Investing in HRD in Uncertain Times Wayne F. Cascio UFHRD Conference, Brighton, UK June 6, 2013

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