A strategic process model for small business training and development. (role of employee training in small businesses) James W. Fairfield-Sonn.

Full Text: COPYRIGHT West Virginia University Bureau of Business Research 1987

A STRATEGIC PROCESS MODEL FOR SMALL BUSINESS TRAINING AND DEVELOPMENT

To survive and grow in increasingly competitive markets, service firms have often been advised to develop a distinctive competence. For example, in Peters and Waterman's book, In Search of Excellence, they cite the success of Delta Airlines' creation of a "family atmosphere" and Disney Productions' "service-through-people." There is one area, however, which is often mentioned but rarely treated seriously as a potential source of competitive advantage. That area is training and development.

Training and development may sometimes be viewed as a luxury or "necessary evil" by senior management. In addition, few senior managers have the time to become personally involved in such labor-intensive activities, so they do not see the direct benefits which can be gained from these efforts. It may also be the case that senior management overlooks or avoids this area because they do not have a clear model for making decisions about whether or not training and development activities will lead to a competitive advantage.

The purpose of this article is to demonstrate that while training and development may be a luxury in certain business situations, in others it is a vital part of a larger corporate strategy. When such activities do become part of a strategic plan, senior managers should become directly involved in several aspects of the effort. In this article a strategic process model is outlined which can aid managers in deciding whether or not training and development activities are likely to lead to competitive advantage in their organizations. The use of the model is illustrated in the case of one service organization.

STRATEGIC PROCESS MODEL

When service organizations report dissatisfaction with their training and development activities, the cause can often be traced to the process by which the activities were created. More often than not, such programs are developed in response to a crisis such as the departure of several valued employees, a rash of customer complaints, and/or new regulatory reporting requirements. In response to these pressures, a content-oriented, reactive, and piece-meal effort is mounted, which may serve short-run demands, but rarely addresses long-term issues. To move beyond this "quick fix" mentality, a fundamental shift in thinking must occur about ways of developing pro-active, goal-oriented programs that can be integrated with other human resource activities.

In figure 1 a strategic decision-making process model, organized around three sequential stages, is outlined as one way of approaching training and development strategy. Stage 1 calls for both external and internal assessments of the organization's goals, strengths, and weaknesses. Stage 2 requires that decisions be made about defining the role and function of training and development within the context of the larger organization. Stage 3 focuses on several basic implementation decisions to insure that the plan will become part of a general approach to management.

The value of this model to managers in small- and mid-size organizations is that it highlights key choice points in the decision-making process. The three stages of the model and ten critical decision areas within them are explored below, followed by a case study detailing how one service organization used this model to create a strategic training and development program.

Stage 1: Organizational Assessment

The first step in developing a strategic plan is to identify where the organization wants to position itself within its industry and to assess its strengths and weaknesses. Unfortunately, senior managers often fail to consider training and development as a serious means of gaining competitive advantage, and training specialists, when present, frequently overlook the need to design their efforts to support the attainment of larger corporate goals. To overcome these weaknesses, key decisions must be made and communicated in two areas.

Decision #1: What are the organization's primary goals? Since the publication of Chester Barnard's The Functions of the Executive in 1938, senior managers have repeatedly been advised to begin their planning efforts by formulating clear corporate goals, which will become key factors for success, and then to communicate them to all employees. Yet senior management in many small- and mid-size firms tend to avoid or overlook this fundamental task. Along with goals for profits, growth, product quality, and customer service, training and development goals must be seriously considered by senior managers as a means of enhancing the human resource potential of the firm.

Decision #2: What internal tensions or deficiencies are currently causing problems? After management has developed clear corporate goals, attention should be shifted to an evaluation of how internal operations are enhancing or inhibiting attainment of those goals. In the broad area of human resources, four issues deserve close scrutiny.

First, what are the policies and practices that apply to screening, recruiting, and hiring? Second, how competent are current employees, and how are they managed and evaluated? Thid, who is leaving the organization, and why? Finally, what kind of information or feedback is management receiving on the above and related activities?

The purpose of Decision #2 is to distinguish systemic from personnel deficiencies which may be causing problems for the organization. In other words, to what degree are personnel policies and practices, as opposed to individual employees' knowledge, skills, and motivation, limiting the attainment of the firm's goals?

If the organization's policies and practices (e.g., salary levels, promotion opportunities) are reasonable and fair, but the employees lack some basic skills or knowledge to do their jobs safely and efficiently, a training effort is definitely in order. On the other hand, training and development may be unnecessary; instead, policies and practices may need to be adjusted. A third possibility is that training and development efforts should be initiated in conjunction with changes in policies and practices.

Stage 2: Positioning the Function

If the organizational assessment reveals that a training and development plan could aid in the attainment of corporate goals (by, for example, easing internal tensions or increasing employee skills), the next set of decisions must center on how to position the function within the organization. Three issues are of particular importance in this stage.

Decision #3: What type of program would be most acceptable to employees of the organization? A few decades ago, only a handful of managers and academics felt that beliefs inherent in the organization should be a serious consideration in designing programs. Today, this idea, carried under the banner of "corporate culture," has become a major factor in the design of many successful change efforts. The idea underlying this approach to management is that each organization has a unique history, which is captured in its symbols (e.g., company logo), rituals (e.g., annual meetings), myths (e.g., company heros and villains), and so forth. New programs must take tradition and corporate culture into account or the efforts will meet with resistance. In most cases, developing a successful program depends on both a respect for past traditions and presentation of the program as a logical extension of previous activities.

Decision #4: What role should the training and development effort play in the organization? Four training and development roles can emerge depending upon the position, power, and professional orientation of the trainers involved. (See figure 2.) One role that trainers can play is to foster innovation and to bring new ideas and directions to the organization. Another role is to serve as guardians of the status quo; i.e., to emphasize and maintain current practices. Sometimes trainers function simply as service providers to implement predetermined programs. Finally, trainers sometimes play the role of rebels--outsiders who are brought in to stir up controversy and challenge established policies and practices. Management must decide what role they want the function to perform, keeping in mind that the role can be changed if the demands on the organization change.

Decision #5: How should the budget be divided between training and development? Because the words "training and development" often appear together, there is a widespread belief they are the same thing. In fact, these activities serve different purposes. A training need arises when employees do not have the basic skills, knowledge, or ability to perform their job. For example, if an employer needs to have a typist who can work at 65 words a minute with no errors and the current typist works at only 35 words a minute with some errors, then a genuine training need exists. Every day this need will be felt, and something should be done immediately to correct the situation.

Development, however, refers to a situation in which the employee is performing well in his or her present job, but to move on to greater responsibilities in the long run, some further education is necessary. Clearly, both short-run and long-run needs must be addressed for the organization to prosper. However, due to budget constraints, tradeoffs must usually be made between these two areas.

Stage 3: Program Implementation

After analyses and policy decisions have been made in Stages 1 and 2, attention can be shifted to the third and final stage of curriculum design and implementation. The way in which the program is implemented will determine whether or not the training and development strategy actually becomes part of a new way of doing business. The final five critical decisions in the strategic training and development process are discussed below.

Decision #6: How should the program be prepared? A range of options are available for consideration in preparing a program, depending on the needs and situation of the firm. For example, if the needed training material is standard (e.g., how to conduct a job interview), staff time is limited, and adequate money is available, the most efficient method is to buy a prepared program. If, however, the program must be tailored to unique needs, the staff has time available, but funds are limited, a program should be developed internally. A range of choices exists, and depending on business needs, available staff time, and funds available, the firm may choose to buy and internally administer a pre-packaged program, or it may choose to bring in outside consultants to tailor-make a program or administer or adapt a previously developed package. Usually the best approach is to adapt a program that meets the firm's needs based on previously developed materials.

Decision #7: Who should deliver the program? As with the question of program preparation, a range of option exists with regard to delivery. If internal staff have expertise as instructors in the content area, money is limited, and time is a marginal concern, then the organization's own staff should conduct the program. However, if internal staff are not qualified as program instructors (as is the case in most small businesses) and the material is unfamiliar, only extreme budget constraints should prevent the use of external instructors or consultants. In some cases, a team of internal and external instructor is desirable. Sometime local colleges and universities can provide low or no-cost assistance or advice to small business.

Decision #8: Who should coordinate the program? To ensure a smooth running program, it is usually desirable to have some form of internal coordination. This issue becomes particularly critical when participants must be involved in activities that conflict with other work demands. In a few extreme cases, where highly specialized programs are offered by recognized experts, however, it may be necessary to turn over virtually all the coordination decisions to outsiders. In most cases, however, some form of joint coordination will work best when outside consultants are involved. An internal coordinator who understands the unique pressures of the organization can work with an external coordinator, who can modify training sessions to fit personnel schedules and the firm's needs.

Decision #9: How should the program be communicated to the members of the organization? In conveying information about programs, the general rule is "more is better." Everyone from the owner/manager to the participants in the program should be involved in discussions about the program from the initial planning stages to feedback and evaluation following the sessions. Since the goal of the training or development effort is to improve the overall functioning of the organization, everyone with a stake in the organization should be given as much information about it as possible. Issues of confidentiality should be the only factor limiting information dissemination.

Decision #10: What type of control system will be used to monitor the success of the program? A good quality control system should be a part of the program design. Typically, such a system has at least three component parts: (a) a procedure to establish priorities for the development and delivery of the programs; (b) a participative method for setting objectives and achievement standards, and (c) a comprehensive system to monitor the results of programs and to record trends. This last feature is particularly important as a means of insuring continuing quality and identifying potential deficiencies in courses.

A CASE STUDY

Diversifying Restaurants, Inc., was founded in 1978 and grew rapidly to include a group of seven restaurants with sales of approximately $15 million in 1986. This growth was noteworthy for several reasons. First, the restaurant industry is not only fiercely competitive, with a high rate of failure, but over 50 percent of the market is now dominated by the 400 giants in the field, and their market share is growing. Second, Diversifying Restaurants, Inc. primarily serves the luxury dining segment of the market, which accounts for only about 15 percent of total industry sales. Third, the restaurants are all located within the greater metropolitan area of one city in the northeastern portion of the United States. Fourth, several of the restaurants have been organized around unique concepts--a strategy which has often proved to be fatal. Finally, the vast majority of the firm's workforce grew up and were developed within the organization.

The firm's extraordinary growth was not achieved, however, without considerable growing pains. Toward the end of 1985, senior management recognized the need to reevaluate the direction of the enterprise and take steps to relieve some tensions that were mounting internally. The steps taken, via application of a strategic process model, are described below.

Organizational Assessment. After months of market analysis and soul-searching, the senior management of Diversifying Restaurants reluctantly concluded that due to labor market and financial pressures, the era of rapid expansion had come to an end. A new period of consolidation and internal development was needed. After talking with managers and personnel throughout the organization, it became apparent that the goal of human resource development would have to become a part of the organization's criteria for success.

Having made this decision, senior management look within the organization to determine where to begin concentrating on strengthening the staff. Ultimately, it was determined that the real weakness in the staff was in the ranks of the first-line supervisors called Assistant General Managers (AGMs). Accordingly, an intense training effort was planned for this target group.

Positioning the Function. Two alternative solutions to the concern about supervisors presented themselves. One solution was to actively recruit new AGMs from outside the organization. The other approach was to develop a new core group of AGMs internally. In making its decision, senior management was heavily influenced by the cultural heritage of the organization to grow from within. Therefore, the second option was pursued.

Since the new program would be highly innovative for the firm and was expected to give the organization a competitive advantage in retaining high-potential employees and in recruiting better-qualified entry-level employees, the decision about who should run it was quite important. After lengthy discussions, it was felt that a senior management official responsible for long-term corporate development would head the activity because of both his senior position and his sophisticated professional orientation toward the function. This decision was made in preference to creating a full time training function. What tipped the scale in favor of the senior management member was that he was highly respected within the organization; he had no intention of building a permanent structure around this activity; and the program would be funded as a part of the organization's ongoing developmental activities.

Program Implementation. Given the considerable expertise of the coordinator, somewhat limited funding, and moderate time pressures, an extensive six-week AGM training and development program was created in just one month. Five of the most promising junior-level employees in the company were then recruited for the program, which was taught by the organization's line and staff managers and coordinated by the senior manager in charge. As the trainees moved through each phase of the program, they were tested on how well they had learned various phases of the restaurant's operations and were made aware of the results. At the end of the program, a graduation party hosted by the president was given in honor of the trainees, with all of the management team in attendance.

In evaluating the merits of the program, senior management was pleased to discover that not only were the five participants much more effective in their current positions, but a groundswell of interest in the program had risen among the ranks of junio-level employees. After some minor adjustments, the company plans to offer more sessions as part of its new strategic effort to build a more competent internal staff.

CONCLUSION

For many small businesses, training and development activities ca be used to improve the organization's position. This article includes a three-stage, decision-based, strategic process model to help managers in small- and mid-size firms to decide whether or not training and development can benefit their firms, and if so, how to organize the effort. The effective use of the model is illustrated by the case example of one young and rapidly expanding service firm in the restaurant industry.

While the model and case example outlined here can serve as a useful general guide, it does have some limitations. The decision-making process outlined is a very general one, and specific criteria could not be cited for various types of firms and firms at different stages of growth. Further empirical research will be necessary to test the model and discover the extent of its strengths and limitations for various industries, firm sizes, and growth stages.