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