Improving Organizational Performance through Training

Ronald L. Jacobs, Ph.D.The Ohio State University

6 November 2007

This session describes a case-study in which training was used to help address a common problem in the banking sector, high employee turnover.

The session will emphasize the analysis of the performance problem and the evaluation of the training program: structured on-the-job training (S-OJT).

Ensuring that training makes a strategic contribution is a continuing challenge. But this goal cannot be achieved without understanding best practices in HRD.

By the conclusion of the session, participants should have the knowledge and skills to begin to use the process in their own bank settings.

Introduction

Korean BankingSector

Boundaryless competition

Financial liberalization

Advances in technology

CMFIS Act

FTA

Global IBs

M&As

Customer Needs

Global Trends Domestic Issues

Challenges for HRD

Global Competence

PerformanceImprovement

Core-ValueDriven

StrategicAlignment

HNB is a large regional bank in the U.S. The Retail Division has experienced high turnover among its frontline employees.

Many of these individuals were the highest performing employees. This situation has hurt profits.

As the HRD Manager, the Chairman has asked that you develop a training program to help address this problem.

What would you do?

HRD Case Study

Definition . . .

Human Resource Development is the process of improving organizational performance and learning through the accomplishments that result from employee development, organization development, and career development programs.

2. Define

training needs

3. Design and plan

training 6. Monitor

and improve

4. Provide for

the training

5. Evaluate

training outcomes

OSU Training Management System

1. Analyze performance

problems

0. Quality Management System

Conforms with ISO 10015 – Quality of Training

0. Quality Management System

• Document the mission and strategic direction of the organization• Document the quality policies and priorities of the organization• Document the training structure, staffing, and responsibilities

• Outputs:• Organization strategic plan• Quality policy statement• Description of training structure

1. Analyze Performance Problems

a. Analyze the current performance of a problem situation, strategic orientation, or change in operational context

b. Identify the desired performance of a problem situation, strategic orientation, or change in operational context

c. Identify the causes of the gaps in performance

d. Identify the most likely training and non-training solutions that might be used to address the gaps in performance

Output: • Performance analysis report

2. Define Training Needs

a. Identify the areas of employee competence related to the performance problem

b. Identify the sources of information related to the areas of employee competence

c. Identify any changes in the areas of employee competence based on requirements, technology, or continuous improvement efforts

d. Identify any changes in employee competence based on legislative, regulatory or external certification requirements

e. Conduct a job and task analysis

f. Identify the employees who should receive the training

g. Define the gaps between the existing and required areas of employee competence

h. Develop methods for anticipating future competence requirements

Outputs: • Job and task analysis report• Needs analysis report

3. Design and Plan the Training

Design

a. Prepare the training objectives based on the areas of competence

b. Analyze the characteristics of the trainees that might affect training effectiveness

c. Describe the constraints in the setting that might affect training effectiveness

d. Describe any policy, regulatory, certification requirements on the training

e. Select the training strategy, training methods, and training media

f. Develop the training program: trainer materials, trainee materials, performance guides, rating scales, tests, and all other materials and resources for the training program

g. Conduct a pilot test of training program

Outputs: • Project documentation• Training program• Pilot test plan and results• Recommendations to improve the training design

3. Design and Plan the Training (Cont’d)

Plan

a. Identify the training provider(s), their roles, and expectations

b. Ensure trainers are qualified to deliver the training

c. Determine the training schedule, sequence, training location, and resources

Outputs:• Description of trainers and the training provider(s)• Contracts or letters of agreement with training provider(s)• Evidence of trainer qualification• Training plan

4. Provide for the Training

a. Obtain management support for the training

b. Ensure the availability of resources to carry out the training plan

c. Ensure that information learned during the training is used back in the work setting

d. Identify the staff responsible for maintaining and up-dating the training

Outputs:• Memos, letters, or other means to communicate management support• Checklist that specifies the training resources• Performance guides• Management follow-up after the training• Staff assignments

5. Evaluate Training Outcomes

a. Evaluate the impacts of the training: improvements in performance, financial benefits, and use of the learning on the job

b. Evaluate changes in learning and satisfaction

c. Evaluate the training design: training strategy, training methods, training media

d. Evaluate the training plan: training provider(s), schedule, sequence, and resources

e. Evaluate unanticipated effects: management feedback, stakeholder satisfaction, employee motivation, organizational climate and culture, quality of work life

Outputs:• Evaluation plan• Evaluation report

6. Monitor and Improve the Training

a. Maintain records related to trainees’ outcomes

b. Maintain records related to organizational impacts

c. Monitor institutionalization of the training program

d. Implement improvements to the training program

e. Implement improvements to the training management system

Outputs:• Employee training records• Evaluation reports• Revised training program• Revised training cycle

Need - Two levels of measured performance

Problem – A need that has value

1. Analyze Performance Problems

Current Performance

Desired Performance

• What is the current turnover rate?

2004934/3147 29 percent

2005775/3098 25 percent

2006698/3032 23 percent

• What are the reasons for the turnover?

Self Initiated Company InitiatedPersonal reasons Low performanceBetter job AttendanceNo advancement Dishonesty

1. Analyze Performance Problems

• What percentage might be preventable?

Better jobNo advancement

362 individuals or 15 percent

• How much does it cost when someone leaves?

RecruitSelectBasic teller trainingOne month wages

$4000 total per person

362 persons x $4000 = $ 1,448,000

1. Analyze Performance Problems

• What are the underlying causes of the preventable turnover?

Interview employeesInterview managers/supervisors

Results: Frontline employees felt frustration because:

No clear job instructionsLack of feedback on their performanceNo development plan

1. Analyze Performance Problems

• Current Situation 26 percent average turnover (3 years)15 percent is potentially preventablePreventable turnover occurs more frequentlyCost per turnover is approx. $4000 perTotal cost of turnover is $1,448,000Other costs possible

• Desired Situation Reduce preventable turnover by 10 percent*

• Cause(s) Lack of clear expectationsLack of job instruction

Lack of performance feedbackLack of development plan

1. Analyze Performance Problems: Summary

• Conduct job analysis of frontline employee positions

• Develop S-OJT modules on key areas

• Certify supervisors on how to deliver S-OJT modules

• Develop a blended training program:

“Providing Feedback to Subordinate Employees”

using classroom training to introduce the process and S-OJT (HRD staff) to use the process.

• Produce materials to clarify HNB Development Institute

1. Analyze Performance Problems: Proposed Solutions

Structured On-the-Job Training

The planned process of developing competence on units of work by having an experienced employee train a novice employee at the work setting or a location that closely resembles the work setting.

Delphi – US Operators, Supervisors

Reduced the number of wiring errors

Truck Manufacturer – US Production Technicians

Reduced the number of leaky windshields

KLM Royal Dutch Airlines Cabin Attendants Provided more relevant customer service training experience

Regional Hospital – US New Supervisors Provided information about the mission and vision faster

Electric Utility – US Supervisors Reduced the number of back injuries among production employees

Apple Computer-iBook - California

High Skilled Assemblers

Reduced training time, fewer assembly errors

Seagate – Singapore Production specialists

Reduced number of inspection errors

Petroleum Company - Kuwait

New Engineers Reduced time require to complete job rotations

Company Employee Level Results

5. Evaluate Training Outcomes

ImpactHow did it affect measures of performance?

Do trainees respond to the information?

Did trainees learn? Learning

Satisfaction Did trainees like it?

Behavior

5. Evaluate Training Outcomes

Employee TurnoverSolutions to address the causes of the problem

Lack of:

• Job expectations

• Job instruction

• Performance feedback

• Development plan

• Efficiency - Does one approach achieve the outcomes faster, and is the cost less than the value of the outcomes?

• Effectiveness - Does one approach result in superior work outcomes, and is the cost less than the value of the work outcomes?

5. Evaluate Training Outcomes

Performance value – The financial worth of the work

Training Costs – The expenses to design, deliver, and evaluate a program

Benefit – The contribution of the training, given an accounting of the costs

(Burden, Opportunity)

5. Evaluate Training Outcomes

Costs Recruiting, hiring, orienting new staff Exit interviewer’s time Terminating an employee Administration related to termination Separation pay Unemployment tax Vacancy Replacement Increased supervision

Quantity Volume Rate Productivity WIP Machine down time Cycle time Timeliness

Quality Accuracy Class Novelty Error rate Rework Scrap Waste

Difficult to Calculate Effect on suppliers Effect on customers Lost business Lost customers Reputation

Performance Value

• Work analysis• Training development• Training the trainer• Consultant• Materials, facilities, transportation• Training delivery• Training evaluation• Trainer backfill• Trainee’s time• Performance follow-up

Training Costs

Novice

Specialist

Time to Learn

Training Option A

Option B Savings in Time

PerformanceLevel Time savings: 4 - 6:1

$ savings: 2 - 8:1

Training Efficiency

Training Effectiveness

Work Accomplished

• Truck windshields installed• Sales calls made• Machinery on-line• Hard disks manufactured

Employee learns throughunstructured OJT

Employee learns throughS-OJT

Measured Performance

Fewer reworked windshields Higher sales volume Higher machine productivity Lowered scrap rate

Training Service Provider Performance Consultant – Business Partner

• Like to use your favorite solution over and over

• Focus is on performance – the outcomes of the solution – regardless of the solution

• Respond to requests, implement solutions based on request

• Respond to requests, implement a process to determine the most appropriate solution

• Evaluation is based on perceptions of participants

• Evaluation is based on perceptions of participants, but also the impact of the solutions

• Use single solutions • Use multiple solutions to address complex situations

Lessons Learned

Ronald L. JacobsProfessor, Workforce Development and EducationDirector, Center on Education and Training for EmploymentThe Ohio State University

Email: jacobs.3@osu.eduHomepage: http://www.coe.ohio-state.edu/rjacobs/CETE website: http://cete.org/

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