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Chapter 02 – Strategic Training

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CHAPTER 2

STRATEGIC TRAINING

The chapter on “Strategic Training” begins with a discussion of how training is evolving. It

discusses the strategic training and development process, organizational characteristics that

influence training, various models for organizing the training department, how to brand training

and market it to the rest of the company, and the advantages and disadvantages of outsourcing

training. The chapter highlights the importance of linking the training function to the company’s

strategy. It first presents an overview of the work roles of employees, managers, and executives.

The later part of this chapter talks about organizational characteristics, such as the extent to

which the company has global operations and business conditions that influence training

practices are discussed. Other human resource functions are highlighted and their relationships to

training described. Trends in the changing role of training are identified as well as the training

implications of various business strategies, from concentration to divestment. Finally, the chapter

presents major models of training function organization, which including the corporate university

model, and the business-embedded model. This is critical information to the reader, for if

training is not tied to business strategy, then its existence may be tenuous and, perhaps, not

justifiable.

Objectives

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

2. Describe the strategic training and development process.

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

4. Explain the training needs created by concentration, internal growth, external growth, and

disinvestment business strategies.

5. Discuss the advantages and disadvantages of centralizing the training function.

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

7. Discuss the strengths of the business-embedded model for organizing the training function.

8. Explain a corporate university and its benefits.

I. Introduction

A. A business strategy is a plan that integrates the company’s goals, policies, and actions.

The goals are what the company hopes to achieve in the medium and long-term future.

There are both direct and indirect links between training and business strategy and goals.

Training that helps employees develop the skills needed to perform their jobs directly

affects the business.

B. Business strategy has a major impact on the type and amount of training that occurs and

whether resources (money, trainers’ time, and program development) should be devoted

to training. Also, strategy influences the type, level, and mix of skills needed in the

company.

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The Evolution of Training: From an Event to Learning

A. As more companies recognize the importance of learning for meeting business challenges

and providing a competitive advantage, the role of training in companies is changing.

B. Learning occurs through training, development, informal learning, and knowledge

management.

C. After attending the training program, employees are responsible for using what they

learned in training on the job.

D. The role of training as a program or event will continue into the future because

employees will always need to be taught specific knowledge and skills.

E. However, the training events or programs will need to be more closely tied to

performance improvement and business needs to receive support from top management.

II. Learning as a Strategic Focus

The Learning Organization

A. Learning organization is a company that has an enhanced capacity to learn, adapt, and

change. In a learning organization, training is seen as one part of a system designed to

create human capital.

B. To learn from failure and success requires providing employees with the opportunity to

experiment with products and services similar to what happens in engineering and

scientific research. Some of the conditions necessary for successful experimentation

include that it involves genuine uncertainty, the cost of failure is small and contained, the

risks of failure are understood and eliminated if possible, there is an understanding that

failure still provides important information, success is defined, and the opportunity is

significant.

C. A single training event or program is not likely to give a company a competitive

advantage because explicit knowledge is well-known and programs designed to teach it

can be easily developed and imitated.

Implications of Learning for Human Capital Development

A. There is recognition that to be effective, learning has to be related to helping employees’

performance improve and the company achieve its business goals.

B. Unpredictability in the business environment in which companies operate will continue to

be the norm.

C. Because tacit knowledge is difficult to acquire in training programs, companies need to

support informal learning that occurs through mentoring, chat rooms, and job

experiences.

D. Learning has to be supported not only with physical and technical resources but also

psychologically.

E. Managers need to understand employees’ interests and career goals to help them find

suitable development activities that will prepare them to be successful in other positions

in the company or deal with expansion of their current job.

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III. The Strategic Training and Development Process

The strategic training and development process model shows that the process begins with

identifying the business strategy.

Business Strategy Formulation and Identification

A. Five major components are part of developing a new business strategy.

B. The mission is the company’s reason for existing, the vision is the picture of the future

that the company wants to achieve, and values are what the company stands for.

C. The second component is the company goals, which are what the company hopes to

achieve in the medium to long term; they reflect how the mission will be carried out.

Training can contribute to a number of different business goals.

D. The third and fourth components, external and internal analysis, are combined to form

what is called a SWOT analysis. A SWOT analysis consists of an internal analysis of

strengths and weaknesses and an external analysis of opportunities and threats to the

company that currently exist or are anticipated.

E. The last component is strategic choice. After completing the SWOT analysis, the

company (usually managers involved in strategic planning) has all the information it

needs to consider how to compete, generate several alternative business strategies and

make a strategic choice.

Identify Strategic Training and Development Initiatives That Support the Strategy

A. Strategic training and development initiatives are learning-related actions that a company

should take to help it achieve its business strategy.

B. The initiatives are based on the business environment, an understanding of the company’s

goals and resources, and insight regarding potential training and development options.

Provide Training and Development Activities Linked to Strategic Training and Development

Initiatives

Translating these strategic training and development initiatives into concrete training and

development activities is the next step of the process. These activities include:

A. Developing initiatives related to use of new technology in training

B. Increasing access to training programs for certain groups of employees

C. Reducing development time, and developing new or expanded course offerings

Identify and Collect Metrics to Show Training Success

Determining whether training and development activities actually contribute to the business

goals involves identifying and collecting outcome measures, or metrics.

A. Metrics that are typically used to identify training success or effectiveness include: (1)

trainees’ satisfaction with the training program; (2) whether the trainees’ knowledge,

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skill, ability, or attitudes changed as a result of program participation; and (3) whether the

program resulted in business-related outcomes for the company.

B. The business-related outcomes should be directly linked to the business strategy and

goals. Some companies use the balanced scorecard as a process to evaluate all aspects of

the business.

C. The balanced scorecard is a means of performance measurement that provides managers

with a chance to look at the overall company performance or the performance of

departments or functions (such as training) from the perspective of internal and external

customers, employees, and shareholders. The balanced scorecard considers four different

perspectives:

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

2. Internal (processes that influence customer satisfaction).

3. Innovation and learning (operating efficiency, employee satisfaction, continuous

improvement).

4. Financial (profitability, growth, shareholder value).

Examples of the Strategic Training and Development Process

Consider the strategic training and development process in Barilla Group and Mike’s

Carwash.

IV. Organizational Characteristics that Influence Training

Roles of Employees and Managers

A. Traditionally, employees’ roles were to perform their jobs according to the managers’

directions. They were not involved in improving the quality of the products or services.

B. However, with the emphasis on the creation of intellectual capital and the movement

toward high-performance work systems using teams, employees today are performing

many roles that were reserved for management.

C. Team members may receive training in skills needed for all positions on the team (cross

training). To encourage cross training, companies may adopt skill-based pay systems.

D. Traditional work settings required managers to do the following:

1. Manage individual performance: including assessing performance and providing

feedback, and changing performance as needed.

2. Develop employees: providing them with the necessary skills and knowledge to

perform.

3. Plan and allocate resources: translating strategic plans into tasks and deadlines.

4. Coordinate interdependent groups: enabling groups to understand each other’s goals

and needs.

5. Manage group performance: defining areas of responsibility, and meeting with other

managers to coordinate groups and facilitate change as needed.

6. Facilitating decision-making process: Facilitate team and individual decision making.

Encourage the use of effective decision-making processes (dealing with conflict,

statistical process control).

7. Creating and maintaining trust: Ensure that each team member is responsible for his

or her workload and customers. Treat all team members with respect. Listen and

respond honestly to team ideas.

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8. Represent one’s work unit: Develop relationships with other managers, communicate

the needs of the work group to other units, and provide information on work group

status to other groups.

Top Management Support

A. The CEO, the top manager in the company, plays a key role in determining the

importance of training and learning in the company.

B. CEO’s are also responsible for: a clear direction for learning (vision), encouragement,

resources, and commitment for strategic learning (sponsor), taking an active role in

governing learning, including reviewing goals and objectives and providing insight on

how to measure training effectiveness (governor), developing new learning programs for

the company, teaching programs or providing resources online (faculty), serving as a role

model for the entire company and demonstrating willingness to constantly learn (learner),

and promoting the company’s commitment to learning (marketing agent).

Integration of Business Units

The degree of integration of business units affects the approach to training. In a highly

integrated business, employees need to understand all parts of the company and training must

address those needs.

Global Presence

For companies with global operations, training is needed to prepare employees for overseas

assignments. These companies must decide if training will be coordinated through a central

U.S. facility or through satellite installations located near overseas facilities.

Business Conditions

A. When unemployment is low and/or businesses are growing at a high rate and need more

employees, companies often find it difficult to attract new employees, find employees

with necessary skills, and retain current employees.

B. For companies in unstable business environments, characterized by mergers, acquisitions

or disinvestments of businesses, training may be left up to managers or it becomes very

short-term oriented.

C. For companies experiencing growth, training may be a greater demand among employees

who want to qualify themselves for lateral job moves and promotions.

D. When companies are trying to revitalize and redirect, earnings may be flat and there are

likely fewer incentives for participation in training programs. When companies downsize,

training must focus on ensuring continued employability.

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Other HRM Practices

A. Human Resource management practices (HRM) consists of management activities related

to the investment (time, effort and money) in staffing, performance management,

training, and compensation and benefits. Companies that adopt state-of-the-art HRM

practices that contribute to business strategy tend to demonstrate higher level of

performance than firms that do not. Training, along with selection, performance

management, and compensation influence attraction motivation and retention of human

capital.

B. Staffing Strategy refers to the company’s philosophy regarding where to find employees,

how to select them, and the desired mix of employee skills and statuses (temporary,

fulltime, etc.).

1. Companies vary on such issues as the extent to which they rely on the internal labor

market (i.e., current human resources) versus the external labor market (i.e., job

applicants from outside the firm).

2. Two aspects of a company’s staffing strategy influence training:

a. The criteria used to make promotion and assignment decisions (assignment flow).

b. The places where the company prefers to obtain the human resources to fill open

positions (supply flow).

C. Companies also vary on the extent to which they make promotion and job assignment

decisions on individual performance versus group or unit performance.

Strategic Value of Jobs and Employee Uniqueness

A. Uniqueness refers to the extent to which employees are rare and specialized and not

highly available in the labor market.

B. Strategic value refers to employee potential to improve company effectiveness and

efficiency.

C. Human Resource Planning includes identifying, analyzing, forecasting, and planning

changes needed in the human resources to help the company be competitive. It allows for

the anticipation for human resource movement due to turnover, transfers, retirements,

promotions. Training can prepare employees for increased responsibilities, job changes,

etc.

Extent of Unionization

The presence of a union leads to joint union-management programs for preparing employees

for new jobs, ensuring that all parties buy into the necessary training or changes.

Staff involvement in Training and Development

A. Managers need to be involved so that training stays related to business needs and training

transfer can be supported.

B. Managers become more involved in the training process if they are rewarded for

participating.

C. An emerging trend is to have employees initiate the training process, bearing the

responsibility for planning their own development with the company supporting their

initiatives.

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D. Training and development planning involve identifying needs, choosing the expected

outcome, identifying the actions that should be taken, deciding how progress toward goal

attainment will be measured, and creating a timetable for improvement.

E. To identify strengths and weaknesses and training needs, employees need to analyze what

they want to do, what they can do, how others perceive them, and what others expect of

them.

V. Training Needs in Different Strategies

A. A concentration strategy focuses on increasing market share, reducing costs, or creating

and maintaining a market niche for products and services.

B. An internal growth strategy focuses on new market and product development, innovation,

and joint ventures.

C. An external growth strategy focuses on acquiring vendors and suppliers or buying

businesses to enable the company to expand into new markets.

D. A disinvestment strategy focuses on liquidation and divestiture of businesses.

VI. Models of Organizing the Training Department

A. Structure of the training department has important implications for how the training

function contributes to the business strategy.

B. Centralized training means that training and development programs, resources, and

professionals are primarily housed in one location and decisions about training

investment, programs, and delivery methods are made from that department. Advantages

of centralized training function are:

1. It helps drive stronger alignment with business strategy.

2. It allows development of a common set of metrics or scorecards to measure and

report rates of quality and delivery.

3. It helps to streamline processes, and gives the company a cost advantage in

purchasing training from vendors and consultants because of the number of trainees

who will be involved.

4. It helps companies better integrate programs for developing leaders and managing

talent with training and learning during times of change.

The Corporate University Model (Corporate Training Universities)

The Corporate University Model has a client group which includes not only employees and

managers, but also stakeholders outside the company, including community colleges,

universities, high schools, and grade schools.

Creating a Corporate University

A. Senior managers form a governing body.

B. A vision statement needs to be developed.

C. A company has to decide how to fund the university.

D. The degree to which all training needs to be centralized needs to be determined.

E. The needs of the university customers must be identified.

F. Products and services need to be developed.

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G. Chose learning partners including: suppliers, consultants, colleges, and companies

specializing in education.

H. Develop and utilize new technologies to train employees.

I. Learning that occurs should be linked to specific performance improvement.

J. The value of the corporate university needs to be communicated to potential customers.

Business-Embedded (BE) Model

The BE Model is characterized by five competencies: strategic direction, product design,

structural versatility, product delivery, and accountability for results.

A. It views trainees, their managers, and senior level decision makers as customers of

training.

B. The most noticeable feature of a BE function is its structure. In BE training functions all

persons who are involved in the training process communicate and share resources.

C. Current Practice: Business-Embedded Model with Centralized Training

1. There is an increasing trend for the training function, especially in companies that

have separate business units, to be organized by a blend of the BE model with

centralized training that often includes a corporate university.

2. This approach allows the company to gain the benefits of centralized training but at

the same time ensure that training can provide programs, content, and delivery

methods that meet the needs of specific businesses.

Learning, Training, and Development from a Change Model Perspective

A. Change involves the adoption of a new behavior or idea by a company. There are many

reasons why companies are forced to change, including the introduction of new

technology, the need to better take advantage of employee skills and capitalize on a

diverse workforce, or the desire to enter global markets.

B. The process of change is based on the interaction among four components of the

organization: task, employees, formal organizational arrangements (structures, processes,

and systems), and informal organization (communication patterns, values, and norms).

C. The four change-related problems that need to be addressed before implementation of any

new training practice are resistance to change, loss of control, power imbalance, and task

redefinition.

1. Resistance to change refers to managers’ and employees’ unwillingness to change.

2. Control relates change to managers’ and employees’ ability to obtain and distribute

valuable resources such as data, information, or money. Changes can cause managers

and employees to have less control over resources.

3. Power refers to the ability to influence others. Managers may lose the ability to

influence employees as employees gain access to databases and other information,

thus getting more autonomy to deliver products and services.

4. Employees may be held accountable for learning in self-directed training. Web-based

training methods, such as task redefinition, create changes in managers’ and

employees’ roles and job responsibilities.

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VII. Marketing Training and Creating a Brand

A. Internal marketing involves making employees and managers excited about training and

learning.

B. It is especially important for trainers who act as internal consultants to business units.

C. For internal consultants to survive, they must generate fees for their services.

D. Successful internal marketing tactics:

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

2. Demonstrate how a training and development program can be used to solve specific

business needs.

3. Showcase an example of how training has been used within the company to solve

specific business needs.

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

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

6. Advertise on e-mail, on company Web sites, and in employee break areas.

7. Designate someone in the training function as an account representative who will

interact between the training designer or team and the business unit that is the

customer.

8. Determine what financial numbers such as return on assets, cash flow from

operations, or net profit or loss, top-level executives are concerned with and show

how training and development will help improve those numbers.

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

E. Training functions are beginning to become profit centers by selling training courses or

seats in training courses to other companies. Companies sell training services for a

number of reasons:

1. Some businesses are so good at a particular aspect of their operations that other

companies are asking for their expertise.

2. Other companies aim training at their own customers or dealers.

3. In some cases, the training department sells used seats in training programs or e-

learning courses.

VIII. Outsourcing Training

A. Outsourcing refers to the use of an outside company (an external services firm) that takes

complete responsibility and control of some training or development activities or that

takes over all or most of a company’s training including administration, design, delivery,

and development.

B. Business process outsourcing refers to the outsourcing of any business process, such as

human resource management, production, or training.

C. Why would companies outsource training?

1. Cost savings

2. Time savings that allow a company to focus on business strategy

3. Improvements in compliance and accuracy in training mandated to comply with

federal, state, or local rules

4. The lack of capability within the company to meet learning demands

5. The desire to access best training practices

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D. Reasons companies do not outsource their training:

1. The inability of outsourcing providers to meet company needs

2. Companies’ desire to maintain control over all aspects of training and development,

especially delivery and learning content

E. Any decision to outsource training is complex.

F. Training functions that do not add any value to the company are likely candidates for

outsourcing.

G. Many companies have training functions that do add value to the business but still may

not be capable of meeting all training needs.

Chapter Summary

For the training function to be effective, it must be linked to the company’s strategic plan, so an

understanding of company structure, conditions and strategy is essential. This chapter provided a

solid understanding of the work roles of employees, managers and executives. It presented

organizational characteristics that have implications for training and described how training

aligns with the other human resource functions. Attention was given to the role of training in

companies and how that role is evolving. Further, major company strategies were described, as

were the respective training implications. Descriptions of the various approaches to organizing

the training function within companies (i.e., training models) were also provided, along with a

discussion of the advantages and disadvantages of each. Finally, the importance of internal

marketing of the training function, and decisions involving outsourcing of the training function

were provided. This chapter illustrated the context within which the training function must exist

and which it must support to be effective. Without this context, the student’s knowledge of

training and development would be quite incomplete.