INVESTMENTS IN TRAINING AND DEVELOPMENT

INVESTMENTS IN TRAINING AND

DEVELOPMENT

Current Practices in Training Investments

As indicated earlier, heavy investments in training will be necessary for future strategies and competitive advantage. Nonetheless, U.S. companies seem to lag behind the practices of companies in several other industrialized countries. For example, a study by the Congressional Office of Technology Assessment reported that “auto workers in Japan receive more than three times as much training each year as workers in American-owned assembly plants in the U.S.” U.S. workers not going on24 to college do not receive the training of their counterparts in other industrialized countries. In contrast, technical workers in other industrialized countries are often trained in well-developed apprenticeship programs. Approximately 59 percent of the German workforce has been trained through 25apprenticeships. In Japan, new employees often receive months of training by their employers. Japanese companies are investing in human resources by training these workers.

 

1.On-the-Job Training

On-the-job training is another way in which an employer may invest in  human capital needed for strategic advantage. Such investments may be made by structuring a job so that employees learn while they work. 

For example, employees’ skills may be increased by learning how to perform new tasks or operate new equipment. Employers may structure jobs so that these skills may be learned from other employees. They may also give employees time to learn new procedures or how to operate new equipment through self-instruction, such as by reading technical manuals, or by learning new software through self-instruction.

 Employers may also absorb the costs of lower productivity while workers lacking relevant skills learn through interaction with skilled employees or through trial-and-error processes. Gary Becker has noted that on-the-job training’s impact  on workers’ productivity levels is frequently underrated.30 Likewise, economist Lester Thurow argues that on-the-job training provides the bulk of skills used on the job while formal education serves a signaling function of communicating to employers the trainability of job applicants.31 Economists calling attention to the importance of on-the-job training point out that a worker’s productivity is determined by the capital intensity of he job; type and extent of on-the-job training provided; 

The worker’s ability to learn from the training, which is signaled by education; and how the jobs are structured, such as their promotion possibilities and responsibility level.32 The contribution of on-the-job training to productivity has also been hypothesized to vary according to occupation as a result of differences in such factors as the rapidity of skill obsolescence and difficulty of job tasks. The contribution to worker productivity of on-the-job training has been verified in an empirical analysis of governmental employees with on-the-job training being measured by the employees’ years of job experience.

2.Investments in Management Development

The continued development of managerial personnel is a critical strategic issue in most organizations and a particularly difficult challenge given the massive shifts in strategy. Before management development, it is useful to quickly review some evolving and forecasted trends in the managerial environment. It is clear that organizations are becoming less hierarchical and that many middle-management positions have been eliminated. Further, larger numbers of workers are better educated and many are professionals. As a result, they expect to participate more in decision making. In the future, more work is expected to be performed in task force or project teams, power will be shared, managerial status will be deemphasized, and leadership responsibilities may be rotated.34 Because of the participative aspect of these empowerment trends, many professionals and highly educated employees may have more exposure to managerial responsibilities and may develop related skills as a natural part of their work.

References

1. Buono, Anthony F., and James L. Bowditch. The HumanSide of Mergers and Acquisitions: Managing CollisionsBetween People, Cultures, and Organizations. San Francisco: Jossey-Bass Publishers, 1989.

􀂄 NOTES

1. Dyer, Lee. “Bringing Human Resources into the Strategy Formulation Process,” Human Resource Management 22, no. 3 (1983): 263. 

2. Quinn, James B., Thomas L. Doorley, and Penny C. Paquette. “Beyond Products: Services-Based Strategy,” Harvard Business Review 90, no. 2 (1990): 58–67.

3. Quinn, Doorley, and Paquette. “Beyond Products: Services-Based Strategy,” p. 60.

4. Lawler, Edward E. III. The Ultimate Advantage: Creating the High Involvement Organization. San Francisco: Jossey-Bass Publishers, 1992, p. 21.

5. Bolt, James F. “Job Security: Its Time Has Come,” Harvard Business Review 61, no. 6 (1983): 115–23; Peters, Tom. Thriving on Chaos: Handbook for a Management Revolution. New York: Harper and Row, 1987.

6. Jackson, Susan E., Randall S. Schuler, and J. Carlos Rivero. “Organizational Characteristics as Predictors of Personnel Practices,” Personnel Psychology 42, no. 4 (1989): 727–86.

7. Beer, Michael, Bert Spector, Paul R. Lawrence, D. Quinn Mills, and Richard Walton. Managing Human Assets. New York: The Free Press, 1984.