Achieve a higher ROI in training interventions
Sibongile is a resource manager with a dilemma. She has to select one training initiative from a variety of training offerings from the HR department that will best enable her staff to perform better. The challenge here is that the HR department is not necessarily there to achieve a higher ROI for her unit, yet Sibongile’s performance bonus is directly linked to achieving higher returns. How does she tackle this challenge?
The solution involves a move away from the traditional approach that says “any training is good”. Some training may be good for the individual – but is it good for the business? As an example, Steve Jobs, co-founder of Apple, said that his class in calligraphy was one of the best things that he did at college, and it is the reason we have different fonts on computers today – but taking a calligraphy class will certainly not make most of us better at our jobs.
We need to re-examine training and make it relevant to improving the performance of individuals in their existing jobs. However, before reassessing your training methods, determine what type of employer you are.
Toh, Morgeson and Campion, in Human resource configurations: Investigating fit with the organizational context, showed how organisations use the values they pursue and their organisational structure as key determinants of HR practice and performance. They identified five HR practice bundles that characterise employers. These include being a cost minimiser, contingent motivator, competitive motivator, resource maker and commitment maximiser.
Cost minimisers are organisations that are below the average in adopting high-performance HR practices. As such, these organisations expend the least amount of effort in motivating, developing, and retaining staff through HR initiatives.
Contingent motivators are organisations that adopt a variety of contingent pay systems to motivate. This system of motivation usually translates into ‘pay for performance’ and ‘no pay – no performance’. This is typical of commission-driven industries.
Competitive motivators motivate by paying above-market competitive wages. These organisations do not have a strong training programme and will spend time on recruitment. They also focus on maintaining a disciplinary environment for ‘working out’ incompetent employees. These systems are called ‘meritocracies’ as merit is determined by increasing contributions to the organisation.
Resource makers are organisations that focus on recruitment and selection, training and development, and retention strategy. They seldom use monetary rewards as motivation.
Commitment maximisers adopt the full range of high-performance HR practices to gain maximum motivation and commitment. They select, develop, motivate, and provide opportunities for employees to maximise their contribution. These organisations are often referred to as innovative, high performing, or highly involved.
High performance environments are more likely to operate as resource makers or commitment maximisers, while low performance environments are likely to be operating as cost minimisers, contingent motivators. Competitive motivators may be in either sphere.
Now, to get back to our case study.
Sibongile needs to decide how to plan her resources in a corporate context. Is she there to create new resources that are capable – so adopting a resource-making strategy - or is she going to pay for performance? If the latter is true, recruitment, and not training, is a more strategic capability.
These are tough questions but in the end she will have to decide and align the training with the desired performance goals to get the best out of her people.
Daud wrote in Human resource practices and firm performance: The moderating roles of strategies and environmental uncertainties, that human resource planning has a positive relationship with profitability and growth. He also found that performance-based pay has a positive relationship with profitability and growth. His study revealed that skills development only really has a positive impact on reducing involuntary employee turnover. He also found that business strategy has a bigger impact on performance and growth than any other HR-related interventions.
A classic mistake that companies make is training people for their next job. Training should have a focus on empowering people to do their current job better. Employees improve their level of engagement when they learn new techniques, strategies and perspectives on their current work. If training takes a person too far away from their existing reality this is likely to result in a career change.
A new paradigm for training would look at how training enhances fit with your current job and how training enhances the flow of what you are doing. Most of us do not think of training interventions in this way, they are normally perceived as classroom experiences that give us an opportunity to reflect on our careers.
For Sibongile, this means that the variety of skills that she should be getting from HR is not generic. It should be specific to her industry and help to advance people in their existing jobs.
Most companies do not have the means to create such programmes and they should approach specialist organisations that can assist in customising learning programmes. Workplace-based learning and assignments formed around cutting-edge thinking develops the basis of these programmes.
This is a radical departure for some organisations that only train on supervisory or managerial levels. Not to say that there is no role for general management development in South Africa. The reality is that we need more than 1000 new CEOs of organisations that can employ up to 200 staff in South Africa right now to support the country’s development strategies. We also need a growing number of senior and middle managers.
To develop these abilities, companies are looking towards spiritual and emotional intelligence as core competencies in the average employee. Organisations are training their staff on entrepreneurship, project management and finance every day. Mentoring and coaching, leadership, general management and specific skills are critical for most organisations. These are the new basics required to ensure that organisations gain a return on investment and excel in an increasingly demanding corporate environment.
Now more than ever, organisations have a responsibility to support competency development to achieve results for shareholders and training is a tool for enhancing this ROI.
Riaan Steenberg is the Chief Operating Officer and a Director of Regenesys Business School in which capacity he takes responsibility for strategy, operations and growth, together with the rest of the executive team.
A certified PMP with a MBA with specialisation in change, investment and portfolio management. Riaan has completed management consulting and project management assignments for hundreds of projects ranging from major infrastructure implementations to complex research and process re-engineering assignments.
