Abraham Maslow developed what he characterizes as “The Hierarchy of Human Needs.” For present purposes, I will consolidate them in three stages: survival, security, and fulfillment. OK, but so what?
A lot, it turns out.
According to Training magazine, organizations of various kinds currently spend $57-plus billion on training and development (T&D). That’s big money. Since just about everyone would agree that T&D is a good investment, are those dollars well spent? Not necessarily. To determine how those dollars are being effectively utilized, managers need to decide how best to invest based on business needs. Since this connection is not always apparent, decision-makers are advised to consider three key stages. Each stage provides value to an organization. They also ensure dollars are being invested wisely rather than merely spent.
Stage 1: Survival
To quote Peter Drucker, “The ultimate goal of business is to stay in business.” In other words, to survive… and this is just what Stage 1 is designed to accomplish. It focuses on employees who are critical to helping the business remain viable. Typically, these employees are those who generate revenue, make products, or perform a vital service.
Stage 1 of the training investment ensures a critical employee group(s) will master job competencies required to perform at a high performance level.
For example, the Starbucks brand is identified as “the third place.” A place to go that’s not home and not work, but a place of “affordable luxury. Store-level Starbucks employees make the “third place” experience happen. Accordingly, Starbucks trains these employees to a high standard. Delivering on the third place expectations ensures Starbuck’s success. It’s also an investment in survival.
What happens when a firm just assumes critical employees already know how to do their jobs well? You’ll be on you way out of business, that’s what.
Determine how your firm will answer the following questions:
- Have you identified those employee (jobs) who are critical to (a) producing needed revenues, (b) providing a service, and (c) manufacturing a product?
- Have critical employees received training that guarantees they will perform their jobs to a high level?
- What percentage of your T&D dollars is now invested in Stage 1?
Employee retention research confirms that when employees are not trained to perform well in their jobs, they become disengaged with their jobs and their organization. Could these be your critical employees? How long do you think your business will survive without investing in Stage 1?
Stage 2: Growth to Ensure Stability
Training is defined as preparing employees for their current jobs through learning activities designed to support organizational goals. Development is defined as applying learning activities to prepare employees for future jobs and assignments.
Stage 1 investment ensures business survival today. Stage 2 investment ensures business survival into the future by investing in future employee growth.
A Growth stage investment is designed to build talent bench strength. And, like Stage 1, there is a focus on identifying critical employees to invest in. The goal of this investment is organizational performance through employee growth.
Just as a coach positions a team to win in seasons to come by strengthening the skills of its players season to season, so must business leaders position development of their employees to ensure future business needs are met.
For instance, Federal Express’ ability to recruit, assess, and develop hourly employees for front-line supervision is a key driver to its continued growth and success (91 percent of all its managers are promoted from non-management positions).
Determine how your firm will answer the following questions:
- What are your organization’s longer-range needs and strategy (18 to 24 months)?
- What positions will most affect their ability to arrive there?
- How will you develop employees to fill those positions?
- What percentage of your T&D dollars is now invested in Stage 2?
Future success will depend on employees’ ability to grow. Are you strengthening your players to win next season?
Stage 3: Gaining and Then Sustaining a Competitive Advantage
Stage 3 requires an investment in training within a context, a frame of reference, one that is significantly different from Stage 1. As an organization achieves control over training (survival), then development (growth), training can help to accelerate and strengthen a firm’s competitive advantage. When work processes change, new products or services are introduced and job competencies change, as well. Here, training plays an important role…ensuring that employees not only can but will perform.
To illustrate, research confirms that there is a positive relationship between customer satisfaction and repeat purchases, customer retention, stock price, decreased complaints, and profitability. Firms now are placing greater emphasis on training front-line folks in new ways of interacting with customers. Today, data on customer buying patterns can help employees personalize customer service to achieve customer satisfaction. Leveraging this information can create a competitive advantage.
The Cheers intro song that notes, “you want to go where everyone knows your name,” speaks to ultimate personalization. Suggesting products or services that align with customer tastes and interests adds another layer of service. Training employees how to personalize their customer interactions represents a competitive advantage.
According to Temkin Customer Service Ratings, firms such as Courtyards by Marriott, H.E.B., Chick-fil-A, USAA, and Amazon.com receive high customer satisfaction ratings. They also invest in their employees to create service that ensures ongoing customer satisfaction.
As a reminder… employees’ ability to personalize service successfully is directly connected to how well they are trained.
Determine how your firm will answer the following questions:
- How do you recognize opportunities for performance improvement where training must play a role?
- How are your employees trained to reach a new, higher level of performance?
- What percentage of your T&D dollars is invested in Stage 3?
The competitive landscape is constantly and rapidly changing. Does maintaining the status quo, no matter how high it is now, ensure a competitive advantage?
Every Training department has a budget and is responsible for investing those dollars wisely. The percentage of a budget that is committed to survival, growth, or competitive advantage will vary based on prior T&D investments and a changing marketplace. A bigger question is how much is being invested in T&D initiatives that are not survival, growth and competitive advantage? Let’s call it Option 4. And what is the business reason for spending money there?
Even if your firm is flush with cash, every dollar expended for non-essential T&D (Option 4) could be invested in survival, growth, and competitive advantage. Option 4 may be viewed as nice, but it subtracts from business success, and if much money is invested in Option 4, you may well be on your way out of business.
Conclusion
The 3 Stages approach is a tool managers can use to align T&D with the present and future needs of the business. Allocating training funds into the appropriate stage ensures that sound decision-making is at work and capital is managed like the investment it is. Like any investment, T&D dollars ultimately are reflected in the only measure that really counts: business success. And that investment truly is a wise move. More to the point, it is imperative to survival, security (stability), and, of greatest importance, fulfillment of the organization’s goals.
I agree with Maslow: There can be no security without survival and stability, nor can there be a competitive advantage without the stable foundation that only rigorous and enlightened T&D can achieve. It also is important to keep in mind that only in the healthiest organizations are personal growth and professional development most likely to thrive. If that doesn’t justify a substantial investment in training and development, I have no idea what does.
John H. Cox, Ed.D, CPLP, is president of the Cox Learning Group. Cox and his firm have developed high-impact learner-guided T&D systems for numerous organizations across sales, supervisory, management, customer service, and multiple front-line roles. Contact him with feedback on his article via e-mail at: coxlearn@gmail.com or by phone at 972.304.0851.
