Tying Training and Development to Competitive Strategy
Every organization has a specialized value chain consisting of unique activities that make products and services beneficial to customers. Knowledge of the value chain and its accompanying strengths and deficits is essential. The process of gaining such knowledge is known as value chain analysis, a concept popularized by competitive strategy guru Michael Porter. Value chain analysis is a powerful tool for business leaders, particularly those who oversee training and development (T&D).
Best-practice T&D, along with other human resource (HR) functions, supports the primary activities of the business. In difficult financial times like these, “support” might be considered non-essential to business processes and therefore subject to cost-cutting. However, activities that sustain the primary value-creation engines of a business always require investment, in good times and bad.
Critical Business Support
Top T&D professionals first seek to understand how value is created by the business they support. They then translate this thorough understanding of the value chain into the knowledge, skills and abilities of the people involved in mission-critical activities. The next step is to organize these key capabilities into competency models for each level of the organization. Competency models define successful behaviors that ultimately make the products and services of the business valuable to customers.
Competency models drive not only T&D activities, but also other HR activities. Upstream activities, such as talent sourcing, and downstream activities, such as performance management, work in concert with T&D to provide the HR capability to the value drivers of the business. Companies that hire the right people for the job and reward them for top performance get the most return from their T&D investments.
T&D professionals can avoid common training pitfalls by building their programs around the business value chain, incorporating overall business strategy and coordinating their activities with other HR practices. A business leader might say, “Sales are down, so we need better sales training.” The savvy T&D manager should be able to help pinpoint the constraint leading to lower sales, find a more effective solution and respond with something like, “If we target training to the order-fulfillment process, we can reduce delivery time and errors, which are the primary causes of declining sales.”
Well designed, expensive training programs risk becoming the “flavor of the month” when not intimately tied to business strategy and tightly woven into the fabric of other HR practices. The skilled T&D professional proactively offers the fundamental activities that lead to value creation in the business and there by avoids the latest fads and trends in T&D, which quickly give way to the next wave of fads and trends and always involve additional expenditures.
T&D’s Value Chain
An organization’s value chain yields products and services with competitive advantage. The concept of value chain analysis can also apply to the business of T&D. At this level, the primary strategic objective of T&D activities is to provide more valuable employees to the company.
Activities in the best-practice T&D value chain precede employment and extend beyond termination:
- Pre-employment:
- Community, governmental and educational outreach programs
- Sourcing and recruitment activities
- Employer-of-choice branding and realistic job-preview activities
- Pre-employment assessments and interviews
- During employment:
- On-boarding activities
- Enculturation, reinforcement of values and basic operational training
- Career guidance and management activities
- Functional, professional, management and leadership training
- Assessment for promotion or individual insight and development
- Safety, compliance and regulatory training
- Post-employment:
- Exit interviews and surveys
- Outplacement support
- Employee alumni groups and networks
The T&D professional conducting the value chain analysis examines each activity and asks, “Where does the development of people add the most value to our enterprise? Where are the constraints to adding that value?” For example, some high-tech companies take a proactive, strategic approach by directing significant T&D efforts at middle-school students who have an interest in a technology career.
On the post-employment side, many consulting companies recognize ex-employees as a profitable source of increased business. By making every effort to ensure a positive experience for all their people, these organizations now have numerous former employees who are ambassadors of the company brand, involve the company in consulting contracts and sometimes return with even more experience.
The Bottom Line
Value chain analysis is a tool business leaders use to lay the foundation for executing on business strategy. It is also a tool that helps define best practices in T&D. By adding value to the business, T&D investments yield significant returns and become a key driver of competitive advantage.
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