Training & Development for Businesses: A Literature Review

Training & Development for Businesses: 

A Literature Review

     This admittedly is a bit different from my normal postings but sometimes a change is refreshing and this is my attempt to be a bit more academic in my writing. I recently had the chance to lay the groundwork of a leadership development program for one of the largest third party logistic providers & freight managers in the world at their largest North American location with over 1000 warehouse associates and leaders. While I have "field experience" in leadership I saw this opportunity as a way to expand my academic understanding of what leadership is and how you develop it. Before you are several summaries of articles that I have reviewed to help give you a guided tour through what you should or shouldn't do and why these programs are important.

Article #1

(Cappelli, 2008)

This paper sets the stage and discusses the broader topic of talent management within companies and how to carry out the entire process with the best ROI. There are four basic principles: 
1) Make and Buy to Manage Risk; too much talent is expensive to retain. Underestimate the talent you need and then higher the rest from outside but, be careful in the areas in which you do this because some are easier (less expensive) to fill from the outside than others.
2) Adapt to the Uncertainty in Talent Demand; break up development programs into shorter periods or create organization wide talent pool that can be used by any business unit. 
3) Improve the Return on Investment in Developing Employees; get employees to share in costs of development. Ask them to take on additional assignments on a voluntary basis. Maintain relationships with employees that leave in hopes that they will come back, bringing back your investment in them. 
4) Preserve the Investment by Balancing Employee-Employer Interests; Involve them in the conversation of where there career is going within your organization, this may prevent another company from stealing the talent you have already developed. This approach is almost like a queueing in supply chain management but with human capital instead.

Article #2

(Pierre Gurdjian, 2014)

This article discusses the 4 major mistakes that came up when the authors interviewed hundreds of executives (the authors work at McKinsey & Company) in regards to their leadership development efforts. 

1) Overlooking Context, “A brilliant leader in one situation does not necessarily perform well in another.” The type of skills and leadership you want to develop will be determined by what you are trying to do with your business. This leads you into refining the development process to 2-3 core competencies to train on and the program should have a clear beginning and ending skill level. 

2) Decoupling reflection from real work, classroom training has its place but studies show that learning by doing is a much better development process. “Tie leadership development to real on-the-job projects that have business impact and improve learning.” The immense amount of challenge that is involved in this type of process will produce much better results from your program and might just end with a fantastic business improvement. 

3) Underestimating mind-sets, this is usually accompanied with difficult conversations that have to be hand because what may have to change is a personality trait or a style of leadership, I.E it may be hard to tell somebody they are a micro-manager or tell somebody that you want to change the way they do things even though they already do them well but your way would make them even better. Challenging and pushing people out of the comfort zone is the only way you will get already effective leaders to flourish even more. 

4) Failing to measure results, you track results of new products or business functions why would you not track the effectiveness of your training or leadership programs. Not only will you fail to improve the program if it didn’t work but you won’t be able to justify its continued use if it does. Being able to quantify its success is key in determining it’s return on investment. This analysis can range from determining the productivity of workers before and after a training program to tracking their careers to see if those that have gone through development program have fared better than those that have not. 

In conclusion you spend plenty of time and research on developing and launching products or business lines why would you do the same for your employees?

Article #3

(Dostie, 2010)

This paper examined the effects of OTJ and Classroom Training in businesses throughout Canada from 1999 to 2006. They used statistics from the Workplace and Employee Survey (WES) conducted by Statistics Canada. While they are relatively confident in their findings they do admit some factors that may have skewed their findings such as: worker turn-over inhibiting long term gains from training and less productivity-enhancing subjects being taught. The article has found that employees who have received classroom training are 11% more productive than employees who have not.  They also find that OTJ training creates 3.4% more productive employees but could be higher if the turnover rate is controlled for.  During a cost benefit estimation in the article they have outlined that the “11% productivity gain yields approximately $8000 in additional value added per trained employee per year.” However they found in WES that “average classroom training expenses per (trained) employee being approximately $1000. This would mean that each $1 invested in classroom training yields a maximum of $8 in value added.” This however is generalized across a large subject sample and may not be replicable in every business environment. 

Article #4

(Bartel, 2000)

This article discusses commonalities between various literature throughout that analyse returns on investments (ROIs) to companies when they conduct training programs. While the article was written in 2000 (the current atmosphere may be different) they found several glaring issues with research; companies did not effectively (or did not at all) measure ROI due to the lack of productivity data before and after training was conducted, they did not compare their measured group to a control group to determine its overall effectiveness, and the companies did not continue to measure productivity well after training to determine the depreciation of the productivity created from that training. In two case studies that measured and analysed everything correctly the companies had ROIs of anywhere between 100 and 200%.

     In summary what should you and your business do? Honestly I wouldn't even start developing a program until you find that it might be worth creating. I guarantee that if you thought about doing it another company before you thought about it and then did it. Reach out to your contacts in similar businesses and see what their outcomes were and if they think it was worth it or not because if it wasn't then that money and time could be used best in another area. If it was worth it take a measure of those that you want to train and then set a goal for where you want them to be after. This gives you not only the pre-training data to analyse ROI but will also give you an idea of what type of training you will need to incorporate in order to bridge that gap of skill you have established. Next is understandably the hardest part, developing the curriculum of the program. You want the content to be challenging in order to encourage growth but you don't want it to be too hard or too easy because that may ruin your ROI. Lastly don't make the mistake of not measuring the progress of your employees, before, during, and long after they have completed the training. The whole reason of creating the program is to improve the business and you can't measure improvement if you don't effectively track the outcomes of the program.

     Investing in human capital through training & development is just as important as research & development of a new product, I would even argue that it is more important. If you have a good product but you don't have productive employees then you won't be able to manufacture and sell that product. If you aren't developing your workforce then you aren't developing your business and that is a recipe for failure. Hopefully after reading this you will be inspired to create your own recipe for success. 




Shout out to the Scholars (Aka Bibliography)

Bartel, A. P. (2000). Measuring the Employer's Return on Investments in Training: Evidence from the Literature. Industrial Relations, Vol. 39 No. 3.

Cappelli, P. (2008). Talent Management for the Twenty-First Century. Harvard Business Review, 1-8.

Dostie, B. (2010). Estimating the Returns to Firm-Sponsored On-the-Job and Classroom Training. The Institue for the Study of Labor, IZA Discussion Paper No. 5258.

Pierre Gurdjian, T. H. (2014). Why leadership-development programs fail. Mckinsey Quarterly.