Building customer relationships: a model for vocational education and training delivery

Transcription

1 Journal of Vocational Education and Training ISSN: (Print) (Online) Journal homepage: Building customer relationships: a model for vocational education and training delivery Denise G. Jarratt, Diannah Lowry & Tom Murphy To cite this article: Denise G. Jarratt, Diannah Lowry & Tom Murphy (1997) Building customer relationships: a model for vocational education and training delivery, Journal of Vocational Education and Training, 49:4, To link to this article: Published online: 20 Dec Submit your article to this journal Article views: 401 View related articles Full Terms & Conditions of access and use can be found at

2 BUILDING CUSTOMER RELATIONSHIPS Journal of Vocational Education and Training, Vol. 49, No. 4, 1997 Building Customer Relationships: a model for vocational education and training delivery DENISE G. JARRATT & TOM MURPHY Charles Sturt University, Bathurst, Australia DIANNAH LOWRY University of Western Sydney, Westmead, Australia ABSTRACT Changes being made to vocational education and training (VET) in Australia to enable industry to be more internationally competitive include making training more responsive to industry and client needs, delivering work skills to specific industry standards, making entry level training more flexible and developing a nationally recognised training framework. Organisations across many industries are adopting a marketing relationship approach in their interactions with customers, recognising the importance of creating value for their current customer base, alongside the need to create new business opportunities. Reports from Britain have described the building of enterprise-specific training programmes, with local partnerships between technical colleges and industry forming the basis of successful British VET delivery. This article first describes theoretical aspects of relationship marketing which support the building of business relationships, then examines the various interactions between industry and VET providers in a non-metropolitan setting to determine whether these constructs are reflected through the interactions. Interviews with industry and training providers identified several different approaches to industry training that are currently adopted, and indicate varying levels of integration between and within industries and training providers. This research identifies and describes one particular training delivery model that exhibits relationship marketing constructs of trust and commitment, investment by relationship partners, knowledge exchange and the development of new processes for training delivery, all supporting relationship longevity. Introduction Both past and present governments in Australia have been and are committed to building internationally competitive industries, and as part of that objective have made as a priority improvement in the skills and 591

3 DENISE G. JARRATT ET AL training of the workforce. Changes being made to vocational education and training (VET) to enable industry to be more internationally competitive include making training more responsive to industry and client needs, delivering work skills to specific industry standards, making entry level training more flexible and developing a nationally recognised training framework. Internationally, researchers and government bodies alike have noted that organisational drive for increased efficiency in production, improvement in service and manufacturing quality, integration of technological innovation, the capturing and using of information and flexibility in operation is impacting on the nature and method of skill development in the workplace (Mansfield, 1995; Diplock, 1995). These changes are forcing a decreasing emphasis on functional specialisation and an increasing emphasis on a broader skill base, team participation, communication and decision-making skills. Organisations across many industries are adopting a relationship marketing approach in their interactions with customers, recognising the importance of creating value for their current customer base, alongside the need to create new business opportunities. Reports from Britain describe building enterprise specific training programmes where local partnerships between technical colleges and industry have formed the basis of successful British VET delivery (Hill, 1995). Within these partnerships new training programmes have been developed that address both technical and soft skill needs. The programmes have been implemented with top management commitment, are delivered both within and outside the workplace and programme evaluation has raised issues for further programme development. Through examining interactions between providers of vocational education and training and their client organisations in the central western region of New South Wales (NSW), this research will determine whether relationship marketing concepts are contributing to training provider-industry linkages. Relationship Marketing Concepts The centre of the marketing exchange process has moved from the transaction to marketing relationships (Juttner & Wehrli, 1994). Juttner & Wehrli contend that the common superior objectives of all strategies are enduring relationships with customers which cannot be imitated by competitors and therefore provide competitive advantages (p. 54). Relationship marketing is certainly not a new concept (Bagozzi, 1995); however, according to Berry (1995, p. 236), formally marketing to existing customers to secure their loyalty was not a top priority of most businesses nor a research interest of marketing academics. This recent interest in maintaining customers has refocused marketing towards 592

4 BUILDING CUSTOMER RELATIONSHIPS creating value and building relationships, with some organisations discarding more traditional marketing approaches. This new marketing paradigm has now been explored in consumer marketing services marketing and business to business marketing (Morgan & Hunt, 1994; Storbacka et al, 1994; Sheth & Parvatiyar, 1995; Holmlund & Kock, 1996; Ennew & Binks, 1996). For example, Storbacka et al examined the contribution of service quality as a precursor for customer satisfaction, relationship strength, relationship longevity and customer relationship profitability, and Sheth & Parvatiyar showed how consumers engage in relational behaviour to simplify information processing, and consuming tasks, reduce perceived risk and maintain states of cognitive consistency and psychological comfort. Initally, relationship marketing clearly redefined the organisation/customer interface, with a descriptive analogy provided by McKenna (1991) who explained the shift in emphasis, as moving from tell us what color you want to let s figure out together whether and how color matters to your larger goal. Customer retention is delivered through building relationships, with organisations developing key processes to support those relationships, including new product development processes and customer support services. Over time, relationship marketing s umbrella opened to embrace the strategic alliance body of literature (relationships developed to enhance the value-adding process of the enterprise and contribute to an enterprise s competitive advantage), with Morgan & Hunt (1994) extending the definition of relationship marketing from the organisation/customer interface to include marketing relationships with suppliers, competitors, channel members, employee groups, and any other body that impacts on the value-adding process of an organisation. The authors build on a body of research on alliance relationships that indicate the importance of trust, satisfaction, and social interaction on the development of and commitment to the alliance (Anderson & Narus 1990; Jarillo & Stevenson, l991; Ring & Van de Ven, 1992). Morgan & Hunt propose a model of relationship marketing where commitment and trust are the mediating variables influencing the outcomes of the business relationship. Their results indicate that trust affects the way that those in the alliance perceive disagreements and arguments, and indicate that when trust is present, parties will view such conflict as functional (p. 32) and will discuss problems openly. Trust a mediating variable influencing business relationship outcomes Trust is proposed by Ganesan (1994) as a multidimensional construct of credibility and benevolence. Credibility is the one dimension identified that has a significant effect on the long-term orientation of a business 593

5 DENISE G. JARRATT ET AL relationship, and Ganesan argues that firms with a long-term orientation rely on relational exchanges to maximise profitability over a series of transactions, whereas firms with short-term orientations focus on developing efficient transactions to maximise profits. These relational exchanges generate efficiencies through synergies built through investment in and exploitation of idiosyncratic assets and risk sharing (p. 3). Antecedents of trust are identified as reputation for fairness (affects credibility but not benevolence), satisfaction with equitable outcomes, experience with vendor and the customer s perception of vendor s specific investments in the relationship. Trust is identified as a pre-condition for parties to have a long-term orientation, and, where trust exists, parties believe that, even under conditions of market volatility and uncertainty, rewards generated through the partnership will be divided in an equitable manner. Previous work by Anderson & Weitz (1989) was consistent with these findings, linking goal congruence, length of the relationship and transaction specific investments to trust within relationships. More recent research by Sheth & Parvatiyar (1992) examined the impact of the constructs trust and uncertainty on alliance characteristics. Their findings indicate that, where trust exists alliances appear to be autonomous, with free-flowing information and better cross-functional cooperation. However, in conditions of low trust there appears tighter management control and a rise in power supported through resource-dependency. Organisation-Customer Relationships In consideration of the nature of the relationship between an organisation and its customers, Evans & Laskin (1994) propose a model of marketing relationships describing inputs (understanding customer expectations, building service partnerships, empowering employees and total quality management), outputs (customer satisfaction, customer loyalty, product quality and profitability) and assessment (customer feedback and integration). Within this model, building service partnerships implies the integration of the service delivery system to develop solutions for the customer, or, in the case of business-to-business markets, developing solutions for a customer to enhance that customer s competitive position. Therefore, product development, product innovation and/or product customisation might also be considered as specific outputs of the model. In consumer marketing, building relationships generates customer satisfaction and decreases switching behaviour (Fornell, 1992). Fornell identified switching barriers built through relationships, including search costs, learning costs, emotional costs, cognitive effort, and financial, psychological, and social risk factors. These aspects were reinforced by Sheth & Parvatiyar (1995) where, following a review of consumer behaviour theories such as consumer learning, memory, cognition, risk, 594

6 BUILDING CUSTOMER RELATIONSHIPS cognitive consistency and sociological influences on consumer behaviour, the authors proposed that relational market behaviour is linked to consumers desire to simplify the buying task, simplify information processing, reduce risk, maintain cognitive consistency and retain a state of psychological comfort. They further argue that an organisation s desire to achieve superior performance and/or competitive advantage will accrue only if customers are willing to engage in such patronage behaviour (p. 256). Some of these customer relationship attributes may also exist in relationships between businesses. Berry (1995) argues that the accelerated interest in relationship marketing in services is the result of the maturing of services marketing, recognition of the benefits of relationships to both the organisation and its customers, and advances in technology. Maturing of services marketing as a subdiscipline of marketing has been evidenced through increasing debate in the literature on service quality in the drive to create customer value (for example, Rust & Zahorik, 1993; Liljander & Strandvik, 1993; Zeithaml et al, 1993). Relationship marketing, particularly in business-to-business services marketing, extends this concept to creating value through providing services tailored to customer specifications. In fact, the service provider becomes an integral part of the customer s value creation process. According to Berry (1995), technological advances are decreasing costs and increasing the potential benefits of relationships through customisation, personalisation, integrating delivery, and extending communication. Relationship Bonds Market relationships have been examined in terms of the bonds that tie members together. Relationships between firms in industrial markets are characterised by a series of bonds identified as technical, planning, knowledge, social, legal and economic (Holmlund & Kock, 1996). Liljander & Strandvik (1993), however, further categorised these bonds, with legal, economic, technical, geographic links and time designated as primary bonds, and knowledge, social cultural, ideological and psychological ties identified as secondary bonds. Recently, there has been a great deal of interest in the issue of maintaining relationship bonds. Research by Ohmae (1989) identified the energy input required from both parties to develop and maintain a business relationship: Anderson & Weitz (1989) explained trust through goal-congruence of relational members, reputation of an organisation and relationship longevity; Johanson et al (1991) explored the issue of economic ties and interdependence; File et al (1995) researched the association between level of interaction and satisfaction, repurchase intent and positive word-of-mouth; Young & Denize (1995) examined commitment associated with relationships, even in cases where participants did not feel positive about their interactions; and O Sullivan 595

7 DENISE G. JARRATT ET AL (1996) reviewed the importance of information exchange in enhancing client relationships. Young & Denize (1995) found that level of commitment to a business relationship varied with the amount and source (one or both parties) of effort applied to maintaining the relationship. The authors observed that where commitment was evidenced from both relational partners, both personal and economic commitment frequently existed. They conclude that quality service delivery may not be required to retain all customers. Some customers require only minimal competence aligned with a guarantee of relational continuity or a high quality brand name (p. 34). The conclusions drawn from this research on relationships between accounting firms and their clients might also be considered when exploring service provider/client relationships in market monopolies. Relationship Marketing in Market Monopolies Relationships developed within monopolistic or oligopolistic markets appear different from those developed in a highly competitive market (Storbacka et al, 1994), indicating the importance of power within the relationship and the nature of the dependence when either the buying (in this research the organisation purchasing training) or selling (in this research the training provider) organisation dominates. These issues of power and relationship dependence are particularly important in this research, with the monopolistic position of traditional VET providers being eroded by those providing higher level vocational education services and those providing lower level vocational educational services broadening their reach in the marketplace (downwards and upwards market stretching). Storbacka et al (1994) provide a causal model of relationship development: service quality customer satisfaction relationship strength relationship longevity customer relationship profitability. The authors point out, however, that relationship longevity is not always a function of relationship strength, with random factors such as critical incidents having the ability to end a relationship. The authors also identify the importance of accountability for relationship profitability, supporting the notion that from the organisation s perspective, the relationship must contribute to its value-adding process for the relationship to survive and develop. The authors claim that even dissatisfied customers may remain loyal because of high switching costs or market monopolies. From the perspective of vocational education and training providers the definition of building relationships with its customer base to enhance value provided to customers fits within the original definition of relationship marketing (organisation-customer interface). However, from 596

8 BUILDING CUSTOMER RELATIONSHIPS the client enterprise s perspective the relationship could be considered as developing a strategic alliance to extend employee skills, enhancing enterprise efficiency and the value process underpinning their competitive position. It is appropriate to consider the interaction from both enterprise and service provider s perspectives under the overarching definition of relationship marketing. Where services are developed through unique interactions between a service provider and an enterprise, they contribute to the value-adding process of the enterprise, are difficult for competitors to imitate, and they meet the criteria of contributing to an enterprise s sustainable competitive advantage (Varadarajan & Cunningham 1995). Relationships between Vocational Education Providers and Industry Local partnerships between technical colleges and industry have formed the basis of successful British programmes for vocational education and training. Hill (1995) describes a 1993 project developed between the Chemical Industries Association (CIA), Synthetic Chemicals and Wakefield College. Initial discussions indicated that, while the CIA national qualifications were gradually being transferred to Synthetic Chemicals, the organisations had concerns about the implementation of the training programme, identifying amongst other issues that trainees were spending too much time in training laboratories and not enough time on the plant, and the course placed too much emphasis on engineering skills and too little emphasis on chemistry content. A Modern Apprenticeship scheme developed by the CIA was adopted as the process for training delivery, and another local chemical company joined the pilot study. An entire programme was developed from the beginning between the college and the two chemical companies, using the Modern Apprenticeship scheme framework as the delivery vehicle and building National Vocational Qualifications into the programme. Successful partnerships have also been observed in Australian vocational programme delivery. The Advanced Manufacturing Technologies Centre in Western Australia has been designed to deliver leading edge science, engineering and technology which can be applied to manufacturing and other value add industries including mining, food, manufacturing, energy and telecommunications. The Centre has been developed with industry partners, to ensure relevancy of content and delivery of courses. As the more traditional trade-based skills are replaced in the manufacturing processes by automation and technology, an increasing demand is emerging for computing, support and servicing skills, understanding of production, processing and quality management, leadership and teamwork (Beere, 1995, p. 79). Where no such specialised training centre exists, Kelly (1995) suggests that vocational training providers such as technical and further 597

9 DENISE G. JARRATT ET AL education (TAFE) colleges must develop localised partnerships where learning is a shared responsibility (p. 104). He proposes that training must be flexible, containing distance learning modules, workplace mentors/assessors and formal structured learning. Modules need to be constructed as stand-alone segments that can be completed as required, and the quality of courses needs to be carefully maintained. Those within the Australian National Training Authority recognise the importance of developing relationships between training providers and their major clients at a local level, be it industry or individuals as the drivers of change. We need to see a decisive shift in responsibility to implementation at a local level, (Noonan, 1995, p. 19). This move to devolution of responsibility has encouraged the concept of user-choice, an emphasis on quality, and an integration of state and national standards to provide a nationally consistent and portable training system. The need to improve quality and productivity of the workforce and develop international competitiveness has resulted in an increased emphasis over the last few years on industrial relations and training reforms in the workplace. A greater enterprise focus... provides the opportunity for those organisations at the leading edge to try different and innovative approaches to employee relations and working arrangements, thereby gaining a competitive advantage. For many enterprises this has included greater integration of skill formation with overall business strategy the development of a true learning organisation. (Diplock, 1995, p. 35) Diplock also recognises the importance of the contribution of the workplace to the success of the National Training Agenda, identifying the importance of compatibility between national standards and industry training requirements, industry resources and local training providers capabilities. Indeed, this factor has also been identified by Allen Consulting Group in a recommendation to the Australian National Training Authority that The national training reforms should be refocused on the demand side. They should be conceived as developing a training market centred on direct client relationships between training providers, on the one hand, and enterprises and individuals, on the other (Fitzgerald, 1994). In response to the user buys recommendations in the Fitzgerald report (1994), where it was recommended that employers are provided with the funds they need to purchase the training they require, the Australian National Training Authority (ANTA) has encouraged the development of partnerships between training providers, employers and employees, using a series of pilot studies to provide guidance through examples of good innovative practices (Curtain, 1995). This process of building partnerships, according to ANTA, will strengthen links and improve responsibilities between providers and clients at the local level 598

10 BUILDING CUSTOMER RELATIONSHIPS and may include improved integration of on- and off-the-job training, customisation, negotiation of delivery arrangements and sharing of resources between enterprises and providers. Research Objectives and Method The research objective is to determine whether relationship marketing concepts are evident at the organisation/vet interface in industries driving the economy and employment in the Central Western Region of NSW. To achieve this objective the following support objectives were established: 1. to identify regional industries that are driving employment and economic growth; 2. to examine within those industries the VET experience from both the organisation and VET providers perspectives; and 3. to identify where principles of relationship marketing are being applied in VET delivery. A qualitative rather than a quantitative research method was selected, as the research objectives directed a focus on developing an understanding of the nature of relationship links between VET providers and regional organisations. Companies were selected for inclusion in the study on the basis of the following criteria: (1) the company must be a competitor in an industry driving employment and economic growth in the region; (2) companies must reflect the range of organisations competing in these industry segments with regard to size and distance located from VET providers; and (3) the company must be willing to discuss training issues. The targeted respondent in each company was the person responsible for the management and development of staff. The majority of respondents were company owners, managers or human resource managers. An overview of each company s experience with VET providers was required from a respondent within the company that had experienced interactions over time, or who was knowledgeable about those interactions. A company rather than individual employee perspective of training experiences was sought, thus a holistic rather than embedded design, with multiple informants, was selected (Yin, 1994). The Central Western region in New South Wales is frequently identified as a cohesive industry area. As such, this area provides a distinct area for examination of the provision of VET. To ensure that the findings reflected the views and VET processes of those industries driving employment and economic growth in the Central Western Region, input/output tables were developed for the region. Based on information provided through the input/output tables, key industries within local government areas were identified for specific analysis through qualitative research. The key areas supporting 599

11 DENISE G. JARRATT ET AL employment identified in the region were retail trading and other trades, food manufacturing, wood manufacturing, other manufacturing, forestry, agriculture (wheat, dairy, sheep, beef, vegetables, viticulture), mining, utilities, public administration, education and community services. In the Central West had employment of 59,482 and gross output (i.e. turnover) of $5.3 billion. The appendix identifies that community services and trade have the largest share of employment with personal services, finance, food manufacturing, building and transport also having a share of more than 5%. However, food manufacturing has the largest share of output, reflecting high capital intensity and relatively high wages. Other industries with relatively high output but lower employment are coal mining, utilities and equipment manufacturing. The economic profile of the region provided support for concentrating investigation on those industries supporting the local economy, both in terms of output and employment. Key industries targeted for investigation were food manufacturing, trade (including retail, mechanical and electrical trades), coal mining, building, equipment manufacturing, and the timber industry. An Organisational Training Needs Analysis model was adapted to a wider industry/regional level. Three levels of analysis have been incorporated into the methodology: (a) industry/regional level; (b) organisational level; and (c) operational level. Organisations were analysed at each of these three levels using guided interview techniques, and were then clustered according to industry type. This facilitated a process of cross-matching across industry sector, in order to identify emerging issues. Verification of themes generated was important in the validation of the data. Key points raised in discussion with industry were followed through with training providers and those funding training as well as those closely involved with industry development within the region. Documentation of training programmes and operational plans were also examined. Phase 1: interviews with industry. Twenty interviews were completed using an interview protocol and interview guide designed to address the research objectives, ensuring broad coverage of industry from small workshops and retail businesses to large organisations in industries identified through the input/output analysis. Information generated from interviews with organisations reflected themes associated with training delivery and their interactions with VET providers. Phase 2: interviews with training providers. All key vocational education providers and groups associated with VET in the Central Western Region were contacted and agreed to be interviewed. These included TAFE, Orange and Community Technical Education College (OCTEC) in Orange, Central West Community College in Bathurst, Business Enterprise Centres, the Department of School Education, private vocational education 600

12 BUILDING CUSTOMER RELATIONSHIPS providers and the Area Consultative Committee, a newly formed committee through the Department of Employment, Education and Training and Youth Affairs (DEFT) to oversee the strategic direction of VET in the Central Western Region. Providers were interviewed to determine their perception of VET issues within the region and key relationships developed within industries and organisations. Results Observed Relationships between Industry and Vocational Education and Training Providers Interviews with industry and training providers identified several different approaches to industry training that are currently adopted, and indicate varying levels of integration between and within organisations, industries and training providers. Model I: integrated enterprise specific training model. At the heart of this model is an organisation s human resource management strategy closely linked with corporate priorities and built around the development of a skilled workforce. Examples of this model of training delivery were found in mining, fast foods and timber industries, and Figure 1 demonstrates the links between training providers and the client organisation. The model reflects a relationship approach, where the client enterprise develops a total training initiative for the enterprise and, either through a coalition of training partners or through a series of independent relationships with training providers, delivers that training within the workplace, sometimes delivering components of training themselves. The organisation recognises that it will require one or several training providers to develop the key skills needed in their employees to enhance the organisation s competitive position, and provide a safe work environment. It will seek out partners who have demonstrated the ability to deliver the standard of training outcomes required by the organisation. 601

13 DENISE G. JARRATT ET AL 137mm Figure 1. Integrated enterprise specific training model. Training programmes are developed within such organisations. through instigating negotiations (with government in the case of TAFE and/or directly with private training providers), and selecting those training organisations who can meet the training requirements and are willing to invest in the partnership. This investment was demonstrated through providing industry-specific project officers to work with the organisation over time (up to 12 months) to establish a training programme. In one organisation studied the total training programme was developed through establishing a network of partnerships. Relationship marketing attributes Activities supporting attributes 602

14 BUILDING CUSTOMER RELATIONSHIPS Selection of partners Process changes to accommodate relationship Bonds Commitment and trust Relationship strength and longevity Organisations are proactive in seeking relationships with VET providers to address specific organisational human resource management objectives. Off-the-shelf training programmes were not considered, or found not to provide desired training outcomes. Training programmes are designed specifically for the client organisation, requiring changes to programme delivery systems, programme assessment systems and programme articulation systems. Multiple links developed with client organisation over long development and delivery periods, cultural training, financial negotiations and agreements, knowledge exchange about specific organisational processes, VET articulation system, costs of alternative delivery system options and training outcomes. Financial investment of training providers, investment by client in workplace training facilities, cultural immersion to ensure relevance of training programme, delivery of programme to fit workplace schedule, continued development through negotiation and articulation of training with recognised qualifications (even for training components carried out by multiple training providers), satisfaction with training outcomes, information sharing, working together to reduce costs of programme delivery. High transaction costs through long development period, building a knowledge base about the organisation, organisational delivery, linking training to recognised qualifications, market monopolies in technical training area build relationship strength and longevity, creating high switching costs. Table I. Support for a relationship marketing approach in an integrated enterprise specific training model (Figure 1). For this organisation TAFE, holding a current market monopoly in technical training programmes, provides the technical training, a private training company (operating within a very competitive environment, but with strong industry specific knowledge) delivers skill development in team building and management, a specialist niche trainer provides an occupational health and safety programme, and specific divisions within the organisation where workers are employed, trained and competency assessed also contribute to the training effort. Organisation-specific training programmes are developed, with large components of workplace delivery and assessment, and training providers become familiar with (immersed in) the client s organisational culture and its procedures prior 603

15 DENISE G. JARRATT ET AL to training delivery. The programmes are articulated to nationally recognised qualifications. Table I provides a summary of the data generated that demonstrates links with previously identified relationship marketing principles. Commitment to the relationship by training providers was evidenced through development of new internal processes to facilitate the delivery of programmes within client organisations (as opposed to traditional delivery, in their own training facilities), the development of industry and organisation-specific knowledge, development of the client-specific programme, multiple interactions with the client, and evaluation of satisfaction with training delivery and training outcomes. In each relationship example, the client organisation retained power and control of the network alliance or series of relationship partnerships which they had instigated to deliver the technical, team and management skills to their employees. From the perspective of the technical VET provider, in each example bonds were developed with the client organisation through financial commitment to this new process of training delivery, the knowledge exchange facilitating programme development, and the planning of programme delivery within the workplace (Holmlund & Kock, 1996). The quality of the training programmes delivered, the articulation of these programmes to recognised qualifications, and delivery of the programmes to fit with the client s workplace schedule further contributed to relationship strength and relationship longevity, with the extensive and costly process of programme development acting as a disincentive to discontinue the partnership. Client organisations generally supported relationship longevity. However, one organisation recognised the need to work with the relationship partner to reduce the cost of training delivery. Achieving operational efficiency and achieving strategic effectiveness are important outcomes for strategic and operational alliances respectively (Sheth & Parvatiyar, 1992). For one client organisation both these outcomes were important. Sheth & Parvatiyar classified alliances as either strategic or operational, based on the contribution of alliance to the achievement of a future competitive position or enhanced operational efficiency. The relationships formed to develop a skilled workforce contribute to both these organisation-desired outcomes, i.e. future competitive position and operational efficiency. 604

16 BUILDING CUSTOMER RELATIONSHIPS 130mm Figure 2. Integrated enterprise/industry training model. Tier 1 training is provided both within (competency assessment by qualified trainers) and/or outside (at training provider s premises) the workplace. Technical training programmes are developed through State Government-established, Industry Training Advisory Boards, with little regional or small business input. The examples observed that fell within this model of VET delivery, supported the relationship development model proposed by Storbacka et al (1994), with specific training programmes being developed through multiple interactions with the client organisation over a long period of time, and satisfaction with the programme strengthening and continuing the relationship. High switching costs and the market monopoly position of the technical training provider are also factors contributing to relationship longevity. Satisfaction with training outcomes, experience with partners over training programme development and training delivery, recognition of 605

17 DENISE G. JARRATT ET AL training providers level of investment in client designed programmes, and industry and organisation knowledge and skills of training staff, are antecedents of trust and relationship dependency, described by Ganesan (1994) and evidenced in these relationships. Training providers will need continually to support this trust through superior performance and frequent interaction with relationship partner, as trust (supported by credibility in performance and benevolence under changing market conditions) appears to be a significant predictor of a long-term partnership orientation (Ganesan, 1994). Dependence within relationships is increased when outcomes are important and highly valued and there are few potential sources for exchange. Development of a skilled labour force for these organisations is a high priority and an important contributor to their value-adding processes. With the resources required to develop technical training programmes (such as: the purchase of technical training equipment; the development of links with industry bodies and the time required for course development; links with government bodies needed to facilitate articulation of programme components into government recognised qualifications, valued by both employees and employers; and resources required to develop organisation-specific training programmes) creating a barrier to entry, there are few training organisations capable of delivering quality technical programmes directly with a client organisation. Transaction-specific investments of relationships (such as realignment of processes to effect exchange, investment in staff s industry and organisation knowledge facilitating customisation of training service and quality service delivery) are resource intensive, however, provide strong signals of trustworthiness of training provider to client organisation, and satisfaction in performance supports that trust (Anderson & Weitz 1989). The data suggest that, for some organisations, future satisfaction will be linked with the ability of both partnership members to reduce costs associated with enterprise-specific training delivery. Model 2: integrated enterprise/industry training model. Model 2 varies from Model 1 in the division and nature of training delivery. Basic training requirements are generally specified by industry (tier 1), with organisations requiring further elements of training (tier 2). Examples of this training model were found in both food manufacturing and metals manufacturing industries. The first tier of training that addresses a range of industry generic skills, is delivered both within and outside the workplace by the training provider. The second tier, addressing organisation-specific needs, is provided in the workplace by the organisation, to ensure protection of the proprietary nature of the second tier training. Figure 2 identifies the nature of the relationship, with the tier 1 training programmes being developed generally through Industry Training Advisory Boards (for TAFE programmes) or other industry 606

18 BUILDING CUSTOMER RELATIONSHIPS organisations, and delivered by local technical and further education colleges or industry-specific private providers. Specifically, the first tier of training involves the determination and delivery of generic training modules (e.g. for the food manufacturing industry communication, occupational health and safety, food science, food technology, canning and preserving technology), with the second tier training to be carried out in-company. This approach to training development and delivery for first tier training meets industry training needs without transferring proprietary information, and when delivered locally, provides a pool of skilled workers that could attract other food manufacturing companies to the region. The need for highly competent workers, with both technical and soft skills, has resulted in one organisation diversifying into the training market, in direct competition with traditional government-funded technical training providers. This training division now provides recognised government-approved training in both technical and non-technical areas for industry, linking with other training providers to deliver basic and/or higher level technical or management skills. The programme combines technical training with communication, leadership and team-building skills, areas identified as not being adequately addressed by programmes delivered through government-funded technical colleges. Few indicators of relationships between training providers and client organisations were evident under this model of training delivery. There is a commitment by training providers to develop industry-specific knowledge, and delivery of some training components occurs in the workplace. However, the development of the content of tier 1 training, through Industry Training Advisory Boards appears to have little regional or small business input. There was evidence of intermittent cooperation between training organisations and local industry groups and organisations, but no evidence of formally building relationships based on commitment, trust and shared values. Model 3: industry-specific training model. This model of vocational education and delivery is reflective of industries containing companies that employ small numbers of employees. In these industries owners/mangers are active in their business, and have little time to devote to training or be trained, some being unaware of the benefits trained employees can bring to their business. Figure 3 represents this simple model of training delivery, with Figure 4 providing an overview of the training continuum, moving from enterprise-specific training development and delivery, to skill development programmes selected by individual customers or by employers for their employees. This latter model of delivery occurs in technical trades, farming and the retail industry. 607

19 DENISE G. JARRATT ET AL 90mm Figure 3. Industry-specific training model. Programmes are developed with industry advice and accredited through government accrediting bodies. Some competency assessment may occur in the workplace. However, programmes are traditionally delivered outside the workplace at the training provider's facilities. As with Model 2, the content of vocational training programmes delivered through TAFE is determined by Industry Advisory Boards, and programmes are generally delivered through traditional channels at TAFE premises. Many small organisations experience difficulty in releasing staff to attend training, and unless the programme is being delivered locally, employees have to travel large distances for specific periods to meet course requirements. Although there was little formal evidence of the application of relationship marketing constructs within this model of delivery, training providers recognise the difficulties faced by their customers and are developing a range of strategies to address their problems. Video conferencing and distance education delivery are two options being currently examined, with new programmes incorporating workplace assessment components. With the movement to competency-based training programmes, and competency assessment occurring in the workplace, concerns were raised with regard to the assessment procedure and the ability of future employers to evaluate adequately the capabilities of those applying for positions. Concerns were voiced about assessment being carried out by workplace colleagues without evaluation from an external examining 608

20 BUILDING CUSTOMER RELATIONSHIPS authority, as well as the current practice of recording achievement of competencies without reference to the time taken to achieve a competency or the level of the competency achieved. 70mm Figure 4. Continuum of training development and delivery options. Implications Model 1 represents the ideal model of VET delivery from an organisation s perspective, with training being culturally tailored, delivered with minimal disruption to workplace and individual schedules, having positive training outcomes and articulated with nationally recognised qualifications. However, the transaction costs of developing and delivering such a programme are high from both the training provider s and organisation s perspectives. Only large employers with a commitment to employee skill development are willing to allocate resources, negotiate with potential partners such as government bodies and private training providers and contribute to the development of an organisation-specific training programme. Even so, in those partnerships that have been established there is pressure to decrease the costs of training delivery. Where multiple training providers are involved, an organisation s ability to manage the training network will strongly influence network stability and longevity. Where enterprise-specific training is not a financially viable option from both the provider s or the organisation s perspective, training development and delivery through Models 2 and 3 could be improved by adopting relationship marketing principles. Interactions between local training providers and local industry groups (for example retail and farming groups) could be formalised, with processes established to 609

21 DENISE G. JARRATT ET AL facilitate information exchange to enhance providers awareness of industry practice, identify the most appropriate media and structures for programme delivery, facilitate local industry s understanding of the financial benefits accruing to business through a skilled workforce, and establish employer commitment to and ownership of employee development. Providers would need to align their internal process to the market place to provide customer support, flexible delivery and facilitate assessment and feedback. Investment from training providers and industry will establish the initial relationship, and the building of bonds through knowledge exchange will create tailored, flexible programmes. The continual evaluation and development of these programmes to meet the challenges of a dynamic business environment will support relationship strength and longevity. Both retail and farming industries have identified the problem of lack of time available to train new employees in basic skills, with the farming industry indicating safety concerns with those entering industry employment without being able to operate a range of basic equipment safely. Partnerships with local industry groups could result in the design and delivery of pre-employment training programmes, and facilitate development of further programmes that address issues of location (farming industry) and peak trading periods (retail industry). Conclusion In the organisations interviewed, commitment of top management to training appeared to be a critical driver of relationship development, stimulating delivery of organisation-specific training programmes that are articulated into nationally recognised qualifications. This commitment is evidenced through the key client organisational resources (such as: the development of training facilities within client organisations, time for key executives to negotiate with government bodies) that are required to support relationship development. Where no such partnerships existed, three major issues have been raised. First, there appears to be increasing concern about the focus on technical rather than soft skill development, limiting the potential of individuals to work within teams and understand how the nature of the problem they are addressing in the workplace fits within the total operational picture. Although the issue of soft skill development is being addressed in enterprise-specific programmes, most technical, industry-directed training programmes, accessed by staff in smaller organisations, fail to deliver the skills required for leadership, communication, decision-making and team participation. Secondly, concerns have been raised about the issue of competency assessment in the workplace. Lack of external evaluation of competencies has raised the issue of the value of achieving competency accreditation and the difficulty of employers in evaluating the skills of potential employees. Thirdly, small 610