Building People Capability Current Trends and Practices April 2008

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1 Building People Capability Current Trends and Practices April 2008 Recent years have seen many organisations adopt a more strategic, future oriented and integrated approach to training and development or building people capability within the business. In today s fast paced environment, if your staff are not learning, both the individual his/herself and the organisation are falling behind. A US study of 500 publicly traded firms found that firms that had invested the most in training had a stockholder return 86% higher than firms who had invested the least in training, with a score that was also 46% higher than the market average. Training and Development takes many forms, but when it is strategically aligned with the overall business plan, it can have a powerful impact on productivity, performance and commitment levels among staff. Most would agree that today s successful businesses treat employee training and development as an essential investment. The days of training for the sake of training are long gone as training needs to be carried out in a manner that gives people the information, skills and motivation they need to do their jobs well and achieve their goals. Increasingly organisations are focused on providing the right training, at the right time, for the right people. This means the investment is worthwhile for those involved and for the organisation. In a competitive global market, a key difference between companies selling the same product or service is the calibre of their respective workforces. Building people capability, when designed and delivered to meet the real needs of the business and its people, gives organisations a strong competitive advantage.

2 Both Government and individual organisations have identified training and skills development as one of the keys to dealing with the current challenges in the labour market. The Expert Skills Group on Future Skills Needs, 2007, highlighted the need for higher levels of education and strong interpersonal skills among the workforce, all of which need to be fostered by training and development initiatives. The NCPP has predicted that future jobs growth will come from more advanced and highly skilled work than was previously the case (Forum on the Workplace of the Future, 2005). So, clearly the value of Training and Development to Irish businesses and the economy overall has been recognised and well documented. Research by Heraty and Collings (2006) showed that the investment in human capital development was the third largest contributor to Ireland s positive economic growth. In their description of human capital, they incorporated the level of education, work experience of the work force, managerial expertise and training and development and the acquisition of knowledge. Further research by Saratoga (2006) at a global level concluded that generally it is the organisations that engage in the highest levels of learning, training and development investment that experience the greatest success in talent management. Organisations may be responding, as evidenced by the rise in training expenditure of almost 1% to 3.9% of payroll in the 2006 IBEC HRM survey, compared to the 2004 and 2002 surveys. Although the percentage spend and number of days spent training staff may be useful in order to get an overview of the companies commitment to training and development, it is the manner, approach and content of the training initiatives as well as their assessment and follow up that determines success. Training needs to be designed and delivered with the aim of helping staff to achieve their departmental as well as personal goals, so the trend of increased involvement by line managers and employees is a positive development in terms of ownership of the training and learning. The FAS statement of strategy indicates that half of employees in Ireland are employed by Irish owned small to medium sized enterprises. These businesses are ones that need to invest in the up skilling of all their employees if Ireland is to remain competitive into the future. By adopting a strategic approach to training and development rather than an unplanned and ad hoc one at both a National and individual organisational level, training and development initiatives become more targeted, measurable and effective.

3 Other trends in the area of building people capability include the following: A key trend in recent years has been a growing awareness that top talent is critical to an organisation, and if managed well, will have a dynamic impact on the bottom line. Harvard Business School recently concluded that one of the vital functions of HR has to be the war for talent, broadly defined as recruiting, developing and retaining talent. The critical topic emerging was how companies need to become better at bringing people up to speed quickly ensuring they are developed and empowered to reach their potential at work. Research by Tharenou, Saks and Moore (2007) showed that training was positively related to HR outcomes and organisational performance. They also showed that training and development was more strongly related to organisational performance when closely linked to business strategy. Research shows that people tend to act themselves into new ways of thinking rather than think themselves into new ways of acting. Whiteley (2004) showed that organisations that proactively tackle diversity issues are those that trained leaders in behavaioural change. When these leaders and managers modelled inclusive and appropriate behaviours, diversity was successfully integrated into the business. Current and future trends indicate that organisations that want to secure and retain talented and adaptable employees need to provide for ongoing development and educational opportunities. Research by Garavan (2008) showed that the difference between what employees and employers perceive as effective training includes employers rating on the job training, coaching, mentoring, one to one instruction, job rotation and shadowing to be the most effective methodologies. Employees on the other hand, consider education programmes and classroom based training to be the most effective.

4 Perceptions of the effectiveness of e-learning practices have improved significantly, a trend that is expected to continue into the future. This is in line with the general evidence that usage of technology is incremental rather than revolutionary. According to the CIPD survey on learning and development in the UK, the use of competency frameworks is now well embedded in the majority of organisations there, and on average these frameworks cover over three quarters of employees. In Ireland, competency assessment is becoming more popular and has been identified as a key feature of the performance management system by almost half the respondents with formal performance management processes in the 2006 IBEC survey. There is clear scope for extending their usage as a mechanism for identifying learning needs. Many organisations now provide career development plans to their staff. This practice is most common in the area of financial services, with foreign owned and larger organisations more likely to have career development plans and succession planning than Irish owned or smaller companies. A significant change in Ireland since 2004 has been the increase in the use of coaching and mentoring. The IBEC HR survey 2006 showed that the usage of these two methodologies nearly doubled to 61% of companies. This reflects the need to achieve behavioural change and the expectation that coaching now forms part of the role of many managers. More companies are measuring the return on investment for training activity. The Nissan car factory in Sunderland, UK had the highest levels of productivity in Europe, a key factor being the fact that they had one of the best training records in the country as they were in the top 10 of 850 UK engineering and manufacturing firms for their commitment to training. Therefore, the importance of evaluating training impact is increasingly being recognised.

5 Stages in Developing a Training Strategy The research and current trends in the area of building people capability shows the value of taking a strategic and focused approach to this area in the business. The benefits need to be linked to the achievement of company goals, so that the value of all training interventions is clearly linked to the meaningful outcomes. In order to do this, businesses need to be strategic in the manner in which they approach this area. The vital stages to consider in this process include : Business Plan Review what is the strategy and goals for the organisation? Collate baseline performance data customer feedback, sales, staff feedback etc. Conduct a Learning needs analysis What are the organisations goals, what tasks must be completed to achieve these goals, what behaviour is needed for each job holder to complete their assigned tasks, what deficiencies do job holders have in terms of skills, knowledge and attitude to do the job? Developing a training and development plan Implementing the training measuring the transfer of the learning, what is the real outcome of the training intervention in terms of skills, knowledge and attitude? Evaluation of the training levels of evaluation include reaction, learning, behaviour, results, return on investment. How can we measure the impact of the training on all these levels so that the real value of the investment is captured?

6 Overall then, there are a number of important trends now evident in the field of building people capability in Ireland. The need for training to deliver real results in terns of the business and the individual s needs is clear with all parties now having higher expectations about the training process and the results it needs to yield. The critical topic emerging is how companies can become better at bringing people up to speed quickly, developing people faster and empowering them. This reinforces the need to be able to demonstrate what interventions deliver the right results for the business and why. Much more attention is being given to discussing training as a system embedded in the whole organisation as opposed to an add on or nice to do activity. The issue of building people capability should be viewed in the context of a national agenda in Ireland of improving competitiveness and upgrading the skills of all the workforce. In practice, this means that now, more than ever, organisations must invest time and money in workplace training, learning and development. This is regarded as vital to the business, the individual and to Ireland maintaining its position in the competitive global economy of the future.