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Investing in HRD in Uncertain Times
Wayne F. Cascio
UFHRD Conference, Brighton, UK
June 6, 2013
We Live in Uncertain Times
Why the Uncertainty?
• Global Economic Turbulence
• High ratios of debt/GDP• Financial market volatility• Regulatory uncertainty• Consumers’ reluctance to spend• Structural changes in labor markets• Developments in technology
Global Interdependencies
• Countries, companies, and workers interconnected as never before
• Global labor markets are fueling both company and worker mobility
• Competition for talent comes not only from the company down the street, but also from the employer on the other side of the world
• Challenge: Become an “employer of choice”
Three More Big Changes
• Increasing workforce flux• more roles automated or outsourced• more workers contract-based, mobile, or work
flexible hours
• More diversity as workers come from a greater range of backgrounds
• Successful managers less defined by technical skills, more defined by the ability to work across cultures and to build relationships with many different constituents
Structural Changes in LMs
• Workers coming from a variety sources - a splintered supply of labor
• Labor-market intermediaries (LMIs) facilitate that
• LMIs: temporary-help services, online job boards, social media sites, executive-search firms, outplacement firms, professional employer organizations (PEOs)
Bonet, Cappelli, & Hamori (2013)
• “The growth and increasing prominence of LMIs is important for all research associated with the workplace because we can no longer do a study of ‘workers’ in an organization and assume that they are all employees. Some may be “temps” under contract to an agency, some may be ‘employed’ by a PEO, some may work for vendors” (p. 340)
Examples
• LinkedIn – largest prof’l social-networking site• >175 million members in >200 countries. • About 2.6 million companies worldwide have
LinkedIn pages
• Temporary-help agencies – 81% of orgs. worldwide use them to manage fluctuations in demand
• In Europe, estimates of percentage of the workforce not “regular” employees is > 30%
Rethinking Existing Paradigms About the Workplace - HRD
• Orgs. that trained workers less were more likely to use non-standard workers, including agency temporary workers and PEO workers (Cappelli & Keller, in press)
• Unwilling to provide firm-specific training, companies tend to assign workers from these sources to simpler jobs, which gives the workers little chance to learn on the job
Implications for HRD
• Who is most likely to receive opportunities for continued skill development?
• Workers with longer-term relationships with employers
• Whose skills are valuable or essential to achieve an organization’s strategic objectives
Dramatic Changes in Spending on HRD
• In 2008 and 2009, annual training expenditures plummeted by 11% in each year
• It rebounded a positive 2% in 2010, but then rose sharply, increasing by 10% in 2011, and then by another 12% in 2012
• Lesson: Firms cut training expenditures dramatically during the GFC, but as the economy began to rebound, expenditures on HRD simply could not wait
• For full-time, core employees, HRD is not a competitive nicety. It’s a competitive necessity and firms know it
Two current Trends
• Public-Private partnerships• Airbus and State of Alabama
• “Building a workforce” in remote areas• Mining industry, Anglo American PLC
Aligning HRD with Evolving Trends
• Workplaces are becoming more transient, more mobile, and more focused on self-service
• They have become seamless, and also endless, as they roll through a 24/7/365 cycle
• Organizations have become “borderless” to their customers as well as to their employees
Developments in Technology
• Rise of the Internet• % of the world population with Internet access
has increased from 18 to 35%, from 2006 to 2011
• Growth in cloud computing• Gives consumers and companies cheap,
unlimited access to cutting-edge computing power and applications
• By 2015 a projected 2.5 billion users and 15 billion devices will be accessing cloud services
Implications for 21st-Century Orgs.
• 20th-century organization: hierarchical
• 21st century organization: flat - a web or network that links partners, employees, external contractors, suppliers, and customers in various collaborations
• Players are becoming more and more interdependent; managing this intricate network will be as important as managing internal operations
Doing More With Fewer Workers
• 95% of net job losses during the GFC were in middle-skill occupations - office workers, bank tellers, and machine operators
• HRD challenges associated with reskilling, or upskilling these individuals: a major public policy issue, and also a significant opportunity for HRD specialists to contribute to the betterment of human welfare
• This is not a one-shot opportunity; the MIT Center for Digital Business predicts that the next 10 years will be more disruptive than the last 10
Innovations in HRD Design/Delivery
• Responses to massive changes wrought by globalization and technology
• Two trends: • Technology-delivered instruction (TDI)• HRD using social-learning tools
Technology-Delivered
Instruction (TDI)• TDI is the presentation
of text, graphics, video, audio, or animation in digitized form for the purpose of building job-relevant knowledge and skill
Technology-Delivered
Instruction (TDI)
• Whether training is Web-based or delivered on a single work station, on a PDA, or on an MP3 player, TDI is catching on
Why TDI Will Boom
• Both demand and supply forces are operating
• There is growing demand for:• Just-in-time training delivery• Cost-effective ways to meet the learning needs
of a globally distributed workforce, and• Flexible access to lifelong learning
Why TDI Will Boom (cont.)
• On the supply side:
• Internet access is becoming standard at work and at home
• Advances in digital technologies now enable training designers to create interactive, media-rich content
• Increasing bandwidth and better delivery platforms
• There is a growing selection of high-quality products and services
BOEING’S 787 DREAMLINER
• Mechanics going through Boeing’s 25-day training course for the 787 Dreamliner learn to fix all kinds of problems
787 Dreamliner (cont.)
• Problems range from from broken lights in the cabin to major malfunctions with flight controls.
• One thing they won’t soon do: touch one of the planes
• They use laptop and desktop computers inside a classroom with huge diagrams
• Computers display an interactive 787 cockpit, as well as a 3-D exterior of the plane
787 Dreamliner (cont.)
• Using a mouse, the mechanics “walk” around the jet, open virtual maintenance access panels, and go inside the plane to repair and replace parts
• At the end of the course, the mechanics get all training materials on a tiny memory stick
• In the field, staring up at an actual Dreamliner, they use tablet PCs to diagnose and solve real problems with the planes
Does TDI Pay Off?
• Meta-analysis results (Sitzmann, 2011) indicate that relative to a comparison group:
• Post-training self-efficacy (belief that one can succeed) was 20% higher
• Knowledge of facts was 11% higher,• Skill-based knowledge was 14% higher,
and• Retention was 9% higher for trainees
taught with simulation games
Does TDI Pay Off? (cont.)
• Trainees learned more when:
• Simulation games conveyed course material actively rather than passively,
• Trainees could access the simulation game as many times as they desired, and
• The simulation game was a supplement to other instructional methods rather than stand-alone instruction
Does TDI Pay Off? (cont.)
• Trainees learned less when:
• The instruction the comparison group received as a substitute for the simulation game actively engaged them in the learning experience
Social-Learning tools
• “Employees have always learned from one another, but technology has made it possible for workers to collaborate in ways that were almost unimaginable a decade ago” (O’Leonard, 2013, p. 13).
Dramatic Growth (O’Leonard, 2013)
• 2007: 7% of U.S. companies were using wikis in a learning environment
• 2012: 24%
• 2007: 11% of companies were using communities of practice (CoPs) in a learning environment
• 2012: 33%
• 2012: 26% of U.S. organizations use social media such as Facebook, Twitter, and Yammer in their employee-development initiatives
Social-Learning Tools (Cont.)
• 2012: $46,000, on average, spent in large U.S. companies, nearly triple the spending in 2010
• Objective: Create the kinds of learning environments that will fit evolving structural changes in the nature of work and in its execution
Caution• Traditional, instructor-led classroom training is still popular:
• 37% of total training hours in manufacturing; 63% in insurance
• Trend: combine social-learning tools with more formal training programs. How?
• By creating employee networks, connecting novices to experts through online expertise directories, and sharing knowledge through CoPs
• Result: continuous learning environments
Research Questions
• What is the relative effectiveness of alternative social-learning tools?
• Which features seem to have the greatest impact on long-term learning and positive transfer to the job situation?
• What circumstances make social-learning tools more or less effective?
• Are there interaction effects between social- learning tools and more formal training programs?
Developing Leaders in an Uncertain World
• Best companies share two features:• They generate dramatically greater market
value over time than the weakest
• Their CEOs commit a higher priority to
leadership development in spite of uncertain environments and pressures for short-term financial results • Source: 2012 study of about 1,000 firms worldwide
by CEO.net in partnership with Chally Group Worldwide
Developing Leaders: Best Companies
• Procter & Gamble• Exercises a razor-like focus on internal succession
planning at all levels. • From its inception 175 years ago, promotion from
within has been a hallmark of the company. • To encourage managers to develop those below them:
your boss can’t be promoted until you are ready to be promoted.
• Each year the CEO personally looks at the top 300-400 executives and reviews their progress with the BoD
• Most important element: short feedback loops that include 360-degree reviews where the system tries to prevent derailment
Best Companies (Cont.)
• General Electric’s Crotonville, NY Center• Reportedly spends about $1 billion a year • Offers 13 leadership-skills courses that all senior
executives should have, such as presentation skills, project-management skills, and financial literacy
• Managed by Crotonville staff, but delivered at GE businesses around the world, including Shanghai, Munich, and Bangalore
• Uses a “Train-the-Trainer” model. GE trains 50,000-60,000 people a year digitally and an additional 9,000 attend courses at Crotonville.
Best Companies (Cont.)
• IBM: long history of innovative leadership development and cross-discipline mentoring • Each year it identifies, assesses, and develops some
60,000 high-potential leaders at all levels• Sends teams of high-potential employees around the
world to work with local organizations on local problems
• Its succession process has been a major reason it is one of the few firms that has lasted a century
Practices in Best Cos. for HRD
• Top management is committed to HRD; it is part
of the corporate culture
• It is tied to business strategy and is linked to bottom-line results.
• Internal environments are feedback-rich: • they stress continuous improvement, promote risk taking,
offer one-on-one coaching, and afford opportunities to learn from the successes and failures of decisions
• There is commitment to invest the necessary resources, to provide sufficient time and money for training
Conclusions
• In an uncertain world, HRD expenditures may dip during economic recessions, but there is no evidence of their long-term demise
• Competitive pressures to deploy well-trained workforces that can innovate constantly will not go away
Challenges: HRD Design/Delivery
• Changes in the structure of labor markets (greater use of LMIs)
• In the forms of organizations (from vertical hierarchies to networks)
• In social trends (explosive growth in the use of social-media tools), and
• In technology (cloud computing, smartphones, tablet computers)
• Technology-delivered instruction and social-learning tools are two key innovations, and there is every reason to believe that many others will follow