well on the way to a strategic plan.

What about the issue of lack of trust? Research suggests that when faced with threats, small firms benefit by going outside the organization for help. Unlike large organizations, they are unlikely to have the necessary internal resources to address these threats.

34

Without a source that they trust, they simply will not obtain the necessary information or assistance. Small businesses need to seek out possible resources and establish appropriate relationships in “good times” so that they can be drawn on for help in “bad times.”

35

The small business owner can evaluate the relationship during times when threats are not creating a crisis.

Will an increase in strategic planning result in a corresponding increase in the attention that small businesses give to training? Perhaps not, but we believe that it will focus attention on the “right” training. Training is often ignored as a strategic initiative because owners and managers do not have a clear model for making decisions about whether training activities will lead to a competitive advantage.

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Involvement in strategic planning will provide such direction. As we discussed earlier, when the need for training emerges from the strategic planning process, it is clearly tied to the mission and objectives of the small business. For example, in companies that include International Organization for Standardization (ISO) certification in their strategy, training is clearly value added because certification will not be granted without it.

One final point should be made about small businesses. Because they are small, communicating a strategic direction and implementing the plan should be considerably easier than with a large firm. The evidence indicates that in implementing strategic plans, small companies needed to anticipate and prevent fewer problems than larger firms.

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Some problems still do exist, however. For example, the small business that seeks to become a preferred supplier to a company doing business must receive ISO certification. Metro Tool & Die, a small manufacturer in Ontario, for example, became ISO certified in 1999, in order to be able to supply parts to the auto industry.

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Many small companies used the strategic planning process to determine whether becoming certified is worthwhile. The planning process allows them to see how certification fits their overall competitive strategy.

Training in Action 2-3

shows how different companies used the strategic planning process to make the decision.

2-3 Training in Action Stories Along the Road to ISO39

Rivait Machine Tools, which provides electrical discharge machining of steel, employs 14 people. The president, James Rivait, made an important strategic decision to diversify into the aerospace industry. To even be considered as a supplier in this industry, a company must be ISO 9000 certified. Eighteen months later and $100,000 poorer, Rivait achieved certification.

Early in 1993, Grace Specialty Polymers set out in a new strategic direction that required ISO 9000 certification. The strategic plan set a target of achieving certification for four separate locations by the end of 1994. To accomplish this goal, an executive steering committee was assembled, consisting of the general manager and employees who reported directly to him. The committee was to provide the direction, commitment, and resources needed. Next, an ISO implementation team was set up. Department managers made up most of this cross-functional team. Although successful, the members of the team indicated the process was not easy. Their assessment was that a company must be committed to getting it done. You can’t have less than a full effort.

Reelcraft Industries embarked on an ISO certification program to improve processes. It took the company two years to achieve certification, and the paperwork it produced was awesome. The main difference is that Reelcraft now “builds quality in rather than inspects errors out.” Among the chief benefits are increased knowledge, skills, and communication.

Cavalier Tool & Manufacturing examined the ISO process and determined that it did not make strategic sense for them at that time. Sometimes a customer faces a short-run emergency and needs a “down and dirty mold.” “If we were ISO 9000 certified, we would not be allowed to take on that business. All your work must follow the ISO process, and so I would have to turn down this customer. I am not ready to do that,” President Rick Jannisse said. Furthermore, he is not disposed toward the discipline required to be ISO certified. Examining the external environment, he realizes that he may be forced to become certified eventually, but not now. At least he is aware of the implications of the decision he is making.

Summary

Training activities need to be aligned with the organization’s strategy to be effective. Part of the alignment process is the development of training unit strategies in support of the organizational strategies. So it is important for training professionals to understand the basics of the strategic planning process. Two examples of competitive strategy—market leader and cost leader—were presented to illustrate how differences in strategy influence the internal operations and lead to different training needs. The organization’s strategic choice will depend, in part, on key factors in the external environment and on the general level of environmental uncertainty. The organization’s core technology influences not only external strategy, but also the alignment of internal operations with those strategies. Organizations must develop internal strategies to align their operations with the external strategies. For example, whether a company adopts a market or a cost leader strategy will have different implications for how HR and HRD go about their business. The HR department needs to be involved in the strategic planning process to provide information about workforce readiness to implement various alternative strategies being considered. HR also provides input in relation to managing change arising from new strategic directions. From this and other information, a sound strategic choice can be made.

The choice of strategic direction will also help determine the way HRD is structured. Cost leader organizations operate in a stable environment, and more training can be centralized. Market leaders, conversely, operate in an uncertain environment, and the HRD department needs to be more decentralized. Competitive strategy will also influence the degree to which HRD will outsource training.

OD focuses on improving the effectiveness of the organization through planned change. Strategic planning and training can benefit from the concepts, principles, and techniques used in OD. While training is focused on improving employee capabilities, OD is focused on managing performance. Improved capabilities do not translate into improved performance unless the performance management system is aligned to support those capabilities. Conversely, no matter how good the performance management system, employees will not perform if they don’t have the capabilities. For this reason alone, the HRD and OD units need to work closely together. While there are differences in the focus of these two units that often create friction, their ultimate objectives are the same.

Key Terms

· • Competitive strategy

· • Core technology

· • Cost leader

· • Decision autonomy

· • Division of labor

· • Environmental complexity

· • Environmental stability

· • Environmental uncertainty

· • Force-field analysis

· • HR strategy

· • HRD strategy

· • Internal strategy

· • Market leader

· • Mechanistic design

· • Nonroutine technology

· • Organic design

· • Organizational design

· • Organizational development (OD)

· • Organizational mission

· • Organizational strategy

· • Organizational structure

· • Proactive strategy

· • Reactive strategy

· • Routine technology

· • Strategic planning

CASE ANALYSIS

CASE: STRATEGIC PLANNING AT MULTISTATE HEALTH CORPORATION

As you read this case, think about the relationship among competitive strategy and both the HR and HRD functions at Multistate Health Corporation (MHC). The case was written in 1994 and is real, but the corporation asked that its name not be used. The federal and insurance environment for health care has changed substantially since that time; however, the strategic planning issues faced by MHC remain relevant today. The information provided here reflects the organization in 1993 as it was completing its strategic planning process.

THE ORGANIZATION

MHC is a health care provider owned and operated by a religious order. MHC owns 30 hospitals and four subsidiary corporations employing more than 10,000 people. Its headquarters are in Michigan, with hospitals located in 17 states across the country. The overall organizational structure and the corporate HR structure are depicted in Exhibits

2-1

and

2-2

.

COMPETITIVE STRATEGY

EXHIBIT 2-1 MHC Organization

Corporate

HR is included as part of corporate staff, as desicribed in Exhibit 2-2.

In line with its mission, which is rooted in the tenets of the order’s religion, MHC focused on providing care to the indigent and less able members of the community. It was reasonably successful until 1989, when the health care industry began to experience considerable change in governmental regulations and insurance procedures. At the time of their strategic planning, hospitals were reimbursed on the basis of a preset, standardized price for treatment rather than the “cost-plus” method used previously. The federal and state governments were putting increasing pressure on health care institutions to reduce costs. In addition, new medical technologies and procedures being developed were expensive to acquire and implement. MHC recently acquired subsidiary corporations to develop or acquire new procedures and technologies. The subsidiaries were to work in partnership with the regions to implement new procedures and technologies.

EXHIBIT 2-2 MHC’s HR Organization

MHC has lost money every year since 1987. Currently, it is experiencing an oversupply of bed space in most of the communities with MHC hospitals. Projections indicate that the need for inpatient services will decline while the need for outpatient services will increase. Nontraditional health-related services are also projected to increase (e.g., services in which patients and their relatives are trained in self-care or care of relatives). In short, the market is becoming much more competitive while products and services are rapidly changing.

MHC just finished its corporate strategic planning process and planned to develop a two-pronged market strategy to deal with its changing business environment. One major area of focus is technology. The strategic planners departed from the previous strategy, opting to become a leader in the development of new health care technologies and procedures. They felt that the new developments would allow quicker recovery times, thus reducing the hospitals’ costs. In addition, the technology could be marketed to other health care providers, generating more revenue. The drawback was that new technologies and procedures were expensive to develop and were often subject to long waiting periods before being approved by the insurers and government agencies.

The second prong of the strategy was directed toward the hospitals and was focused on improving efficiencies in basic health care and outpatient services. This would allow them to continue to provide for the basic health care needs of the less fortunate. The substantial governmental fees, grants, and other revenues tied to this population would provide a profit only if efficiencies could be developed throughout the corporation.

IMPLEMENTATION ISSUES

Carrie Brown, hired six months earlier as corporate vice president of human resources, listened to several days of strategy discussion, without participating much. She now felt that it was time to address the HR implications of these strategies.

“While I agree that these are good strategies,” Carrie said, “I don’t know if we have the right people in the right places to carry them out. A few of our regional and divisional executives are already doing some of the things you’re talking about, but most of them have grown up in the old system and don’t know how to go about cost cutting in a way that doesn’t diminish the quality of our service. Many of our divisions are in rural areas and haven’t kept up with technology. We do have some middle-to upper-level managers who are up to date in cost cutting and technology implementation, but they are scattered throughout the organization.”

Mitchell Fields, president and chief executive officer (CEO), suggested, “Why don’t we just move those people who can implement our strategies into positions where they have the power to make it happen?”

“Unfortunately,” Carrie said, “we have no accurate data about which of our people have the capabilities. It would be a mistake to move forward unless we’re sure that we have the knowledge and skills on board to be successful. What I’ve discovered in the short time I’ve been here is that we have grown too large for our human resource information system (HRIS). We’re still doing most of the data collection on paper, and the forms used are different in each of the divisions, so we can’t consolidate information across divisions, and even if we could it would take forever to do it by hand. We have different pay scales in different divisions, and you can’t get a VP in Boston to take a CEO position in Iowa because he’d have to take a cut in pay. Basically, what I’m saying is that we don’t have a coherent HR system in place to give us the information we need to put the right people in the right places.

“Another issue is that our current structure isn’t conducive to setting up partnerships between the subsidiary corporations and the regions. The corporations developing the technology are seen as pretty distant from the regions and divisions. While the subsidiary corporations will bear the developmental or acquisition costs, they are going to want to pass those along to the regions and divisions. The divisions will then have to bear the costs of implementing the new technology and working out the bugs. Once all the kinks are worked out, the subsidiaries will be selling the technology to our competitors at lower prices (due to volume) than they charged the divisions. The corporation and subsidiaries are likely to profit from this arrangement, but the divisions are likely to show losses. As you know, our compensation of division executives is based on profitability. They are likely to resist cooperation with the subsidiaries. Our current systems don’t let all of our businesses come out winners.”

“I understand what you’re saying,” Mitchell said. “Our competitive strategy is for the big picture and the long term. If these HR issues are going to be a problem, we have to fix them right away. We are going to have to work out some way for both the subsidiaries and the divisions to come out winners in moving new medical technology forward. Assuming we are able to put our HR house in order . . . get the right systems and people in place. . . . Are there any other concerns about adopting our strategies?” Hearing no additional objections, he said, “Okay, then, let’s get to work on putting an implementation plan together, and first on the list is our HR system.”

HR FOLLOW-UP TO STRATEGIC PLANNING AT MHC

MHC determined that it needed to address the HR implications of the new climate in health care and that some type of planning system was in order, so it hired an outside consulting firm. The consultants agreed that some type of system would likely be appropriate, but they were not ready to stipulate what that system would look like. They conducted some initial diagnostic interviews, lasting one to two hours, with all of the divisional CEOs, the regional executive vice presidents (EVPs), the corporate CEO, and the corporate VPs, including the VP of HR and the VP of OD. The interview format is shown in

Exhibit 2-3

. The following information was obtained from the interviews.

The current HR activities conducted at the corporate level are as follows:

· 1. To collect and store résumé-type information for all employees. This information includes demographic data, employment history, and performance evaluations.

· 2. To select divisional CEOs, regional EVPs, corporate officers, and staff professionals, and to assist at the regional and divisional levels in the selection of management-level employees, primarily through posting the position and through word-of-mouth about who is competent and available.

· 3. To sponsor occasional management development programs at the corporate level, although no system is in place to determine whether these are perceived as valuable or necessary. Most management development is done externally with tuition reimbursement, and some is done by individual divisions.

The interviewees expressed varying degrees of dissatisfaction with the following:

· 1. No system for comparing internal candidates for positions. Performance evaluation is decentralized.

EXHIBIT 2-3Agenda and Clarification of Issues for Human Resource Planning System

· I. What is the purpose of this meeting?

To enhance and develop the objectives of the human resource planning system (HRPS).

· II. What is HRPS?

HRPS is a business planning system designed to provide quality data to enhance individual and organizational decision making in all aspects of human resource management.

· III. Why was I asked to participate in this meeting?

Because you are a key decision maker, we want to ensure that HRPS fits the needs of your organization.

· IV. What specific information should I provide?

We want your input regarding the following:

· 1. Should administrative access to the data in HRPS be local, regional, or only at the corporate level?

· 2. Who in your organization would use and benefit most from this system?

· 3. What, if any, problems are there with current information used in human resource management decisions (i.e., recruiting, training, appraising, etc.)? For example, do you lack information as to which people are capable successors for certain jobs, and do you know what recruiting sources produce the best employees?

· 4. What values of the corporation should be incorporated into HRPS? How might these values be incorporated?

· 5. As you see it, ideally, what job responsibilities will change in your organization as a result of HRPS?

· 2. No system for making known the criteria for positions. People do not respond to posted openings because rejection is a block to future promotion. Recommendation from a higher-up is known to be necessary. A related complaint was that many CEOs will not recommend their best people either because the CEOs rely on them heavily or because the bright young people might eventually be competition.

· 3. No system for evaluating the KSA required of a CEO in one part of the corporation compared with that of another. For example, the CEO in Grand Rapids has different responsibilities compared with a CEO in Detroit, but no one at the corporate level knows what the differences are.

· 4. No corporate HR philosophy or strategy guides the organization in its HR activities.

Individuals at the corporate, regional, and divisional levels reported slightly different perceptions of the priority of needs for an HRPS. See

Exhibit 2-4

.

Although monitoring equal employment and affirmative action is in the company’s mission statement, it was considered important by only one respondent. The various levels disagreed on what job classifications should be in the HRPS: Corporate and regional personnel preferred to include only executive-level personnel, and divisional personnel wanted to include data down to the first-level supervisor. As an interviewee stated, “The MHC value statement says that we respect the dignity of all individuals. To exclude people below the executive level tells them they are worth less.” On the issue of control and administration of the HRPS, corporate and regional executives preferred corporate- or regional-level administration, while divisional executives had a strong preference for direct access. Some expressed concern that corporate administration would reduce divisional autonomy in human resource decision making. The degree of centralization had been a sore point for several years. The divisions previously operated individually as profit centers, but corporate headquarters was discussing the need for a more integrated approach.

After reviewing the consultants’ report and meeting with the consultants, the executive committee (representing the three levels of management) arrived at a consensus on the following HRPS objectives:

· 1. Improve the selection/search process for filling vacant positions.

· 2. Develop a succession plan.

· 3. Forecast critical skill/knowledge and ability needs.

EXHIBIT 2-4Rank Order of Top HRPS Objectives by Organizational Level

2
4
3
5
1

1
3
4
5
2

1
5
4
3
2

Organizational Level

Improve Selection/Search Process

Develop a Succession Plan

Forecast Critical HR Skills

Develop Critical HR Skills

Create and Utilize Career Development

Corporate

Regional

Divisional

· 4. Identify critical skill/knowledge and ability deficiencies.

· 5. Identify equal employment and affirmative action concerns.

· 6. Create a career development system that reflects the

organizational mission

.

The following HR philosophy was developed and approved by the MHC board of directors:

As an employer committed to the value of human life and the dignity of each individual, we seek to foster justice, understanding, and a unity of purpose created by people and organizations working together to achieve a common goal. Therefore, we commit ourselves to the following beliefs:

· 1. People are our most important resource.

· 2. The human resource needs of the organization are best met through the development of employees to their maximum potential.

· 3. Justice in the workplace is embodied in honest, fair, and equitable employment and personnel practices with priority given to the correction of past social injustices.

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Issue	OD Practitioner	Trainer
Role	Strategic	Tactical
Client	Top management	Middle-to-lower-level management
Response to problems with organizational politics, structure, etc.	Challenge and Confront	Work around or within the system
Organizational perception	Overly analytical	Gets things done

Not enough time	Too busy with day-to-day operations and concern about tomorrow are the excuses for not planning for next year.
Unfamiliarity	Lack of awareness of strategic planning or failure to see its value. See it as limiting flexibility.
Lack of skills	Do not have the skills or time to learn them. Do not wish to spend money to bring in consultants.
Lack of trust	Want to keep key information confidential. Do not wish to share this information with other employees or outsiders.

Organizational Level	Improve Selection/Search Process	Develop a Succession Plan	Forecast Critical HR Skills	Develop Critical HR Skills	Create and Utilize Career Development
Corporate
Regional
Divisional

Human Resource- Only bid if you can meet budget

Training System and Processes

TRAINING AS AN OPEN SYSTEM

FIGURE 1-1 General Open Systems Model

FIGURE 1-2 Training as an Open System

THE TRAINING PROCESS MODEL

1-1 Training in Action Team Building Sizzles, Then Fizzles

Analysis Phase

SKILLS

ATTITUDES

Competencies

EXTERNAL ENVIRONMENT

Internal Alignment with Strategy

FIGURE 2-2 Factors Influencing Environmental Uncertainty

FIGURE 2-3 Relationships among Mission, Strategy, Technology and Structure

TECHNOLOGY

STRUCTURAL CHOICES

Organizational Design

Decision Autonomy

Division of Labor

Aligning HR and HRD with Strategy

FIGURE 2-4 Strategy Development at Different Levels

2-1 Training in Action Back from the Brink17

WHY OD PROFESSIONALS NEED TRAINING COMPETENCIES

PUTTING IT ALL TOGETHER

HRDs Relationship with Other HR Functions

Developing an HRD Strategy

ORGANIZATIONAL AND HR STRATEGY

INTEGRATING HRD AND OD ACTIVITIES

SOME STRATEGIC TRAINING ALTERNATIVES

Internal Provider Strategy

Outsourcing Strategy

TABLE 2-3 Questions to Assess Training Provider Capabilities

The Mixed Strategy

FOCUS ON SMALL BUSINESS

TABLE 2-4 Small Business Owners’ Reasons for Not Planning Strategically

TABLE 2-5 Strategy Questions for Small Business

2-3 Training in Action Stories Along the Road to ISO39

Summary

Key Terms

CASE ANALYSIS

EXHIBIT 2-1 MHC Organization

EXHIBIT 2-2 MHC’s HR Organization

HR FOLLOW-UP TO STRATEGIC PLANNING AT MHC

EXHIBIT 2-3Agenda and Clarification of Issues for Human Resource Planning System

EXHIBIT 2-4Rank Order of Top HRPS Objectives by Organizational Level

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