Thursday, 26 August 2010 20:00

3 Questions

Regina Spratt leads the national brokerage segment for Marsh Inc. in the United States. She is responsible for the strategic direction and overall growth of business focused on midsized buyers. She has previously run the national brokerage operation in the New York metro area and has held numerous leadership positions throughout the Northeast.

Q. How can a business save money on its risk management?

What industry you’re in and who you’re getting advice from can play into that. At the end of the day, a big part of what people pay are their straight-up insurance premiums. We talk with our clients about a concept called the total cost of risk, and insurance premiums are just one part of that total risk. There are costs associated with those claims — and if you have any kind of insurance program where you retain any loss or have any deductible, that’s money that you pay out. So the ability of companies to do a better job from a production standpoint can help them control their own costs and can ultimately help them get more favorable rates on the insurance side. We try to spend as much time with our clients in regard to their insurance premiums and program design, but we also spend time on the things they can control.

Q. How will risk management help the bottom line?

The first and obvious way is cost — the cost associated with their insurance program or their retained losses. Another impactful way is that there’s a steep compliance or regulatory burden across many industries, and risk management is clearly something that can help manage that financial or administrative burden. It can also either help or hurt a company’s ability to grow, and there are industries where it does allow companies to be more competitive.

Q. What has changed during the last year or two in the industry?

The external environments and the risks that people face will never decrease. The last 12 or 15 months have been a time when people have had to balance how they best manage risk, and in the cases where they’re using insurance, are there ways they can be creative in how they structure the program to minimize costs?

Published in Atlanta
Thursday, 26 August 2010 20:00

3 Questions

Jerry Kysela has approximately 25 years of experience as a risk management department director and relationship manager. He currently serves as resident managing director of Aon’s North-Central Ohio region, which includes offices in Cleveland, Akron, Youngstown and Columbus. Kysela oversees the region’s client services, business development and overall operations.

Q. How can a company analyze the risk it faces? 

It is even more critical given today’s economy that senior officers and directors fully understand and perform due diligence around a company’s risk, including operational, financial and other business risks — not simply insurable risks. This would include a process that chronicles the major risks and exposures, risk mapping and weighting, including assigning of probabilities, quantifying and strategies to mitigate each. The issue of reputational risk is critically important in today’s environment and should be included in an enterprisewide approach.

Q. How can a company create a risk management plan? 

Creating a risk management department and defining what risk management means to the organization, including perhaps what it does not include, would be a good starting point. Writing a risk management plan document to provide some fundamental parameters on how the department will operate, including tasks and responsibilities, would be important to the process.

Q. What are some ways to save money on risk management?

There are generally many opportunities to reduce cost within a company’s risk management program. The starting point is insurance brokerage representation. Hire a broker who has both significant leverage and relationships with the key insurance markets. Given their premium volume with the various insurance carriers, they will drive the best results. This is a fundamental leverage approach. The one who buys the most buys at the lowest price and is able to negotiate the best terms and, importantly, will be able to negotiate the best outcome on claims. One insurance agent or broker is not like the rest. It is not a commodity, and clients can receive much greater value by partnering with a broker who not only has premium leverage but also has specialized expertise by insurance products and by industry practices groups. This will insure that your broker understands the issues in your business.

Published in Akron/Canton

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“But what we’re seeing is that manufacturing is coming back, but it’s not back yet to where it was in 2008,” says Daniel E. Berry, president and chief executive officer, MAGNET (Manufacturing Advocacy & Growth Network). “From what we hear, people are back up to 50, maybe 60, percent of their 2008 production levels and they’re feeling pretty confident but are very cautious. Manufacturers still are not calling employees back in big numbers for the most part. We are seeing some hiring again in the auto sector, so all of this is good and will have a ripple effect, but for the most part, everyone is still cautious.

“Manufacturing is recovering. It’s still a little bit wounded, but folks are feeling a little bit better — just not enough to jump in and hire back everyone they laid off.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of innovation and new opportunities — that should move to the top of your priority list.

“We believe helping companies become more innovative in what they’re doing is an important strategy for avoiding, to some degree, the problems of the past — helping them develop new products that create new markets and growth opportunities is an important strategy,” Berry says. “The market diversification and new product development are areas where we want to be more helpful with companies, with helping them look to the future and avoid the past.”

It can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about researching how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times. You might also consider your risks, especially over the long term. And you will likely want to diversify your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio.

“Company executives really need to come to fundamental recognition that things are really not going to be the way they were,” Berry says. “Facing that reality means they’re going to have to embrace a strategy to changing how they do business. That’s an important first step — recognizing that the ground has shifted and we need to find different ways of doing things. What we’ve been saying is that companies need to be looking seriously at how they take their instinct product lines and adapt them and diversify them to other markets so they’re not so dependent on single-source customers.

“Diversifying their portfolio is an important strategy for avoiding the kind of massive negative impacts we’ve seen over the last year.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

“One of the big unknown changes that everyone is tracking is what the (oil spill in the Gulf of Mexico) means,” Berry says. “It means that we’re more likely to see some more impetus from the federal government on green initiatives and sustainability and probably some more of a push for alternative energy sources and maybe the price of petroleum will go up and have an effect on the economy, too. There is a little bit of uncertainty around the effects of the Gulf and more manufacturing particularly.”

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“It depends on what happens in global markets, the value of the euro, whether our companies are disadvantaged,” Berry says. “I think we’re going to see a slow, gradual recovery that’s threatened by what’s happening in Europe. Folks are kind of cautiously optimistic.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”

Published in Cincinnati
By the time financial markets around the globe started to tumble in October 2008, so much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession, but perhaps no industry was affected more since the turn of the millennium. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, manufacturers often still let go of the most employees.

The cycle was vicious, and it continued month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, but all indicators do point up, however modest, rather than down.

“It’s really an opportunity, after you’ve survived the last two years and you’ve streamlined your business, to leverage off of those hard decisions you had to make and to figure out how to do business better,” says John Fenton, partner of assurance services, BDO Seidman LLP. “Do you want to go back to normal, where you were two years ago? Or do you want to build off the efficiencies you’ve already gained?”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010, or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, what with banks starting to somewhat relax their requirements. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business, the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company, that should move to the top of your priority list.

“Reassess your priorities and really have a vision for what you want the company to be five or 10 years down the road,” Fenton says. “Keeping a lid on costs is important, so technology and investment are important, as is investing in employees.”

Keep the long term in perspective

Two years ago, few manufacturers were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be and whenever it does become more noticeable, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various departments of federal, state and local government. And you will likely want to consider your risks, especially over the long term.

“You can help yourself by really developing a business plan or a manufacturing strategy that embodies the risk associated with the business, with a customer-centric focus and the quality of the products, exploring existing markets or looking at other markets where you can expand,” Fenton says. “Consider your supplies. How do you manage the possibility of wild swings over time in the prices of commodities? How do you plan for significant variations?”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of U.S. companies is U.S. technology. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

Ask questions

As you prepare for 2011, it will be important to keep any number of questions in mind. What those questions are will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“Analyzing and determining what events in the global workplace impact you and how they impact you is important,” says Scott Yancey, senior manager of assurance services, BDO Seidman LLP. “For instance, there will be increased regulation for those companies that operate or sell near the Gulf of Mexico, just because of the failure of the oil spill. That’s something that used to be confined to one or two industries, but companies are going to have to start looking at things like that.”

With all that in mind, you will also need to think about innovation as much as ever. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future,” DeRocco says. “But remember the volatility of this market.”

Published in Atlanta
Monday, 26 July 2010 20:00

3 Questions

Gavin Geraci is the senior vice president and specialty group sales manager for PNC Business Banking. He has more than 18 years of experience in the financial services industry. PNC Bank’s business banking group provides cash flow options to manufacturers and other comprehensive solutions to make everyday business money management as efficient and effective as possible.

From a banker’s perspective, how can manufacturers become more efficient in this economy?

Manufacturers should use downtime to their advantage by making operational improvements that will improve cash flow. Visit and re-engage customers to see what they really need from you as a supplier. Examine vendor contracts with an eye toward leveling your own payments. Also, look for opportunities to level the way customers pay you. Accept credit card payments as an inexpensive means to accelerate receivables and improve record keeping. Scan checks remotely to save time.


What can manufacturers do to position themselves better in the marketplace?

Manufacturers must understand their financial situation and how it compares to industry peers and competitors. Use benchmark ratios to periodically evaluate items such as inventory utilization, pricing and payment processing to make certain you are well positioned against the market. Additionally, diversification of products, customers and markets served reduces risk and may lessen the impact of future market cycles.


What other questions should manufacturers be asking themselves in 2010?

Manufacturers must consider how their industry is evolving and develop a five-year strategic plan. The planning process is a good chance to holistically analyze the operation and develop financial, business management and succession planning strategies to ensure survival and optimize growth opportunities. Manufacturers should ask themselves what their margins are on their current activities and determine if there are opportunities for improvement. Consider creating a profit and loss statement for each customer. Can you raise prices? Should you exit a customer relationship to maintain profitability?

Published in National

The training was a failure. All of that time, all of thateffort, all of that money, just gone, just out the window and gone. What otherexplanation was there, after all, for drop after drop in the hard numbers froma talented sales team in the wake of a training and development session?

It could have happened at any business, but for the purposesof this story, it happened at a large technology company with headquarters inthe Midwest. The top executives, frantic for answers, called a corporate trainingfirm. “Our sales are down,” the executives said. “We need training.”

That technology company was part of a large percentage ofbusinesses that continued to invest in corporate training, education anddevelopment during the last couple of years. Thousands and thousands of othersturned away from training, unable or unwilling to spend more money during therecession.

But a panel of more than 30 industry experts and academicprofessionals agreed that it would have been far better for businesses to continueto spend on training during those tough times — to invest in their employeesand to show the extent of that investment, to improve the business and keep itup to date, to be in a better position when the economy ultimately turns around— than to tighten the budget. The same rule applies now, too.

“Training is always important but even more so in times likethis,” says Pat Galagan, executive editor, ASTD. “This is when you really haveto come out of the gate running. It’s a big mistake to cut your training budgetwhen times are tough because it leaves you unprepared for better times.”

Make a plan

Members of the corporate training firm arrived the next dayand talked with as many employees as possible at the technology company, fromexecutives to engineers to those slumping sales representatives and everyoneelse in between. They prodded and probed and asked questions. They were curiousabout what, exactly, had happened.

They wanted to know, before they embarked on anothertraining session, whether another training session was actually necessary.

This is what you should do when you’re in the process ofdetermining whether to invest in training and development for your employees.You should prod and probe and plan, because just as you shouldn’t approach a newbusiness venture without a model and a solid idea of what you want toaccomplish, neither should you approach training without thoughts of what youneed to tackle.

“Typically, businesses start by looking at their goals andtheir objectives for a period of time, usually the coming year,” Galagan says.“Some companies will do what’s called a skills audit to see if they have theskills to support the direction. Then if they don’t, they will try to train tofill any gaps that they find.

“It’s a very comprehensive process of looking at the skillsthat employees have in key areas and matching that against the skills you feelyou need.”

And even though those needs will vary from business tobusiness, from industry to industry, there are a number of common trainingareas on which almost all businesses should focus. Leadership development,project management and team building are all increasingly important because ofthe changing demographics and economy and because general communication andtechnology skills are as important now as always.

“It’s important for leaders to first reassess their valueproposition and be clear about corporate performance objectives and how thosemay have changed because that then informs your training strategy,” says RodNunn, vice chancellor for workforce and community development, St. LouisCommunity College. “We view training specifically as a way to close the gapsbetween the performance needs of specific jobs and the employee performancecapabilities.”

Open your wallet

Those members of the corporate training firm remained in theoffices for a couple of days. They wanted to follow every lead and turn overevery stone. They wanted to find out what had happened to the sales team afterthat apparently disastrous training and development session. And the technologycompany executives had no problem paying to keep them around. They wanted tofind out what happened, too.

Do you want to keep your top employees after the job marketopens again? Do you want all of your employees to be happy and to enjoy theirwork right now? Investing in training and education is an important part ofhelping you do just that. The average business spends about $1,060 on trainingand education per employee per year, according to research by ASTD.

There are also effective ways to spend a little less, ifyour revenue is still down or if you opt to not invest as much in training.Turning toward local colleges and universities to design a custom program foryour employees is often less expensive than sending them to open enrollmentcourses, as are distance learning and online courses. Some businesses opt tolook within for employees who are experts in a specific area and can train therest of the staff.

“We often talk about the blended learning, but some of thebest training is provided by direct supervisors on an ongoing bas

is,” Nunnsays. “Work-based learning doesn’t have to take three hours out of our day togo over to a classroom.

“You build skills as you tackle real problems and get realresults that are used in the course of the business.”

Keep an eye on results

At last, an answer for our corporate training firm and ourtechnology company in the Midwest. That previous training session, as it turnedout, was not to blame for lower sales numbers. No, the culprit was instead thefact that the technology company executives had recently installed a drasticrestructure of the compensation program. That program encouraged the sales team to try and sell only one of theirmany products, and that is whatchanged everything.

The training had not been the problem at all.

In fact, without that recent training session, the technologybusiness might have planted itself in more trouble because of the new structureof the compensation program. The best money spent might well have been themoney spent on the training — and the worst might have been the money that wasabout to have been spent unnecessarily correcting that training.

“You can create dashboard indicators.” Nunn says. “If you’veidentified that there’s a process within your business that needs improvement,you want to make sure that training intervention is helping that processimprovement.

“Everything we do in training should impact the bottom linewith respect to productivity as measured in either revenue or sales or somespecific process we can drill down into.”

“We know that organizations that are not learningorganizations are losing ground every day,” Nunn says. “It’s just modernbusiness. Things change so fast, companies that are not investing into thelearning environment and creating a learning culture are not able to keeppace.”

Published in St. Louis

The training was a failure. All of that time, all of that

effort, all of that money, just gone, just out the window and gone. What other

explanation was there, after all, for drop after drop in the hard numbers from

a talented sales team in the wake of a training and development session?

It could have happened at any business, but for the purposes

of this story, it happened at a large technology company with headquarters in

the Midwest. The top executives, frantic for answers, called a corporate

training firm. “Our sales are down,” the executives said. “We need training.”

That technology company was part of a large percentage of

businesses that continued to invest in corporate training, education and development

during the last couple of years. Thousands and thousands of others turned away

from training, unable or unwilling to spend more money during the recession.

But a panel of more than 30 industry experts and academic

professionals agreed that it would have been far better for businesses to

continue to spend on training during those tough times — to invest in their

employees and to show the extent of that investment, to improve the business

and keep it up to date, to be in a better position when the economy ultimately

turns around — than to tighten the budget. The same rule applies now, too.

“Training is always important, but even more so in times

like this,” says Pat Galagan, executive editor, ASTD. “This is when you really

have to come out of the gate running. It’s a big mistake to cut your training

budget when times are tough because it leaves you unprepared for better times.”

Make a plan

Members of the corporate training firm arrived the next day

and talked with as many employees as possible at the technology company, from

executives to engineers to those slumping sales representatives and everyone

else in between. They prodded and probed and asked questions. They were curious

about what, exactly, had happened.

They wanted to know, before they embarked on another

training session, whether another training session was actually necessary.

This is what you should do when you’re in the process of

determining whether to invest in training and development for your employees.

You should prod and probe and plan, because just as you shouldn’t approach a

new business venture without a model and a solid idea of what you want to

accomplish, neither should you approach training without thoughts of what you

need to tackle.

“Typically, businesses start by looking at their goals and

their objectives for a period of time, usually the coming year,” Galagan says.

“Some companies will do what’s called a skills audit to see if they have the

skills to support the direction. Then if they don’t, they will try to train to fill

any gaps that they find.

“It’s a very comprehensive process of looking at the skills

that employees have in key areas and matching that against the skills you feel

you need.”

And even though those needs will vary from business to

business, from industry to industry, there are a number of common training

areas on which almost all businesses should focus. Leadership development,

project management and team building are all increasingly important because of

the changing demographics and economy and because general communication and

technology skills are as important now as always.

“All employees,

in order to be successful in the new workplace, will have to have the ability

to adapt and to learn,” says Paula Yoder, director of the Tandy Center for

Executive Leadership at the Neeley School of Business at TCU, referencing a

recent paper by Sandy Dutkowsky, “Trends in Training and Development — The New

Economy, Training in U.S. Companies, Who Does the Training in Corporations?”

“This is part of

a developmental organization. Those who have ‘learned to learn’ will become

most valuable in the new economy. The role of education and training is

becoming more important in the American workplace. Employees are recognizing

the need to improve and broaden their skills to remain employable.”

Open your wallet

Those members of the corporate training firm remained in the

offices for a couple of days. They wanted to follow every lead and turn over

every stone. They wanted to find out what had happened to the sales team after that

apparently disastrous training and development session. And the technology

company executives had no problem paying to keep them around. They wanted to

find out what happened, too.

Do you want to keep your top employees after the job market

opens again? Do you want all of your employees to be happy and to enjoy their

work right now? Investing in training and education is an important part of

helping you do just that. The average business spends about $1,060 on training

and education per employee per year, according to research by ASTD.

Businesses that have the most success tend to spend between 2

and 3 percent of their total payroll cost on training, education and

development. The average is in the middle, of course, right around 2.3 percent.

There are also effective ways to spend a little less, if your

revenue is still down or if you opt to not invest as much in training. Turning

toward local colleges and universities to design a custom program for your

employees is often less expensive than sending them to open enrollment courses,

as are distance learning and online courses. Some businesses opt to look within

for employees who are experts in a specific area and can train the rest of the

staff.

“We cannot forget about our internal subject matter experts,”

Yoder says. “Companies that leverage the expertise of those internal leaders,

even if those leaders need polishing or extended training, are truly honoring

their resources.”

Keep an eye on results

At last, an answer for our corporate training firm and our

technology company in the Midwest. That previous training session, as it turned

out, was not to blame for lower sales numbers. No, the culprit was instead the

fact that the technology company executives had recently installed a drastic

restructure of the compensation program. That program encouraged the sales team to try and sell only one of their

many products, and that is what

changed everything.

The training had not been the problem at all.

In fact, without that recent training session, the

technology business might have planted itself in more trouble because of the

new structure of the compensation program. The best money spent might well have

been the money spent on the training — and the worst might have been the money

that was about to have been spent unnecessarily correcting that training.

The only way to know where you are is to know where you were.

In order to receive a more relevant return on your investment, watch the

progress from the planning stages through the training itself, then during the

months, even years, beyond.

“It is

imperative that leaders ask their employees about the benefits and outcomes of

training,” Yoder says. “There is no excuse for a company to not know the return

on investment for training. Even at the most basic level of understanding

without using any assessment tools, you can at least ask, ‘What did you get out

of it? How did it impact what you do on a daily basis? How does this impact

your effectiveness in your job?’”

Published in Houston

The training was a failure. All of that time, all of that effort, all of that money, just gone, just out the window and gone. What other explanation was there, after all, for drop after drop in the hard numbers from a talented sales team in the wake of a training and development session?

It could have happened at any business, but for the purposes of this story, it happened at a large technology company with headquarters in the Midwest. The top executives, frantic for answers, called a corporate training firm. “Our sales are down,” the executives said. “We need training.”

That technology company was part of a large percentage of businesses that continued to invest in corporate training, education and development during the last couple of years. Thousands and thousands of others turned away from training, unable or unwilling to spend more money during the recession.

But a panel of more than 30 industry experts and academic professionals agreed that it would have been far better for businesses to continue to spend on training during those tough times — to invest in their employees and to show the extent of that investment, to improve the business and keep it up to date, to be in a better position when the economy ultimately turns around — than to tighten the budget. The same rule applies now, too.

“Training is always important but even more so in times like this,” says Pat Galagan, executive editor, ASTD. “This is when you really have to come out of the gate running. It’s a big mistake to cut your training budget when times are tough because it leaves you unprepared for better times.”

Make a plan

Members of the corporate training firm arrived the next day and talked with as many employees as possible at the technology company, from executives to engineers to those slumping sales representatives and everyone else in between. They prodded and probed and asked questions. They were curious about what, exactly, had happened.

They wanted to know, before they embarked on another training session, whether another training session was actually necessary.

This is what you should do when you’re in the process of determining whether to invest in training and development for your employees. You should prod and probe and plan, because just as you shouldn’t approach a new business venture without a model and a solid idea of what you want to accomplish, neither should you approach training without thoughts of what you need to tackle.

“Typically, businesses start by looking at their goals and their objectives for a period of time, usually the coming year,” Galagan says. “Some companies will do what’s called a skills audit to see if they have the skills to support the direction. Then if they don’t, they will try to train to fill any gaps that they find.

“It’s a very comprehensive process of looking at the skills that employees have in key areas and matching that against the skills you feel you need.”

And even though those needs will vary from business to business, from industry to industry, there are a number of common training areas on which almost all businesses should focus. Leadership development, project management and team building are all increasingly important because of the changing demographics and economy and because general communication and technology skills are as important now as always.

“Some of the things that we’re finding demand for and that make sense are strategy and leadership programs, especially managing in turbulent times, managing through transition,” says Barbara Kahn, dean of the School of Business Administration, University of Miami. “There’s also a lot of emphasis on innovation. How companies can try to innovate to stay competitive and survive.”

Open your wallet

Those members of the corporate training firm remained in the offices for a couple of days. They wanted to follow every lead and turn over every stone. They wanted to find out what had happened to the sales team after that apparently disastrous training and development session. And the technology company executives had no problem paying to keep them around. They wanted to find out what happened, too.

Do you want to keep your top employees after the job market opens again? Do you want all of your employees to be happy and to enjoy their work right now? Investing in training and education is an important part of helping you do just that. The average business spends about $1,060 on training and education per employee per year, according to research by ASTD.

“That’s an average, not a recommendation,” Galagan says. “In that pool of companies, some are large, some are small, some are government, some are private.”

There are also effective ways to spend a little less, if your revenue is still down or if you opt to not invest as much in training. Turning toward local colleges and universities to design a custom program for your employees is often less expensive than sending them to open enrollment courses, as are distance learning and online courses. Some businesses opt to look within for employees who are experts in a specific area and can train the rest of the staff.

“Some of the trends that we’ve seen are that companies have been opting for more customized programs rather than sending employees to open programs, which are more generic,” Kahn says. “When budgets are tight, you see an emphasis on more customized programs that are tailored to the specific needs of the company.”

Keep an eye on results

At last, an answer for our corporate training firm and our technology company in the Midwest. That previous training session, as it turned out, was not to blame for lower sales numbers. No, the culprit was instead the fact that the technology company executives had recently installed a drastic restructure of the compensation program. That program encouraged the sales team to try and sell only one of their many products, and that is what changed everything.

The training had not been the problem at all.

In fact, without that recent training session, the technology business might have planted itself in more trouble because of the new structure of the compensation program. The best money spent might well have been the money spent on the training — and the worst might have been the money that was about to have been spent unnecessarily correcting that training.

“It’s really important as you go into these programs that you set specific goals at the beginning of the program and then monitor it say every three months, every six months,” Kahn says. “Make sure things are still on target and whether there’s a need to go back and reinforce certain points.”

The only way to know where you are is to know where you were. In order to receive a more relevant return on your investment, watch the progress from the planning stages through the training itself, then during the months, even years, beyond.

“One of the things that’s very, very important for a company to achieve in a competitive world is make sure they have a strong employee base that’s constantly changing with the changing times,” Kahn says. “You want to have ways for employees to develop their skills and move up.

“If you don’t invest in continuous learning and continuous innovation, obviously employees are going to stagnate.”

Published in Florida

The training was a failure. All of that time, all of that effort, all of that money, just gone, just out the window and gone. What other explanation was there, after all, for drop after drop in the hard numbers from a talented sales team in the wake of a training and development session?

It could have happened at any business, but for the purposes of this story, it happened at a large technology company with headquarters in the Midwest. The top executives, frantic for answers, called a corporate training firm. “Our sales are down,” the executives said. “We need training.”

That technology company was part of a large percentage of businesses that continued to invest in corporate training, education and development during the last couple of years. Thousands and thousands of others turned away from training, unable or unwilling to spend more money during the recession.

But a panel of more than 30 industry experts and academic professionals agreed that it would have been far better for businesses to continue to spend on training during those tough times — to invest in their employees and to show the extent of that investment, to improve the business and keep it up to date, to be in a better position when the economy ultimately turns around — than to tighten the budget. The same rule applies now, too.

“Training is always important but even more so in times like this,” says Pat Galagan, executive editor, ASTD. “This is when you really have to come out of the gate running. It’s a big mistake to cut your training budget when times are tough because it leaves you unprepared for better times.”

Make a plan

Members of the corporate training firm arrived the next day and talked with as many employees as possible at the technology company, from executives to engineers to those slumping sales representatives and everyone else in between. They prodded and probed and asked questions. They were curious about what, exactly, had happened.

They wanted to know, before they embarked on another training session, whether another training session was actually necessary.

This is what you should do when you’re in the process of determining whether to invest in training and development for your employees. You should prod and probe and plan, because just as you shouldn’t approach a new business venture without a model and a solid idea of what you want to accomplish, neither should you approach training without thoughts of what you need to tackle.

“Organizations need to focus on what their strategic objective is,” says James Craft, professor of business administration, Joseph M. Katz Graduate School of Business & College of Business Administration, University of Pittsburgh. “How do they plan to create value in the market for their consumer? What do we have in terms of talent to meet the kind of objectives we say we want to meet? Do we have enough people, and do we have the skills necessary to meet the objectives we have in mind? After you have that analysis, you can begin to think about what gaps exist.”

And even though those needs will vary from business to business, from industry to industry, there are a number of common training areas on which almost all businesses should focus. Leadership development, project management and team building are all increasingly important because of the changing demographics and economy and because general communication and technology skills are as important now as always.

“Get input from both your employees and from their supervisors in terms of what it is they say they need,” says Reggie Overton, executive director of the Center for Professional Development, Community College of Allegheny County. “Surveying, that is a good tool, in terms of looking at where they might say, ‘If we have the opportunity to provide you continuing education, where are the areas that you think you need assistance?’”

Open your wallet

Those members of the corporate training firm remained in the offices for a couple of days. They wanted to follow every lead and turn over every stone. They wanted to find out what had happened to the sales team after that apparently disastrous training and development session. And the technology company executives had no problem paying to keep them around. They wanted to find out what happened, too.

Do you want to keep your top employees after the job market opens again? Do you want all of your employees to be happy and to enjoy their work right now? Investing in training and education is an important part of helping you do just that. The average business spends about $1,060 on training and education per employee per year, according to research by ASTD.

“That’s an average, not a recommendation,” Galagan says. “In that pool of companies, some are large, some are small, some are government, some are private.”

There are also effective ways to spend a little less, if your revenue is still down or if you opt to not invest as much in training. Turning toward local colleges and universities to design a custom program for your employees is often less expensive than sending them to open enrollment courses, as are distance learning and online courses. Some businesses opt to look within for employees who are experts in a specific area and can train the rest of the staff.

“The data I’ve seen is that 70 percent or more of all of the learning that goes on in an organization is informal,” Craft says. “In other words, it isn’t designing a training program — it’s creating an environment where people are willing to work with others to help them learn on the job.”

Keep an eye on results

At last, an answer for our corporate training firm and our technology company in the Midwest. That previous training session, as it turned out, was not to blame for lower sales numbers. No, the culprit was instead the fact that the technology company executives had recently installed a drastic restructure of the compensation program. That program encouraged the sales team to try and sell only one of their many products, and that is what changed everything.

The training had not been the problem at all.

In fact, without that recent training session, the technology business might have planted itself in more trouble because of the new structure of the compensation program. The best money spent might well have been the money spent on the training — and the worst might have been the money that was about to have been spent unnecessarily correcting that training.

“If a company is investing money, they need to make sure the learning experience has been successful and it’s transferred to the work context,” Craft says. “Classically, there are several levels of measurement assessment of whether the learning has been effective — and the final level for assessing it is results.”

The only way to know where you are is to know where you were. In order to receive a more relevant return on your investment, watch the progress from the planning stages through the training itself, then during the months, even years, beyond.

“In order to always stay on top of what your company needs to be doing to work at its best, your people need to have the skills required to do the job that needs to be done,” Overton says. “How do you go about doing that? You can set up a training program.”

Published in Pittsburgh
Friday, 25 June 2010 20:00

3 Questions

Jody Wheaton engages clients in a performance consulting role in the development and delivery of holistic talent management solutions that meet unique business needs. Her consulting experience spans a variety of organizational effectiveness activities, including talent assessment for selection and development, assessment centers, 360-degree feedback and competency-based development solutions. She earned her master’s in industrial and organizational psychology from Radford University.

Q. Realistically, how much should companies set aside for a training budget?

The minimum that we’re seeing clients spending is 2.24 percent of total payroll, but in some cases, I have seen it as much as 4 percent of the budget. Our approach is to provide the choices and recommendations. For businesses that have a tighter budget, our approach would be to provide solutions that are solid but are also considerate of their budgetary restraints.

Q. How can companies monitor training results?

The first step is to define success upfront and determine what needs to happen to sustain that success. On the back end, the measurement of the effectiveness of the investment is also critical. We recommend measuring this at multiple levels. The first level is learner satisfaction with the program, the second is the actual transfer of learning, the third is measuring behavioral change through qualitative and quantitative measures, and the last is identifying ROI and the impact to the organization.

Q. What is the importance of corporate training in this economy?

Organizations are running lean and more is expected of their talent. We’re seeing fewer and fewer resources that people have to do work, and so if we look at it from an employee engagement and retention perspective, and we believe the philosophy that talent is our top resource, it’s critical that organizations are spending dollars toward the development of their talent. Even with a longer-term perspective, we often hear of the effects the generations will play in retirement, and that talent will be expected to move up more quickly and understand all the historical knowledge of the organization. If we’re placing these additional demands and expectations on our employees, then we should, as a best practice, be developing them to retain them.

Published in Cleveland