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CASE STUDY Breaking the Commodity Barrier Continued.. Solution A
In the knowledge-based business environment of today, intellects fuel growth and competition. As knowledge becomes more and more crucial to competitiveness, the ability of individuals to learn, and apply that learning to their day-to-day working-lives dictates an organisation's success. Learning and work have become the two sides of the same coin, allowing employees to learn their way out of the problems they face at work. A corporation that focuses on the continuous development of its people, systems, and processes perceives learning as a dynamic exercise. It is dangerous for a company to believe that development happens automatically through training. Simultaneously, top managements need to understand that learning is too important to be left to chance. The changing dynamics of training makes a planned approach to training imperative. A focused plan is necessary not only to enhance people's skills, but also to internalise organisational changes. Where does one begin? Fundamentally, an organisation needs to define its strategies. From this would arise the need for culture, people-processes, and competencies, which will help a company sustain its competitive advantage. An organisation's approach in this regard cannot be prescriptive, with universal application. It is corporate-centric, driven by the factors that influence the vision, mission, dreams, goals, and objectives of the individual firm. In the organisation of the future, its business objectives will decide whether a training-centre is essential or not. SEL needs to answer some basic questions before it sets up such a facility:
To flourish, an organisation must be value-driven. To be truly value-based, it must orient itself towards learning. An understanding of the core business process, structure, seamless lines of control, and communication channels is the key to making the process of learning effective. Organisations practise on-the-job and off-the-job training through classroom inputs, socialisation, experiential training, group dynamics, and outward-bound programmes. There are also avenues available on a lateral scale: special assignments, task-force-based activities, action learning, cross-functions, role-swaps, job-rotation, and horizontal career-planning. There are also organisational development and systemic interventions, new forms of work, work-role and work-pattern analysis, and performance-effectiveness programmes, which are available on the job. Then, there are business process interventions: reengineering, benchmarking, TQM, performance management systems, value engineering, or supply chain management. Each of these grassroots interventions becomes a new learning-ground for the people involved in those processes--irrespective of whether an organisation has a dedicated training-centre or not. Clearly, not all performance-influencing measures need a training-centre. Whether the centre should be owned or externalised, therefore, becomes irrelevant. In fact, the determining factor is the development needs of individuals. For instance, how best can learning be shared to develop a personality and bridge the knowledge-gap. The transformation of knowledge into learning forms the basis of creating a structure for training. Learning is the ability to apply what we know and adapt, which is based on new learning or feedback. The relevant method for imparting this learning is unique and specific to the situation, and the type of learning envisaged. A training-centre should never be considered a one-stop shop. And yet, the conversion of a training-centre into a commercial enterprise, which seeks to maximise overall revenues, is eminently possible. Motorola University (Motorola), Crotonville (GE), Fountainhead (Arvind Mills), and Gulita (Hindustan Lever) are examples of such successful enterprises. The deciding factor for an in-house training centre is purely financial. While its advantages are, indeed, many--offsite groupware, customised programmes, et al--its absence would not be a handicap for a truly learning corporation. A number of support systems are readily available on hire today. The big question: do organisations know how to nurture and develop the New Age intellect? It all depends on whether a company has the right business focus, a hi-performance environment, and a culture that offers space to all those who wish to create value. If CEO Rao can create such an innovative culture, he will have the answers to all his questions. Solution B
Three other factors have added a new dimension to the compelling need for training in all industries. The first is liberalisation, which has dismantled barriers in varying degrees, and made the entry of both domestic and overseas companies easier. The second is the imbalance in the demand and supply of professional talent, which has made employee-retention a concern for CEOs. And the third reason is the growing expectations of employees regarding their personal and professional development, which are forcing organisations to factor them into their annual budgets. Training cannot be an end in itself; it is only a means to an end. Understanding that distinction is crucial to setting up a dedicated training-centre. For, the risk of missing the wood for the trees is real. Viewed strictly from the point of view of core competence--a capability which offers an opportunity to beat the competition--SEL should outsource all those aspects of its business where it has neither the need nor the reason to excel. Clearly, training as a corporate activity falls in this category. The objective of a training programme is to ensure that your employees are geared to deliver a quality product or service at a cost the consumer is willing to pay. So, training is a secondary, not a primary, function of management. Training would be a primary function only in the case of an academic body or an educational institution. In a corporate setting, while training has an important role to play, its objective is limited. Our primary objective is to deliver value to the customer; all other aspects of business become secondary even when they have a bearing on business results. Training is about building and strengthening competencies. It is about developing skills in an organisation; it is not about profits. That is why I would be wary about looking at a training institute as a profit-centre. A training-centre might, at best, be able to meet its expenses through a self-financing mechanism, by subletting its facilities to outsiders and ensuring full occupancy. I am also in favour of charging nominal fees from each Strategic Business Unit (SBU) that uses the the training-centre. The charges must be notional, without any outgo of cash. Not only will it reduce the company's expenditure on Human Resources Development (HRD), it will allow the SBUs to ascertain whether they are getting value for money. Beyond that, there is a certain risk involved in treating the training institute as a profit-centre. In the pursuit of commercial considerations, SEL's HRD Department may lose its principal focus: that of developing people in the organisation. This is counter-productive. To put it differently, if we assume that the training-centre has a budget of Rs 10 crore per annum, the objective of the HRD division should be to maximise the return on that investment, both in monetary and non-monetary terms. Its objective is not to bolster the company's bottomline at the end of the year. Which is why the institution of Key Result Areas (KRAs) is important for any organisation. All training requirements must be pegged to KRAs. It also makes the task of monitoring and evaluating each training-programme a lot easier. There is no doubt that a dedicated training-centre has its advantages: it offers demonstrative evidence of a management's commitment to improving the quality of its people. This has been adequately summed up by Neelkant Rao. I do not see an either-or option for SEL's top management. The company needs a mix of both in-house and external facilities. Teaching can be outsourced, but the design of the programme must be done in-house. The content of the training must have a bearing on the requirements of the organisation. There are three thumb-rules that SEL must follow:
Only this will allow the company's top management to network with their contemporaries and gain new insights into business strategy. Briefly, the role of HRD in training is four-fold: aligning the training goals with the company's strategic goals; developing a vision for the training division out of that alignment; propagating the importance of training to people at all levels; and managing all training-programmes with a view to securing the maximum return on its investments. Ideation is important in a corporation that is constantly thinking of tomorrow. Rao is trying to build an organisation that is flexible and knowledge-intensive. He is aware of the power of education. Which is why he desires to set a benchmark for the entire industry in training. Surprisingly, such a vision has not pervaded the organisation. Training, whether outsourced or imparted in-house, is crucial to competitiveness. And unless SEL's managers recognise that, they will be unable to read their CEO's mind. RELATED DATA |
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The arguments presented both in favour of and
against setting up a dedicated training-centre at SEL are equally valid. However, the
creation of a learning infrastructure, in my view, goes beyond setting up a
training-centre. It is true that training--be it outsourced or developed in-house--is an
integral part of an organisational learning strategy. However, the choice between an
in-house training-centre and an external facility is far simpler than figuring out the
future shape of the organisation. 
The importance of corporate training must be
understood in the context of the paradigm shift that is taking place in Indian industry.
The role of knowledge-workers is increasing. Managements, especially in the infotech
sector, are recognising the importance of intellectual capital. The pace of change is so
fast that skills need to be regularly retooled. And training is one of the tools at a
CEO's disposal to achieve this end. 