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Raymond A. Noe

Fifth Edition

Employee Training and Development

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Training, development, and career management are no longer in the category of “nice to do”; they are now a “must do” for companies to gain competitive advantage and meet employee expectations. The Fifth Edition of Employee Training and Development will equip students with a solid background in the fundamentals of training and development in order to meet the demands of today’s global work environment.

Employee Training and Development, 5e retains the lively writing style, inspiring examples, bal- anced approach to research and theory, and emphasis on new technology and strategic training from previous editions.

New to the Fifth Edition:

New and expanded coverage of current topics and issues, such as outsourcing training, business-embedded training functions, intangible assets and human capital, implications of the aging workforce for training and development, new technologies in training, including virtual worlds such as Second Life, and designing programs, courses, and lessons.

New chapter vignettes begin each chapter. For example, Chapter 8 (“E-learning and Use of Technology in Training”) highlights how Dunkin’ Donuts® uses a blended learning ap- proach to help franchises run a successful and profitable business.

Each chapter now includes a brief case featuring a training, development or learning issue a company is facing. The case questions ask students to consider the issue and make recommendations based on applying the chapter content.

For more information, visit Employee Training and Development, 5e online at

www.mhhe.com/etd5e

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Employee Training and Development

Fifth Edition

Raymond A. Noe The Ohio State University

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EMPLOYEE TRAINING AND DEVELOPMENT

Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2010, 2008, 2005, 2002, 1999 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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ISBN 978-0-07-353034-5 MHID 0-07-353034-4

Vice president and editor-in-chief: Brent Gordon Publisher: Paul Ducham Director of development: Ann Torbert Managing development editor: Laura Hurst Spell Editorial assistant: Jane Beck Vice president and director of marketing: Robin J. Zwettler Associate marketing manager: Jaime Halteman Vice president of editing, design and production: Sesha Bolisetty Project manager: Dana M. Pauley Senior production supervisor: Debra R. Sylvester Design coordinator: Joanne Mennemeier Executive producer, media technology: Mark Christianson Cover design: Joanne Mennemeier Typeface: 10/12 Times New Roman Compositor: Laserwords Private Limited Printer: R. R. Donnelley

Library of Congress Cataloging-in-Publication Data

Noe, Raymond A. Employee training and development / Raymond A. Noe.—5th ed. p. cm.

Includes index. ISBN-13: 978-0-07-353034-5 (alk. paper) ISBN-10: 0-07-353034-4 (alk. paper) 1. Employees—Training of. I. Title.

HF5549.5.T7N59 2010 658.3'124—dc22

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This book is dedicated to the many who have helped to train and develop me along the way, including My wife: Caroline My kids: Ray, Tim, and Melissa My parents: Raymond J. and Mildred Noe The many close friends who have touched my heart and made me laugh The teachers who have shared their wisdom The graduate students who have worked with me over the years

Raymond A. Noe

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Preface

Traditionally, training and development was not viewed as an activity that could help com- panies create “value” and successfully deal with competitive challenges. Today, that view has changed. Companies that use innovative training and development practices are likely to report better financial performance than their competitors that do not. Training and development also helps a company to meet competitive challenges. Current recessionary economic times have resulted in cuts in training and development budgets. However, com- panies need to continue to rely on efficient and effective training practices to help employ- ees strengthen or increase their skills in order to improve or make new products, generate new and innovative ideas, and provide high quality customer service. Also, development activities and career management are needed to prepare employees for managerial and leadership positions and to attract, motivate, and retain talented employees at all levels and in all jobs. Training, development, and career management are no longer in the category of “nice to do”—they are a “must do” in order for companies to gain a competitive advantage and meet employees’ expectations.

Businesses today must compete in the global marketplace, and the diversity of the work force continues to increase. As a result, companies need to train employees to work with persons from different cultures both in the United States and abroad. New technologies such as Web-based training and iPods reduce the costs associated with bringing employees to a central location for training. At the same time, the challenge is how to ensure that these training methods include the necessary conditions (practice, feedback, self-pacing, etc.) for learning to occur. Also, through the blended learning approach companies are seeking the best balance between private, self-paced, technology-based training (such as online learning), and methods that allow interpersonal interaction among trainees (such as class- room instruction or active learning).

The role of training has broadened beyond training program design. Effective instruc- tional design remains important, but training managers, human resource experts, and trainers are increasingly being asked to create systems to motivate employees to learn, cre- ate knowledge, and share that knowledge with other employees in the company. Training has moved from an emphasis on a one-time event to the creation of conditions for learning that can occur through collaboration, online learning, traditional classroom training, or a combination of methods. There is increased recognition that learning occurs outside the boundaries of a formal training course.

Also, the employee-employer relationship has changed. Due to rapidly changing busi- ness environments and competition that can quickly cause profits to shrink and skill needs to change, companies are reluctant to provide job security to employees. At the same time, as employees see downsizing take place (or experience it themselves!), they are reluctant to be fully committed to company goals and values. As a result, both employees and com- panies are concerned with developing future skills and managing careers. Companies want a work force that is motivated and productive, has up-to-date skills, and can quickly learn new skills to meet changing customer and marketplace needs. Employees want to develop skills that not only are useful for their current jobs but also are congruent with their

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Preface v

personal interests and values. Employees are interested in developing skills that can help them remain employable with either their current employer or a future one. Given the increasing time demands of work, employees are also interested in maintaining balance between work and nonwork interests.

The chapter coverage of Employee Training and Development reflects the traditional as well as the broadening role of training and development in organizations. Chapter 1 intro- duces the student to the role of training and development in companies. Chapter 2, “Strate- gic Training,” discusses how training practices and the organization of the training function can support business goals. Because companies are interested in reducing costs, the amount of resources allocated to training is likely to be determined by how much training and devel- opment activities help the company reach business goals. Topics related to designing train- ing programs are covered in Chapters 3 through 6. Chapter 3, “Needs Assessment,” discusses how to identify when training is appropriate. Chapter 4, “Learning: Theories and Program Design,” addresses the learning process and characteristics of a learning environ- ment, and it provides practical suggestions for designing training to ensure that learning occurs. Chapter 5, “Transfer of Training,” emphasizes what should be done in the design of training and the work environment to ensure that training is used on the job. Chapter 6, “Training Evaluation,” discusses how to evaluate training programs. Here the student is introduced to the concepts of identifying cost-effective training; evaluating the return on investment of training and learning; and determining if training outcomes related to learn- ing, behavior, or performance have been reached. Chapters 7 and 8 cover training methods. Chapter 7, “Traditional Training Methods,” discusses presentational methods (e.g., lecture), hands-on methods (e.g., on-the-job training, behavior modeling), and group methods (e.g., adventure learning). Chapter 8, “E-Learning and Use of Technology in Training,” introduces the student to new technologies that are increasingly being used in training. These technol- ogy-based training methods include Web-based instruction, distance learning, e-learning, iPods, simulations, virtual worlds, and blended learning. Chapters 7 and 8 both conclude by comparing training methods on the basis of costs, benefits, and learning characteristics.

Chapter 9, “Employee Development,” introduces the student to developmental methods (assessment, relationships, job experiences, and formal courses). Topics such as 360-degree feedback and mentoring are discussed. Chapter 10, “Special Issues in Training and Employee Development,” discusses cross-cultural training, diversity training, school-to-work programs, and skill-based pay. Chapters 11 and 12 deal with careers and career management. Chapter 11, “Careers and Career Management,” emphasizes the protean career and the career management process. Chapter 12, “Special Challenges in Career Management,” deals with special issues that trainers, employees, and managers face. These issues include skills obsolescence, plateau- ing, career breaks, employee orientation and socialization, work-life balance, downsizing, out- placement, and retirement. Last, Chapter 13, “The Future of Training and Development,” looks at how training and development might be different 10 or 20 years from now.

Employee Training and Development is based on my more than 20 years of teaching training and development courses to both graduate and undergraduate students. From this experience, I have realized that managers, consultants, trainers, and faculty work- ing in a variety of disciplines (including education, psychology, business, and indus- trial relations) have contributed to the research and practice of training and

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development. As a result, the book is based on research conducted in several disci- plines while offering a practical perspective. The book is appropriate for students in a number of programs. It suits both undergraduate and master’s-level training courses in a variety of disciplines.

DISTINCTIVE FEATURES This book has several distinctive features. First, my teaching experience has taught me that students become frustrated if they do not see research and theory in practice. As a result, one distinctive feature of the book is that each chapter begins with a vignette of a company prac- tice that relates to the material covered in the chapter. Many examples of company practices are provided throughout the chapters. Each chapter ends with a case and related questions that give students the opportunity to apply the chapter’s content to an actual training or development issue.

A second distinctive feature of the book is its topical coverage. The chapters included in Part 2 relate to training design (needs assessment, training methods, learning environ- ment, transfer of training, and evaluation). Instructional design is still the “meat and pota- toes” of training. Part 3 covers the more exciting part of training and development, that is, training and development methods. But as the role of managers and trainers broadens, they are increasingly involved in understanding career issues and career management. For example, managers and trainers need to be concerned with understanding generational differences in employees’ career needs, career paths, cross-cultural training, diversity, outplacement, skills obsolescence, and succession planning—topics that fall outside the realm of instructional design. These topics are covered in the chapters included in Part 4 of the book.

The book begins with a discussion of the context for training and development. Part 1 includes chapters that cover the economic and workplace factors that are influencing trends in the training profession. In addition, these chapters discuss the need for training, develop- ment, and learning to become strategic (i.e., to contribute to business strategy and organiza- tional goals). Why? In successful, effective training, all aspects of training—including training objectives, methods, evaluation, and even who conducts the training—relate to the business strategy. More and more companies are demanding that the training function and training practices support business goals; otherwise training may be outsourced or face funding cuts. Although students in business schools are exposed to strategic thinking, stu- dents in psychology and education who go on to become trainers need to understand the strategic perspective and how it relates to the organization of the training function and the type of training conducted.

Not only has technology changed the way we live and the way work is performed, but it also has influenced training practice. As a result, one chapter of the book is devoted entirely to the use of new technologies for training delivery and instruction, such as online learning, blended learning, iPods, virtual worlds, and personal data assistants (PDAs).

The book reflects the latest “hot topics” in the area of training. Some of the new topics discussed in the book are corporate universities, outsourcing training, developing and measuring human capital, learning management systems, competencies, knowledge man- agement, e-learning, the use of mobile technology (such as iPods and PDAs) and virtual worlds (such as Second Life) for training. Each chapter contains the most recent academic research findings and company practices.

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FEATURES DESIGNED TO AID LEARNING Employee Training and Development provides several features to aid learning:

1. Each chapter lists objectives that highlight what the student is expected to learn in that chapter.

2. In-text examples and chapter openers feature companies from all industries including service, manufacturing, and retail, and nonprofit organizations.

3. Discussion questions at the end of each chapter help students learn the concepts pre- sented in the chapter and understand potential applications of the material.

4. Important terms and concepts used in training and development are boldfaced in each chapter. Key terms are identified at the end of each chapter. These key terms are impor- tant to help the student understand the language of training.

5. Application assignments are useful for the students to put chapter content into practice. Most chapters include assignments that require the student to use the World Wide Web.

6. Cases at the end of each chapter and part help students apply what they have learned to training and development issues faced by actual companies.

7. Name and subject indexes at the end of the book help in finding key people and topics.

WHAT’S NEW IN THE FIFTH EDITION I want to personally thank all of you who have adopted this book! Based on the comments of the reviewers of the fourth edition and training research and practice, I have made sev- eral improvements. Some important changes in the fifth edition of Employee Training and Development stand out:

• Each chapter has been updated to include the most recent research findings and new best company practices. New examples have been added in each chapter’s text.

• All the chapter opening vignettes are new. For example, the opening vignette for Chapter 8, “E-Learning and use of Technology in Training,” highlights how Dunkin’ Donuts® is using a blended learning approach to help franchisees run a successful and profitable business.

• This edition offers new and expanded coverage of such topics as outsourcing training, business-embedded training functions, knowledge management, blended learning, learning management systems, intangible assets and human capital, implications of the aging work force for training and development, new technologies in training, (including virtual worlds such as Second Life), and how to design programs, courses and lessons.

• Each chapter ends with application assignments, including new and updated Web-based exercises. These assignments are also found on the book’s Web site.

• Each chapter concludes with a brief case that illustrates a training, development, or learning issue faced by a company. The case questions ask students to consider the issue and make recommendations based on the chapter content.

• To help students better understand the connections between topics, the book is now organized into five different parts. Part 1 focuses on the context for training and devel- opment and includes a chapter devoted to strategic training. Part 2 includes coverage related to the fundamentals of designing training programs. Chapters in Part 2 focus on

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needs assessment, learning theories and program design, transfer of training, and train- ing evaluation. Part 3 focuses on training and development methods and includes chapters devoted to traditional training methods, e-learning and the use of technology in training, employee development, and special issues in employee development, such as managing diversity, succession planning, and cross-cultural preparation. Chapters in Part 4 cover career issues and how companies manage careers as well as challenges in career management, such as dealing with work-life conflict, retirement, and socializa- tion. Finally, Part 5 provides a look at the future of training and development.

• New to this edition, BusinessWeek cases at the end of each of the five parts of the book look at training and development issues companies are facing and encourage students to critically evaluate each problem and apply what they have learned in that part of the text.

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Acknowledgments The author is only one of many important persons involved in writing a textbook. The fifth edition of this book would not have been possible without the energy and expertise of several persons. Editor Laura Spell gave me free rein to write the training book I wanted to write and provided helpful ideas and suggestions regarding how to improve the book. Jolynn Kilburg, developmental editor, and Michelle Gardner, project manager, both deserves kudos for ensuring that my ideas made sense and my writing was clear, concise and easy to understand.

I take full responsibility for any errors, omissions, or misstatements of fact in this book. However, regardless of your impression of the book, it would not have been this good had it not been for the reviewers. Special thanks to the manuscript reviewers who provided me with detailed comments that helped improve the fifth edition of the book for students and instructors. These reviewers include

Linda Matthews University of Texas Pan American

Shumon Johnson Columbia Southern University

Cindy Simerly Lakeland Community College

John Knue University of North Texas

Richard Wagner University of Wisconsin—Whitewater

Dwight Frink University of Mississippi

Raymond A. Noe

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About the Author Raymond A. Noe The Ohio State University Raymond A. Noe is the Robert and Anne Hoyt Designated Professor of Management at The Ohio State University. He has taught for more than 20 years at Big Ten universities. Before joining the faculty at Ohio State, he was a professor in the Department of Manage- ment at Michigan State University and the Industrial Relations Center of the Carlson School of Management, University of Minnesota. He received his B.S. in psychology from The Ohio State University and his M.A. and Ph.D. in psychology from Michigan State University. Professor Noe conducts research and teaches all levels of students—from undergraduates to executives—in human resource management, managerial skills, quanti- tative methods, human resource information systems, training and development, and orga- nizational behavior. He has published articles in the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Journal of Vocational Behavior, and Personnel Psychology. Professor Noe is currently on the editorial boards of several journals, including Journal of Applied Psychology, Personnel Psychology, and Journal of Organizational Behavior. Besides Employee Training and Development, he has co-authored two other textbooks: Fundamentals of Human Resource Management and Human Resource Management: Gaining a Competitive Advantage, both published with McGraw-Hill/Irwin. Professor Noe has received awards for his teaching and research excellence, including the Herbert G. Heneman Distinguished Teaching Award in 1991, the Ernest J. McCormick Award for Distinguished Early Career Contribution from the Society for Industrial and Organizational Psychology in 1993, and the ASTD Outstanding Research Article of the Year Award for 2001. He is also a fellow of the Society of Indus- trial and Organizational Psychology.

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Brief Contents Preface iv

PART ONE The Context for Training and Development 1

1 Introduction to Employee Training and Development 2

2 Strategic Training 52

PART TWO Designing Training 101

3 Needs Assessment 102

4 Learning: Theories and Program Design 138

5 Transfer of Training 185

6 Training Evaluation 215

PART THREE Training and Development Methods 257

7 Traditional Training Methods 258

8 E-Learning and Use of Technology in Training 294

9 Employee Development 345

10 Special Issues in Training and Employee Development 389

PART FOUR Careers and Career Management 443

11 Careers and Career Management 444

12 Special Challenges in Career Management 477

PART FIVE The Future 521

13 The Future of Training and Development 522

GLOSSARY 549

NAME INDEX 561

COMPANY/ORGANIZATIONAL INDEX 572

SUBJECT INDEX 576

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Contents PART ONE THE CONTEXT FOR TRAINING AND DEVELOPMENT 1

Chapter One Introduction to Employee Training and Development 2

Forces Affecting the Workplace Make Training a Key Ingredient for Company Success 2 Introduction 4 What Is Training? 5 Designing Effective Training 7 The Forces Influencing Working and Learning 10

Economic Cycles 10 Globalization 11 Increased Value Placed on Intangible Assets and Human Capital 13 Focus on Link to Business Strategy 17 Changing Demographics and Diversity of the Work Force 17 Talent Management 21 Customer Service and Quality Emphasis 25 New Technology 29 High-Performance Models of Work Systems 31

Snapshot of Training Practices 34 Training Facts and Figures 34 Training Investment Leaders 36 Roles, Competencies, and Positions of Training Professionals 38 Who Provides Training? 40 Who Is in Charge of Training? 41 Preparing to Work in Training 42

Organization of This Book 43 Key Terms 44 Discussion Questions 44 Application Assignments 45 Case: Zappos: Facing Competitive Challenges 46 Endnotes 47

Chapter Two Strategic Training 52

McCormick & Company Uses Strategic Training to Spice Up Business Results 52 Introduction 54 The Evolution of Training’s Role 55

Movement from Training as an Event to Learning 57 The Strategic Training and Development Process 58

Identify the Company’s Business Strategy 59 Identify Strategic Training and Development Initiatives That Support the Strategy 62 Provide Training and Development Activities Linked to Strategic Training and Development Initiatives 65 Identify and Collect Metrics to Show Training Success 67

Organizational Characteristics That Influence Training 68

Roles of Employees and Managers 68 Top Management Support 70 Integration of Business Units 71 Global Presence 71 Business Conditions 72 Other Human Resource Management Practices 73 Extent of Unionization 74 Staff Involvement in Training and Development 75

Training Needs in Different Strategies 76 Models of Organizing the Training Department 79

Faculty Model 80 Customer Model 81 Matrix Model 82 Corporate University Model (Corporate Training Universities) 82 Business-Embedded Model 86

Marketing the Training Function 89 Outsourcing Training 91 Summary 92 Key Terms 93 Discussion Questions 93

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Social Learning Theory 143 Goal Theories 145 Need Theories 146 Expectancy Theory 147 Adult Learning Theory 148 Information Processing Theory 149

The Learning Process 150 Mental and Physical Processes 150 The Learning Cycle 151 Age Influences on Learning 153 Implications of the Learning Process for Instruction 154

Instructional Emphasis for Learning Outcomes 164 Considerations in Designing Effective Training Programs 165

Selecting and Preparing the Training Site 165 Choosing Trainers 167 How Trainers Can Make the Training Site and Instruction Conducive to Learning 169 Program Design 172

Summary 177 Key Terms 178 Discussion Questions 179 Application Assignments 179 Case: Plastics Make Perfect 181 Endnotes 182

Chapter Five Transfer of Training 185

Transfer of Training and Knowledge Sharing Are Important for Nonprofits 185 Introduction 186 Training Design 188

Applications of Transfer of Training Theory 188 Encourage Trainee Responsibility and Self- Management 192

Work Environment Characteristics That Influence Transfer 195

Climate for Transfer 195 Manager Support 196 Peer Support 200 Opportunity to Use Learned Capabilities 200 Technological Support 201

Application Assignments 94 Case: Training and Development Help Rubber Hit the Road at Tires Plus 95 Endnotes 95 Case 1 From the Pages of BusinessWeek: It Takes a Village—And a Consultant 99

PART TWO DESIGNING TRAINING 101

Chapter Three Needs Assessment 102

Needs Assessment at NetApp 102 Introduction 103 Why Is Needs Assessment Necessary? 103 Who Should Participate in Needs Assessment? 105 Methods Used in Needs Assessment 107 The Needs Assessment Process 109

Organizational Analysis 110 Person Analysis 113 Task Analysis 123

Competency Models 127 Scope of Needs Assessment 131

Needs Assessment in Practice 131 Summary 132 Key Terms 133 Discussion Questions 133 Application Assignments 134 Case: Determining Training Needs at Union Pacific Railroad 135 Endnotes 135

Chapter Four Learning: Theories and Program Design 138

A Positive Learning Environment Energizes Training! 138 Introduction 139 What Is Learning? What Is Learned? 140 Learning Theories 141

Reinforcement Theory 141

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Determining Benefits 242 Example of a Cost-Benefit Analysis 243 Other Methods for Cost-Benefit Analysis 244 Practical Considerations in Determining Return on Investment 245

Measuring Human Capital and Training Activity 247 Summary 248 Key Terms 249 Discussion Questions 249 Application Assignments 250 Case: Evaluating the Returns on Leadership Development at BP 251 Endnotes 252 Case 2 From the Pages of BusinessWeek: On-the-Job Video Gaming 255

PART THREE: TRAINING AND DEVELOPMENT METHODS 257

Chapter Seven Traditional Training Methods 258

Training at LaQuinta Hotels Helps Delight Guests 258 Introduction 259 Presentation Methods 260

Lecture 261 Audiovisual Techniques 262

Hands-on Methods 263 On-the-Job Training (OJT) 263 Simulations 270 Case Studies 271 Business Games 272 Role Plays 274 Behavior Modeling 274

Group Building Methods 277 Adventure Learning 278 Team Training 279 Action Learning 282

Choosing a Training Method 284 Summary 286 Key Terms 287

Organizational Environments That Encourage Transfer 202

The Learning Organization 202 Knowledge and Knowledge Management 203

Summary 209 Key Terms 209 Discussion Questions 209 Application Assignments 210 Case: Patagonia’s Culture 211 Endnotes 212

Chapter Six Training Evaluation 215

Training and Leadership Development: A Healthy Investment at Sisters of Charity Providence Hospital 215 Introduction 216 Reasons for Evaluating Training 217 Overview of the Evaluation Process 219 Outcomes Used in the Evaluation of Training Programs 220

Reaction Outcomes 221 Learning or Cognitive Outcomes 223 Behavior and Skill-Based Outcomes 224 Affective Outcomes 224 Results 225 Return on Investment 226

Determining Whether Outcomes Are Appropriate 227

Relevance 227 Reliability 228 Discrimination 228 Practicality 229

Evaluation Practices 229 Which Training Outcomes Should Be Collected? 229

Evaluation Designs 231 Threats to Validity: Alternative Explanations for Evaluation Results 231 Types of Evaluation Designs 234 Considerations in Choosing an Evaluation Design 238

Determining Return on Investment 240 Determining Costs 241

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Why Develop an LMS? 332 Developing an LMS 333

Choosing New Technology Training Methods 334 Summary 337 Key Terms 337 Discussion Questions 338 Application Assignments 338 Case: Cisco Systems Account Managers Are Too Busy for Training 339 Endnotes 340

Chapter Nine Employee Development 345

Randstad’s Partnering Program Develops Employees 345 Introduction 346 Approaches to Employee Development 349

Formal Education 350 Assessment 355 Job Experiences 364 Interpersonal Relationships 371

The Development Planning Process 377 Company Strategies for Providing Development 378

E-Learning and Employee Development 380 Summary 381 Key Terms 381 Discussion Questions 382 Application Assignments 382 Case: Mentoring Is Not Always a Positive Experience 383 Endnotes 383

Chapter Ten Special Issues in Training and Employee Development 389

Successful Management Requires International Experience 389 Introduction 390 Training Issues Resulting from the External Environment 390

Legal Issues 390 Cross-Cultural Preparation 396

Discussion Questions 287 Application Assignments 287 Case: Training Methods for Bank Tellers 289 Endnotes 291

Chapter Eight E-Learning and Use of Technology in Training 294

Blended Learning Is the Key to Tasty Donuts and Hot Coffee 294 Introduction 295 Technology’s Influence on Training and Learning 297

Technology and Collaboration 298 Technology and Learning Environment 299

Technology and Multimedia 301 Computer-Based Training 303

CD-ROM, DVD, Laser Disk 303 Interactive Video 304 Online Learning: The Internet, Web-Based Training, E-Learning, and Learning Portals 305

Developing Effective Online Learning 310 Needs Assessment 312 Design 312 Technology for Collaboration and Linking 314

Blended Learning 317 Simulations 318

Virtual Reality 320 Virtual Worlds 321

Mobile Technology and Training Methods: iPods, PDAs 322 Intelligent Tutoring Systems 324 Distance Learning 325 Technologies for Training Support 327

Expert Systems 328 Groupware 328 Electronic Performance Support Systems 329

Technologies for Training Administration 330 Interactive Voice Technology 330 Imaging 330 Training Software Applications 330

Learning Management Systems: Systems for Training Delivery, Support, and Administration 331

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Goal Setting 462 Action Planning 463 Career Management Systems on the Web 465

Roles of Employees, Managers, Human Resource Managers, and the Company in Career Management 466

Employee’s Role 466 Manager’s Role 467 Human Resource Manager’s Role 469 Company’s Role 469

Evaluating Career Management Systems 470 Summary 471 Key Terms 471 Discussion Questions 471 Application Assignments 472 Case: Generation X Values Have Implications for Career Management 473 Endnotes 473

Chapter Twelve Special Challenges in Career Management 477

Nonwork Lives Are Important Food for Thought 477 Introduction 478 Socialization and Orientation 479

Anticipatory Socialization 479 Encounter 480 Settling In 480 Socialization and Orientation Programs 480

Career Paths, Developing Dual-Career Paths, and Career Portfolios 483

Dual-Career Path 484 Career Portfolio 487

Plateauing 488 Skills Obsolescence 489 Coping with Career Breaks 491 Balancing Work and Life 492

Types of Work-Life Conflict 493 Company Policies to Accommodate Work and Nonwork 493

Identifying Work and Life Needs and Communicating Information about Work and Nonwork Policies and Job Demands 494 Flexibility in Work Arrangements and Work Schedules 495

Managing Work Force Diversity 405 School-to-Work Transition 415 Training’s Role in Welfare-to-Work and Other Public-Private Sector Programs 416

Training Issues Related to Internal Needs of the Company 418

Basic Skills Training 418 Life Long Learning 419 Melting the Glass Ceiling 419 Joint Union-Management Programs 423 Succession Planning 424 Developing Managers with Dysfunctional Behaviors 428 Training and Pay Systems 429

Summary 430 Key Terms 431 Discussion Questions 431 Application Assignments 432 Case: Melting the Glass Ceiling for Accountants 433 Endnotes 434 Case 3 From the Pages of BusinessWeek: Secrets of an HR Superstar 439

PART FOUR CAREERS AND CAREER MANAGEMENT 443

Chapter Eleven Careers and Career Management 444

Managing Careers Helps Accenture Reach Out to Its Virtual Work Force 444 Introduction 445 Why Is Career Management Important? 447

Career Management’s Influence on Career Motivation 447

What Is a Career? 449 The Protean Career 450 Traditional Career versus Protean Career 450 Career Needs and Interests of Different Generations 452

A Model of Career Development 455 Career Stages 456

Career Management Systems 460 Self-Assessment 460 Reality Check 461

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Increased Emphasis on Capturing and Sharing Intellectual Capital 528 Increased Use of True Performance Support 528 Increased Emphasis on Performance Analysis and Learning for Business Enhancement 530 Increased Use of Training Partnerships and Outsourcing Training 532

Implications of Future Trends for Trainers’ Skills and Competencies 534

Training and Development from a Change Model Perspective 534 Methods to Determine Whether Change Is Necessary 537

Benchmarking 537 Process Reengineering 538

Key Issues in Implementing Change 540 Change Management 540 Change Interventions 543

Summary 544 Key Terms 544 Discussion Questions 545 Application Assignments 545 Case: Going Paperless Requires a Change Management Process 545 Endnotes 546 Case 5 From the Pages of BusinessWeek: IBM Reinvents Mentoring, Via the Web 548

Glossary 549

Name Index 561

Company/Organizational Index 572

Subject Index 576

Redesigning Jobs 500 Managerial Support for Work-Life Policies 500 Dependent Care Support: Child and Elder Care and Adoption Support 501

Coping with Job Loss 503 Dealing with Older Workers 506

Meeting the Needs of Older Workers 507 Preretirement Socialization 507 Retirement 509 Early Retirement Programs 509

Summary 510 Key Terms 510 Discussion Questions 511 Application Assignments 511 Case: Do We Have to Cut Jobs to Reduce Costs? 512 Endnotes 512 Case 4 From the Pages of BusinessWeek: Two for the Cubicle 518

PART FIVE THE FUTURE 521

Chapter Thirteen The Future of Training and Development 522

Training for Sustainability 522 Introduction 524 Increased Use of New Technologies for Training Delivery 524 Increased Demand for Training for Virtual Work Arrangements 525 Increased Emphasis on Speed in Design, Focus in Content, and Use of Multiple Delivery Methods 526

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Part One

The Context for Training and Development Part One focuses on issues related to the context for training and development. Chapter 1, Introduction to Employee Training and Development, discusses why training and development are important to help companies successfully compete in today’s business environment. The chapter provides an overview of training practices, the training profession, and how to design effective training (a topic that is covered in detail in Part Two, Training Designing). Chapter 2 discusses the strategic training and development process, organizational characteristics that influence training, various models for organizing the training department, how to market training to the rest of the company, and the advantages and disadvan- tages of outsourcing training.

Part One concludes with a case highlighting how PricewaterhouseCoopers is using training to cope with competitive challenges, reach business goals, and expand learning beyond the classroom and boardroom.

1. Introduction to Employee Training and Development 2. Strategic Training

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Chapter One

Introduction to Employee Training and Development

Objectives

After reading this chapter, you should be able to

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

2. Discuss various aspects of the training design process.

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

4. Describe how much money is spent on training in U.S. companies and how the money is used.

5. Discuss the key roles for training pro- fessionals.

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

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

Customer service, productivity, safety, employee retention and growth, the downturn in the economy, coping with the retirement of skilled employees—these are some of the issues affecting companies in all industries and sizes and influencing training prac- tices. Four companies—Boston Pizza, Seattle City Light, Starbucks, and US Airways— provide examples of how these concerns have affected business and how training has helped them succeed.

Boston Pizza International, a casual restaurant chain, recognized that most of its managers understood the Boston Pizza concept but lacked the soft skills needed to be successful managers. At Boston Pizza College, managers learn and practice skills needed for successful store management. The learning initiative has paid off. Reports from secret shoppers and quality assurance visits have improved, and the restaurant chain has increased retention in an industry in which turnover can approach 300 percent.

2

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Chapter 1 Introduction to Employee Training and Development 3

Seattle City Light, the city’s municipally owned electric company, expects more than a quarter of its work force to retire within the next five years. Seattle City Light is using training courses and interactions with more experienced employees and mentors to help employees learn new and innovative technologies as well as the elec- trical system’s history to prevent electrical demand from overloading aging dams and power tunnels. Final exams and hands-on field tests are administered after training to ensure that new employees have acquired the knowledge and skills needed to be successful operators. The company also uses apprenticeship programs to develop technical employees such as hydro machinists. They are rotated throughout the plant to ensure they understand how their role and their interactions with other employees contribute to the effective and efficient operation of the utility.

Starbucks believes that the key to company success is its employees or partners. Training is integral to Starbucks’s strategy for successfully competing in a weak econ- omy in which customers are spending less. The attitudes and abilities of the partners who greet and serve customers are key to creating positive customer service and repeat business. Every new U.S. employee starts his or her job in paid training called “First Impressions.” Store managers serve as trainers. The training focuses on coffee knowledge and how to create a positive experience for customers. Training special- ists from headquarters work with store managers to ensure that training is consistent across all stores. The training courses are also frequently updated. Managers and assistant store managers take a 10-week retail management training course. Com- puter, leadership, and diversity training are available. Most corporate employees begin their careers with Starbucks in immersion training. Immersion training involves working in a Starbucks store and learning the business by experiencing making bev- erages and interacting with customers. When Starbucks enters a new international market, partners are brought to Seattle for 6 to 12 weeks of training and then sent to other locations to get store experience. To ensure that customers are delighted and that the coffee served meets high quality standards, Starbucks shuts down opera- tions of most of its stores for a full day training event. The training event, known as “Perfect the Art of Espresso,” was designed to help baristas deliver high quality espresso. One activity consisted of pulling an espresso shot and then evaluating the process and the product (was it the right color? Did it take too long or too short a time?). Staff discussions about how the training would benefit customers were held at each store. Also, to counter the perception that Starbucks is the home of the $4 cup of coffee, the company is training baristas to tell customers that the average price of a Starbucks beverage is less than $3 and that 90 percent of Starbucks drinks cost less than $4. Baristas are also encouraged to promote the company’s new dis- counted pairing of coffee and breakfast for $3.95.

US Airways Group provides extensive training for flight attendants and pilots. Newly hired flight attendants receive five weeks of training, including an introduction to the aviation industry, and Airbus cabin simulators include “door trainers” to prac- tice opening emergency exits under difficult evacuation conditions, such as total darkness and billowing smoke. Training also includes jumping into a pool and inflat- ing a life raft and helping passengers into and out of a raft. Federal law requires annual classroom safety training for flight attendants and performance drills every two years. Pilot training includes practicing skills in a simulator that presents many

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4 Part 1 The Context for Training and Development

different scenarios, such as both engines failing, and recreates the feelings and sounds experienced in flight, including turbulence. Forced landings and water ditch- ings are taught in the classroom. The pay-off for this type of extensive training was most evident in the spectacularly safe landing of Flight 1549 and its 155 passengers and flight crew in the Hudson River. Based on their almost automatic responses devel- oped through years of training, flight attendants were able to calm passengers, pre- pare them for a crash landing, and open doors and inflate life rafts to assist in the orderly but quick exit of the slowly sinking airplane. The cockpit crew followed the training they received in how to cope with engine failure and successfully conducted a water landing.

Sources: Based on B. Hall, “The Top Training Priorities for 2006,” Training (February 2006): 38–42; “Seattle’s Strategy, Water Power & Dam Construction,” Training (February 29, 2009): 36; “Tops of the Trade,” Human Resource Executive (December 2005): 1, 16–25; G. Weber, “Preserving the Counter Cul- ture,” Workforce Management (February 2005): 28–34; S. McCartney, “Crash Courses for the Crew,” The Wall Street Journal (January 27, 2009): D1, D8; J. Adamy, “Schultz’s Second Act Jolts Starbucks,” The Wall Street Journal (May 19, 2008): A1, A11; M. Weinstein, “Fresh Cup of Training,” Training (May 2008): 10; J. Adamy, “Starbucks Plays Common Joe,” The Wall Street Journal (February 9, 2009): B3.

INTRODUCTION

Boston Pizza, Seattle City Light, Starbucks, and US Airways illustrate how training can contribute to companies’ competitiveness. Competitiveness refers to a company’s ability to maintain and gain market share in an industry. Although they are different types of busi- nesses, these four companies have training practices that have helped them gain a competitive advantage in their markets. That is, the training practices have helped them grow the business and improve customer service by providing employees with the knowl- edge and skills they need to be successful.

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

Human resource management refers to the policies, practices, and systems that influ- ence employees’ behavior, attitudes, and performance. Human resource practices play a key role in attracting, motivating, rewarding, and retaining employees. Other human resource management practices include recruiting employees, selecting employees, designing work, compensating employees, and developing good labor and employee rela- tions. Chapter 2, Strategic Training, details the importance placed on training in compari- son to other human resource management practices. To be effective, training must play a strategic role in supporting the business.

Human resource management is one of several important functions in most companies. Other functions include accounting and finance, production and operations, research and development, and marketing. Keep in mind that although human resource management practices (such as training) can help companies gain a competitive advantage, the company

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Chapter 1 Introduction to Employee Training and Development 5

needs to produce a product or provide a service that customers value. Without the financial resources and physical resources (e.g., equipment) needed to produce products or provide services, the company will not survive!

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

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

WHAT IS TRAINING?

Training refers to a planned effort by a company to facilitate employees’ learning of job- related competencies. These competencies include knowledge, skills, or behaviors that are critical for successful job performance. The goal of training is for employees to master the knowledge, skill, and behaviors emphasized in training programs and to apply them to their day-to-day activities. For a company to gain a competitive advantage, its training has to involve more than just basic skill development.1 That is, to use training to gain a com- petitive advantage, a company should view training broadly as a way to create intellectual capital. Intellectual capital includes basic skills (skills needed to perform one’s job), advanced skills (such as how to use technology to share information with other employ- ees), an understanding of the customer or manufacturing system, and self-motivated cre- ativity. Intellectual capital is discussed further in Chapter 2. Keep in mind that, traditionally, most of the emphasis on training has been at the basic and advanced skill lev- els. But some experts estimate that soon up to 85 percent of jobs in the United States and Europe will require extensive use of knowledge. Employees will be required not only to understand the service or product development system but also to share knowledge and to creatively use it to modify a product or serve the customer.

Many companies have adopted this broader perspective, which is known as high-leverage training. High-leverage training is linked to strategic business goals and objectives, uses an instructional design process to ensure that training is effective, and compares or benchmarks the company’s training programs against training programs in other companies.2

High-leverage training practices also help to create working conditions that encourage continuous learning. Continuous learning requires employees to understand the entire work system, including the relationships among their jobs, their work units, and the com- pany.3 Employees are expected to acquire new skills and knowledge, apply them on the job, and share this information with other employees. Managers take an active role in iden- tifying training needs and help to ensure that employees use training in their work. To facil- itate the sharing of knowledge, managers may use informational maps that show where

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knowledge lies within the company (for example, directories that list what individuals do as well as the specialized knowledge they possess) and use technology such as groupware or the Internet that allows employees in various business units to work simultaneously on problems and share information.4 Chapter 8 discusses how technology such as the Internet is being used for training.

The emphasis on high-leverage training has been accompanied by a movement to link training to performance improvement.5 Companies have lost money on training because it is poorly designed, because it is not linked to a performance problem or business strategy, or because its outcomes have not been properly evaluated.6 That is, companies have been investing money into training simply because of the belief that it is a good thing to do. The perspective that the training function exists to deliver programs to employees without a compelling business reason for doing so is being abandoned. Today, training is being eval- uated not on the basis of the number of programs offered and training activity in the com- pany but on how training addresses business needs related to learning, behavior change, and performance improvement. In fact, training is becoming more performance-focused. That is, training is used to improve employee performance, which leads to improved busi- ness results. Training is seen as one of several possible solutions to improve performance. Other solutions include actions such as changing the job or increasing employee motiva- tion through pay and incentives. Today there is a greater emphasis on7

• Providing educational opportunities for all employees. These educational opportunities may include training programs, but they also include support for taking courses offered outside the company, self-study, and learning through job rotation.

• Performance improvement as an ongoing process that is directly measurable rather than a one-time training event.

• Demonstrating to executives, managers, and trainees the benefits of training.

• Learning as a lifelong event in which senior management, trainer managers, and employees have ownership.

• Training being used to help attain strategic business objectives, which help companies gain a competitive advantage.

PricewaterhouseCoopers is a good example of a company that uses high-leverage train- ing.8 Its Learning and Education (L&E) team was restructured to better link it to the busi- ness goals related to value and impact. L&E works with the business to understand what it wants education to be. It ensures ongoing innovation in training delivery and instructional methods by evaluating emerging technologies and using them in small pilot projects. The chief learning officer in charge of L&E is a member of the company’s leadership team, which gives that individual the opportunity to discuss ideas regarding training methods, delivery, and content with other top-level managers. L&E sponsors traditional and virtual classroom courses, self-study, team-based learning, action learning projects, coaching and mentoring, and conferences, and it has served more than 150,000 users each year, with over 6,000 courses, 12,000 classroom-based training sessions, and 19,000 Web-based training sessions.

PricewaterhouseCoopers uses a learning management system to create a single access point for training activities. To help employees learn on an as-needed basis, the com- pany’s e-learning includes video and audio conferencing, virtual classrooms, and web- casting. To evaluate the success of training, L&E considers its influence on outcomes,

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Chapter 1 Introduction to Employee Training and Development 7

such as retention of top people. Also, focus groups are used to determine whether trainees and managers are satisfied with the training. A program on sustainability was designed to help partners understand how to provide solutions for their clients. The com- pany’s investment in the program has paid off. The company believes it has achieved a return on investment of more than 1,000 percent in new business sold and reputation gains in the marketplace. In the future, L&E plans to further strengthen the relationship between training, development, and the business by focusing on how it can make learn- ing even more accessible and closer to the point where employees need it. L&E wants to integrate learning and knowledge to speed employees’ development and improve their competencies.

This discussion is not meant to underestimate the importance of “traditional train- ing” (a focus on acquisition of knowledge, skills, and abilities), but it should alert you that for many companies training is evolving from a focus on skills to an emphasis on learning and creating and sharing knowledge. This evolution of training is discussed in Chapter 2.

DESIGNING EFFECTIVE TRAINING

The training design process refers to a systematic approach for developing training pro- grams. Figure 1.1 presents the seven steps in this process. Step 1 is to conduct a needs assessment, which is necessary to identify whether training is needed. Step 2 is to ensure that employees have the motivation and basic skills necessary to master the training con- tent. Step 3 is to create a learning environment that has the features necessary for learning to occur. Step 4 is to ensure that trainees apply the training content to their jobs. This step involves having the trainee understand how to manage skill improvement as well as getting co-worker and manager support.

FIGURE 1.1 Training Design Process

4. Ensuring Transfer of Training

Self-Management Peer and Manager

Support

7. Monitoring and Evaluating the Program

Conduct Evaluation Make Changes to Improve the Program

5. Developing an Evaluation Plan

Identify Learning Outcomes Choose Evaluation Design Plan Cost-Benefit Analysis

6. Selecting Training Method

Traditional E-learning

Task Analysis

1. Conducting Needs Assessment

Organizational Analysis Person Analysis

3. Creating a Learning Environment

Learning Objectives Meaningful Material Practice Feedback Community of Learning Modeling Program Administration

2. Ensuring Employees’

Attitudes and Motivation Basic Skills

Readiness for Training

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

The training design process shown in Figure 1.1 is based on principles of Instructional System Design. Instructional System Design (ISD) refers to a process for designing and developing training programs. There is not one universally accepted instructional systems development model. The training design process sometimes is referred to as the ADDIE model because it includes analysis, design, development, implementation, and evaluation.9

In Figure 1.1, Step 1, conducting needs assessment, and Step 2, ensuring employees’ readi- ness for training, are related to analysis. The next three steps—creating a learning envi- ronment, ensuring transfer of training, and developing an evaluation plan—are design issues. Step 6, selecting and using a training method, relates to implementation. Step 7, monitoring and evaluating the program, relates to evaluation. Regardless of the specific ISD approach used, all share the following assumptions:10

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

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

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

American Infrastructure (AI), located in Worcester, Pennsylvania, uses the ADDIE model to design training for its employees involved in construction and mining.11 Tem- plates based on the ADDIE model are used to design and develop training and develop- ment programs. AI uses the templates to ensure that needs assessment is conducted and evaluation is considered as training and development programs are being designed. The use of the templates also helps to show that training and development programs are aligned with the business strategy and are designed to contribute to important business results— which helps AI get the necessary financial support and encouragement from key organiza- tional stakeholders.

Some training professionals argue that the ISD model is flawed for several reasons.12

First, in organizations the training design process rarely follows the neat, orderly, step- by-step approach of activities shown in Figure 1.1. Second, in trying to standardize their own ISD method used in the training function, some organizations require trainers to pro- vide detailed documents of each activity found in the model. This adds time and cost to developing a training program. Third, the ISD implies an end point: evaluation. However, good instructional design requires an iterative process of design, execution, evaluation, and reconsideration of the needs that the program was designed to meet as well as the learning

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environment, the transfer of training, and all the other activities in the ISD process. Despite these criticisms, the ISD model can be considered a set of general guidelines that trainers need to follow to ensure effective training.

The training design process should be systematic yet flexible enough to adapt to busi- ness needs. Different steps may be completed simultaneously. Keep in mind that designing training unsytematically will reduce the benefits that can be realized. For example, choos- ing a training method before determining training needs or ensuring employees’ readiness for training increases the risk that the method chosen will not be the most effective one for meeting training needs. Also, training may not even be necessary and may result in a waste of time and money! Employees may have the knowledge, skills, or behavior they need but simply not be motivated to use them.

The introduction of new technologies such as podcasting (discussed in Chapter 8) highlights a shift from trainees having to learn from an instructor in one location to trainees learning independently and not being bound to learn in the workplace. Still, good training design requires determining the trainees’ needs, identifying resources so that trainees can learn what they need to know, and providing them with access to refer- ence materials and knowledge bases when they encounter problems, issues, or questions on the job.13

The development of a Web-based training program focusing on teaching managers skills needed to run effective business meetings provides a good example of use of the instructional design process. The first step of the process, needs assessment, involved determining that managers lacked skills for conducting effective meetings and helped to identify the type of meetings that managers were involved in. The needs assessment process involved interviewing managers and observing meetings. The needs assessment process also identified the most appropriate training method.

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

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

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THE FORCES INFLUENCING WORKING AND LEARNING

Table 1.1 illustrates the forces that are influencing working and learning. Globalization of business, demographic changes, new technologies, and economic changes are several of the forces shown in Table 1.1 that influence all aspects of our lives: how we purchase prod- ucts and services, how we learn, how we communicate with each other, and what we value in our lives and on the job.14 These forces are affecting individuals, communities, busi- nesses, and society. To survive, companies must address these forces—with training play- ing an important role.

Economic Cycles The U.S. economy is currently in a recession. In the U.S., the current economic downturn could be the worst since the years following World War II. The economy has lost 5.1 million since the beginning 2008—the most since the end of World War II—and the unemployment rate grew to over 8.5 percent, the highest since 1983.15 Most consumers have seen their homes lose value, as well as experienced substantial declines in retirement savings and household wealth, due to the collapse of the stock market. The recession has a number of probable causes, including the subprime lending scandals and the collapse and failure of major financial institutions such as Bear Sterns, Lehman Brothers, and Merrill-Lynch.16 All of the bad news has contributed to a lack of confidence in the economy, making it difficult for businesses and consumers alike to obtain credit and loans. Most industries, especially retailers, automakers, manufacturing, and construction, have not escaped the crisis. Retail- ers reported record sales declines for the 2008 holiday season as consumers reduced their holiday spending. The Big Three automakers sought money from the government to avoid bankruptcy and the elimination of hundreds of thousands of jobs. The highest unemploy- ment rate at the end of 2008 was 15.3 percent in the construction sector as plans for new homes and office buildings were postponed or canceled. The economic slowdown has not been limited to the U.S. The economies of China and India have slowed and Europe, Mex- ico, and Japan have slipped into recession. President Obama has proposed and the Congress has passed an economic stimulus plan that is intended to create jobs and increase consumer and investor confidence. However, its impact may not be realized for several years.

The poor economy means more companies are downsizing their work force, delaying plans for new operations and growth, and revisiting training and development and human resource budgets to cut unnecessary programs and costs. For example, just in January 2009 more than 70,000 job cuts were announced, impacting employees from Pfizer, Texas Instru- ments, Home Depot, General Motors, Boeing, Alcoa, Andersen, and World Wrestling

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

TABLE 1.1 Forces Influencing Working and Learning

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Chapter 1 Introduction to Employee Training and Development 11

Entertainment.17 Employees are delaying retirement and newly retired employees are returning to work out of necessity because of losses affecting their retirement assets.

One estimate is that companies plan to cut their training budgets over 10 percent in response to the economic crisis.18 However, such economic times also provide an opportu- nity for companies to take a closer look at training and development to identify those activ- ities that are critical for supporting the business strategy as well as those mandated by law (such as safety training or sexual harassment training). Also, training technologies using iPods and online learning will likely receive more serious consideration to reduce training and development costs (travel costs, instructor costs) and increase employees’ access to training. For example, Philips Electronics is cutting its training budget but will continue to offer its Inspire program for high potential employees, emphasizing business strategy and personal leadership topics. Philips believes that investing in leadership development will help the company weather the recession and prepare for economic recovery. Likewise, Estée Lauder Companies, the cosmetics maker, has realized lower profits and sales, result- ing in the elimination of over 2,000 jobs over the next two years. But Estée Lauder is con- tinuing its leadership development programs, which will emphasize innovation and managing change in turbulent business conditions. Despite the recession, talent retention is still an important concern. Some companies are creating discretionary bonus pools to reward employees who may be recruited by other companies. To keep employees engaged, Best Buy uses online surveys to get employees’ opinions and suggestions regarding how to cut costs.

Globalization Every business must be prepared to deal with the global economy. Global business expan- sion has been made easier by technology. The Internet allows data and information to be instantly accessible and sent around the world. The Internet, e-mail, and video conferenc- ing enable business deals to be completed between companies thousands of miles apart.

Globalization is not limited to any particular sector of the economy, product market, or company size.19 Companies without international operations may buy or use goods that have been produced overseas, hire employees with diverse backgrounds, or compete with foreign-owned companies operating within the United States.

Many companies are entering international markets by exporting their products over- seas, building manufacturing facilities or service centers in other countries, entering into alliances with foreign companies, and engaging in e-commerce. Developing nations such as Taiwan, Indonesia, and China may account for over 60 percent of the world economy by 2020.20 For example, Coca-Cola is trying to build a global juice business through deals in Latin America, Russia, and China.21 Power Curbers Inc., a small North Carolina manufac- turer, sells construction-related machinery to more than 70 countries, including Australia, China, Central America, and Western Europe. Its equipment helped complete the Euro- tunnel under the English Channel. Technical Materials, a 250-employee Rhode Island company, has been exporting high-technology materials systems to China. At Texas Instruments (TI), with approximately 30,000 employees worldwide, 80 percent of sales come from customers outside the United States. More than 50 percent of the wireless phones sold worldwide contain TI’s digital signal processing.

Global companies are struggling both to find and retain talented employees, especially in emerging markets. Companies are moving into China, India, Eastern Europe, the Middle

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East, Southeast Asia, and Latin America, but the demand for talented employees exceeds the supply. Also, companies often place successful U.S. managers in charge of overseas opera- tions but they lack the cultural understanding necessary to attract, motivate, and retain tal- ented employees. To cope with these problems, companies are taking actions to better prepare their managers and their families for overseas assignments and to ensure that train- ing and development opportunities are available for global employees. Cross-cultural train- ing prepares employees and their families to understand the culture and norms of the country to which they are being relocated and assists in their return to their home country after the assignment. Cross-cultural training is discussed in Chapter 10.

IBM obtains more than two-thirds of its revenue from outside the U.S. and is seeking to build team leadership in order to compete in emerging markets around the world. IBM’s Corporate Service Program donates the time and services of about 600 employees for projects in countries such as Turkey, Romania, Ghana, Vietnam, the Phillipines, and Tanzania.22 The goal of the program is to develop a leadership team to learn about the needs and the culture of these countries while at the same time providing valuable com- munity service. For example, eight IBM employees from five countries traveled to Timisoara, Romania. Each employee was assigned to help a different company or non- profit organization. One software-development manager helped GreenForest, a manufac- turer of office, hotel, school, and industrial furniture, reach its goal of cutting costs and becoming more efficient by recommending the computer equipment and systems needed to increase production and exports to Western Europe. Another employee worked with a nonprofit organization that offers services to disabled adults. Besides benefiting the com- panies, the employees have also found that the experience has helped them understand cultural differences, improve their communication and teamwork skills, and gain insight into global marketing and strategy.

A.P. Moller-Maersk Group is a world leader in shipping, transportation, and logistics.23

A.P. Moller-Maersk has very selective hiring as well as extensive training and development practices. In its entry-level Maersk International Shipping Education program, one employee is hired for approximately every 200 applicants. The new employees receive job assignments that help them understand the entire company and its global operations, not just one functional area. The company also provides extensive coaching and assessment of managerial potential and provides regular feedback to keep employees focused on the things they need to do to reach their career goals.

Globalization also means that employees working in the United States will come from other countries. The United States takes more than 1 million immigrants, some who are illegal. Immigrants provide scientific talent as well as fill low-wage jobs. Immigrants will likely account for an additional million persons in the work force each year through 2012.24 The impact of immigration will be especially large in certain areas of the United States, including the states on the Pacific Coast, where 70 percent of new entrants to the work force are immigrants.25 Many of these immigrants will have to be trained to under- stand the U.S. culture. U.S. employees will need skills to improve their ability to commu- nicate with employees from different cultures. The terrorist attacks of 9/11 have not changed the use of immigrants but have raised security issues, resulting in more deliberate approval of visas (and longer waits for hiring to be approved).

Globalization also means that U.S. companies may move jobs overseas; offshoring refers to the process of moving jobs from the United States to other locations in the world.

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For example, many technical workers are being asked to train their foreign replacements who return to their home countries once the training is completed.26 The U.S. workers either lose their jobs or are offered other jobs at lower wages. There are three reasons this is occurring. First, the U.S. visa program allows companies to transfer workers from over- seas offices to the United States for seven years. The workers can continue to receive their home country wage, which is usually much less than the wages received by U.S. employ- ees (e.g., Indian workers receive about $10 per hour compared to $60 per hour for U.S. pro- grammers). Second, U.S. colleges are graduating fewer U.S.-born engineers, so companies have to look overseas to hire the best employees. China graduates about four times the number of engineers, although they are not all trained at the same level as U.S. engineers.27

Japan graduates twice as many engineers and South Korea graduates nearly as many engi- neers as the U.S. Third, more talented employees may be available outside the United States.

In contrast to the computer and printer manufacturer Hewlett-Packard, which hired its first foreign workers 20 years after its founding in 1939, search engine Google employed people outside the United States just three years after its 1998 start.28 OfficeTiger, which provides business services to banks, insurance companies, and other clients, has 200 employees in the United States and 2,000 in southern India. Whether its clients need type- setting or marketing research, Indian employees can submit their work over the Internet. Because Indian workers are generally paid only one-fifth of U.S. earnings for comparable jobs, OfficeTiger offers attractive prices. The company is growing and expects that two- thirds of its future hires will be in India, Sri Lanka, and countries other than the United States.29 Regardless of company size, talent comparable to that in the United States is available overseas at lower costs.30 GEN3 Partners, a Boston-based product innovation company, has a research and development lab in Saint Petersburg, Russia, that employs 90 scientists and engineers, all with advanced degrees. Russia has a tradition of scientific excellence, and salaries are lower than for comparable talent in the United States. For small companies such as Cobalt Group, a Seattle, Washington, automotive online services com- pany, labor costs for its 50 research and development engineers working in a technology center in India are about one-third of U.S. labor costs.

However, as a result of 9/11 and concerns that American employees should get the first chance at U.S. jobs, new immigration rules have made it difficult for immigrants to seek employment, and the number of visas permitted to be issued has not recently been expanded. For example, in 2008 only 65,000 H-1B visas were made available, and all were taken on the first day they were made available.31

Increased Value Placed on Intangible Assets and Human Capital Today more and more companies are interested in intangible assets and human capital as a way to gain an advantage over competitors. Training and development can help a com- pany’s competitiveness by directly increasing the company’s value through contributing to intangible assets. A company’s value includes three types of assets that are critical for the company to provide goods and services: financial assets (cash and securities), physical assets (property, plant, equipment), and intangible assets. Table 1.2 provides examples of intangible assets, which consist of human capital, customer capital, social capital, and intellectual capital. Human capital refers to the sum of the attributes, life experiences, knowledge, inventiveness, energy, and enthusiasm that the company’s employees invest in

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14 Part 1 The Context for Training and Development

Human Capital

• Tacit knowledge • Education • Work-related know-how • Work-related competence

Customer Capital

• Customer relationships • Brands • Customer loyalty • Distribution channels

Social Capital

• Corporate culture • Management philosophy • Management practices • Informal networking systems • Coaching/mentoring relationships

Intellectual Capital

• Patents • Copyrights • Trade secrets • Intellectual property

TABLE 1.2 Examples of Intangible Assets

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

their work.32 Intellectual capital refers to the codified knowledge that exists in a com- pany. Social capital refers to relationships in the company. Customer capital refers to the value of relationships with persons or other organizations outside the company for accom- plishing the goals of the company (e.g., relationships with suppliers, customers, vendors, government agencies). Intangible assets are equally as valuable as financial and physical assets but they are not something that can be touched and they are nonmonetary.

Intangible assets have been shown to be responsible for a company’s competitive advan- tage. A study by the American Society for Training and Development of more than 500 publicly traded U.S.-based companies found that companies that invested the most in train- ing and development had a shareholder return that was 86 percent higher than companies in the bottom half and 46 percent higher than the market average.33 Training and develop- ment have a direct influence on human and social capital because they affect education, work-related know-how and competence, and work relationships. Training and develop- ment can have an indirect influence on customer and social capital by helping employees better serve customers and by providing them with the knowledge needed to create patents and intellectual property.

Intangible assets also contribute to a company’s competitive advantage because they are difficult to duplicate or imitate.34 For example, consider companies in the airline industry. Southwest Airlines consistently is profitable and ranked high in on-time arrivals and other indicators of airline success.35 One of the distinctions between Southwest Airlines and its competitors is how it treats its employees. For example, Southwest has a policy of no lay- offs and was able to maintain this record even during the difficult time for airlines follow- ing 9/11. Southwest also emphasizes training and development, which provide its

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Chapter 1 Introduction to Employee Training and Development 15

employees with skills to perform multiple jobs. This benefit allows Southwest airplanes to be quickly cleaned and serviced at airports because employees have multiple skill sets that can be applied to various aspects of readying an aircraft for departure. As a result of these human resource policies, Southwest employees are loyal, productive, and flexible (which contributes to the success of the airline). Other airlines may have similar or greater levels of financial assets and may have physical assets that are comparable to Southwest’s (e.g., same type of airplanes, similar gates), but what contributes to Southwest’s success and gives the company a competitive advantage are its intangible assets in the form of human capital. American Airlines and United Airlines have similar (or greater!) financial and physical assets but have not been successful in competing with Southwest by offering flights on the same routes.

Recognizing the importance of human capital and social capital, John Chambers, CEO of Cisco Systems, has transformed the company from one with one or two primary prod- ucts, in which the most important decisions are made by the top 10 people in the company, to one where networks of employee councils and boards and Web 2.0 applications encour- age executives to work together.36 Business unit leaders now share responsibilities for each other’s success. Cisco’s directory is designed to help anyone inside the company find answers to questions, a product demo, or the right person to speak to a customer in any language, anywhere in the world. As a result of its improved face-to-face and electronic collaboration, Cisco Systems has been able to get products to market faster.

Chapters 7, 8, and 9 discuss specific training and development activities that contribute to the development of human and social capital. How to measure human capital is explained in Chapter 6, Training Evaluation. The value of intangible assets and human cap- ital has three important implications:

(1) a focus on knowledge worker,

(2) employee engagement, and

(3) an increased emphasis on adapting to change and continuous learning.

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

Employee Engagement To fully benefit from employees’ knowledge requires a management style that focuses on engaging employees. Employee engagement refers to the degree to which employees are fully involved in their work and the strength of their commitment to their job and the com- pany.37 Employees who are engaged in their work and committed to their companies give those companies a competitive advantage, including higher productivity, better customer

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16 Part 1 The Context for Training and Development

service, and lower turnover.38 What is the state of employee engagement in U.S. compa- nies? One survey of 50,000 employees across different companies showed that about 13 percent of employees are disengaged, poor performers who put minimal effort into the job and are likely to leave the organization and about 76 percent of employees exhibit moder- ate engagement. That is, they are marginally committed to the company and perform their jobs to the level expected by their manager. Only 11 percent of employees surveyed have high levels of engagement. That is, they exhibit strong commitment to the company and are high performers who help other employees with their work, volunteer for new responsibil- ities, and are constantly looking for ways to perform their jobs better.39

Perhaps the best way to understand engagement is to consider how companies measure employee engagement. Companies measure employees’ engagement levels with attitude or opinion surveys. Although the types of questions asked on these surveys vary from com- pany to company, research suggests the questions generally measure themes such as pride in the company, satisfaction with the job, prospects for future growth with the company, and opportunity to perform challenging work.40 As you probably realize, employees’ engage- ment is influenced by most human resource management practices, including training and development. A survey of senior level human resource and learning professionals conducted by ASTD found that over 50 percent reported engagement was affected by the frequency, quality, and number of workplace learning opportunities, employee orientation programs, and learning that occurred through job assignments (a type of development activity).41

Training and development gives employees an opportunity for personal growth within the company and helps provide the company with the knowledge and skills it needs to gain a competitive advantage. Using training delivery methods that provide employees with the flexibility to manage their personal learning while balancing other work and nonwork responsibilities, such as online learning, helps build employee commitment to the company.

Change and Continuous Learning In addition to acquiring and retaining knowledge workers, companies need to be able to adapt to change. Change refers to the adoption of a new idea or behavior by a company. Techno- logical advances, changes in the work force or government regulations, globalization, and new competitors are among the many factors that require companies to change. Change is inevitable in companies as products, companies, and entire industries experience shorter life cycles.42 The characteristics of an effective change process are discussed in Chapter 13.

A changing environment means that all employees must embrace a philosophy of learn- ing. A learning organization embraces a culture of lifelong learning, enabling all employ- ees to continually acquire and share knowledge. Improvements in product or service quality do not stop when formal training is completed.43 Employees need to have the finan- cial, time, and content resources (courses, experiences, development opportunities) avail- able to increase their knowledge. Managers take an active role in identifying training needs and helping to ensure that employees use training in their work. Also, employees should be actively encouraged to share knowledge with colleagues and other work groups across the company using e-mail and the Internet.44 Chapter 5 discusses learning organizations and knowledge management in detail. For a learning organization to be successful, teams of employees must collaborate to meet customer needs. Managers need to empower employ- ees to share knowledge, identify problems, and make decisions. This allows the company to continuously experiment and improve.

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As more companies become knowledge-based, it’s important that they promote and cap- ture learning at the employee, team, and company levels. Buckman Laboratories is known for its knowledge management practices.45 Buckman Laboratories develops and markets specialty chemicals. Buckman’s CEO, Robert Buckman, has developed an organizational culture, technology, and work processes that encourage the sharing of knowledge. Employ- ees have laptop computers so they can share information anywhere and anytime using the Internet. The company rewards innovation and knowledge creation and exchange by including the sales of new products as part of employees’ performance evaluations. Buck- man also changed the focus of the company’s information systems department, renaming it knowledge transfer department to better match the service it is supposed to provide.

At American Express, the training organization was rebranded from Operations Train- ing into what is now called the American Express Learning Network.46 The department’s new goal is to position the American Express work force so it can better serve its cus- tomers. At W.W. Grainger, the Grainger Learning Center is dedicated to developing sales and customer service representatives to better understand the operations of business cus- tomers and to better position training program offerings to meet business needs. It spon- sors learning experiences based on the company’s strategy specifically requested by senior executives.