Term Paper on "Employment Development"

Term Paper 10 pages (3793 words) Sources: 14 Style: Harvard

[EXCERPT] . . . .

Employment Development Critical Analysis of the Correlation Between Employee Development and Company Performance

What is employee development and why do we need it?

Ebbert Hubbard, the famous American philosopher and writer, used to say: "One machine can do the work of 50 ordinary men, but no machine can do the work of one extraordinary man." His statement seems to be more pertinent than ever in the contemporary context of commuting from organizations focused on tangible assets like land or property to organizations relying on intangible assets such as creativity, knowledge or problem solving. Statistics show that more than 50% of the Gross Domestic Product generated by developed economies is based on knowledge - it, education, and pharmaceuticals being the key sectors which account for the impressive percentage (http://www.yourpeoplemanager.com/YarBGXpoTX_-WA.html). This means that humans have become the major resource of nowadays companies. Consequently, their development and education are the major levers conditioning the organizational growth.

But before starting to analyze the correlation between these two aspects, a clear picture of what employee training and development mean could prove extremely useful.

First of all, a clear delimitation should be made among three concepts that people often confuse. These are education, training, and development. The first one consists of preparing an individual's mind in a framework which is different from the organization. The second refers to attending courses aimed at improving skills, knowledge or attitudes for appropriately achieving a certain task within an organization, while the third is the natural result of the first two and is represented by "the growth of the individual in terms of ability, understanding and awareness" (http://www.accel-team.com/human_resources/hrm_07.html).This triangle proves to be indispensable to company performance as it allows employees to account for more difficult tasks, it accommodates newcomers to the organization's performance standards and helps them act within the same competitive pattern responsible for the company's success, it enhances the organization's efficiency and effectiveness, it responds to legislative requirements regarding health or safety, and sets an adequate framework for informing employees on changes that have been made and the courses they have to attend in order to cope with modifications.

Detecting the personnel's needs requiring employee training and development programs is a very difficult, but not impossible task as managers can rely on various sources like: common sense (for instance, the implementation of new technologies undoubtedly represents a solid reason for training), negative aspects that statistics reveal (the decrease of output per employee, lower performance indices, behavioral problems like absences, sickness, lateness etc.), government recommendations, predictions, specialists' advice, alarm triggers pulled by specialized journals or confessions made by other organizations which have encountered a certain problem.

Training and development may be achieved on both formal and informal ways. The former category implies attending courses held by internal or external managers who usually combine impersonal lectures with interactive activities like role-playing or simulation, forums, tests, case studies presented with the help of video and computers. The latter category is a non-official one, and is mainly based on the employees' ability to draw their own conclusions after observing other workers, participating in meetings, rotating jobs within the organization or temporary assisting employees from another company, autodidactic teaching by reading texts or viewing video tapes, being member of a research team and so on (http://www.accel-team.com/human_resources/hrm_07.html).

Measuring the final outcome of such training and development initiatives is a very difficult thing to do because results are rather qualitative than quantitative. Still, managers may observe if the effectiveness and efficiency of their employees have increased by analyzing the number of customer complaints or the time in which a certain task has been performed. They can also notice a faster accommodation of new employees, more effective use of machinery, a higher job satisfaction reflected in performing more qualitative services to the client (and thus attracting new customers), fewer accidents etc. Managers can also draw some conclusions concerning the employees' loyalty (in terms of turnover, absence levels) or the improvement of their qualification allowing them to pitch in for tougher tasks or other positions within the organization (here, managers could consider recruitment and salary costs) (http://www.accel-team.com/human_resources/hrm_07.html).

2. Researches proving the link between employee development and company growth

Undoubtedly, employee development has a significant impact on the customers' satisfaction and the employees' ability and willingness to solve crisis encountered by the organization or to adapt to changes occurred in the business environment. Through training and development, a company's personnel may gain the necessary expertise for approaching new markets or technologies, thus inducing cost savings in the long run. Additionally, employees value trainings because these are seen as strategic investments that the organization accepts to make as a result of the huge trust it has in its personnel's potential. Therefore, employees will embrace a positive and enthusiastic attitude towards the organization concerned about their intellectual evolvement and will work harder for helping it achieve its mission and goals (Gross, 2000).

The link between employee satisfaction, customer satisfaction and financial performance has also been outlined by AC Nielsen through its market researches or by Sears through surveys carried out on its retail stores (Goldstein, 2003).

Another research which consolidates the statements above is the one displayed in David Sirota, Louis Mischkind, and Michael Meltzer's book - the Enthusiastic Employee: How Companies Profit by Giving Workers What They Want. The survey they carried out on a sample of 2.5 million employees highlighted that companies boasting high morale had the tendency to outperform competitors. Moreover, the research emphasized that out of 28 companies having almost 920,000 employees, the share price of 14 (known as high morale firms), had an average increase of 16% in 2004, while the share price of 6 (known as low morale firms) had an average increase of only 3%. The results were significant when compared with the industry average of 6%, calculated for 9,240 companies (http://knowledge.wharton.upenn.edu/article.cfm?articleid=1188&CFID=3898075&CFTOKEN=53249968).

In conclusion, higher morale and enthusiasm lead to increased financial performances. As employee development and training are said to be rewards boosting the personnel's positivism and satisfaction, they may be considered inherently linked to company growth.

3. Benefits of employee training and development major benefit of employee development is increased productivity. Because of the courses he attends, an employee may learn advanced techniques which lead to higher efficiency and effectiveness in performing his tasks. For instance, if a company's bookkeeper is sent to an Excel course, this will be taught several shortcuts which will help him comply faster with his job requirements. On one hand, this means that he can perform other activities which would have otherwise required hiring new employees, and spending more money. On the other hand, increased efficiency results in prompt accountancy reports and ledgers which may be timely consulted by managers in order to make operative decisions. This means shorter time, and consequently, less money spent.

A second benefit of employee development refers to reducing turnover. Researches that have been carried out with regard to this issue have emphasized that an employee's trajectory within an organization has the form of a parabola. In the beginning, he is enthusiastic about his new job and learns everything he needs in order to live up to the company's expectations and gain recognition for his well-done work. This ascending trend (or honeymoon as Sirota calls it) lasts five or six months until the individual reaches a climax where routine comes into the limelight. Thus, he continues to do his job for a certain period, but as nothing new appears, the employee decides to leave the company and try something different or look for another challenge. Yet, Sirota's research shows that 10% of the companies surveyed succeed in ensuring a prolonged honeymoon throughout the entire career to their employees because they understand the difficulty of "being enthusiastic about an organization that is not enthusiastic about you" (http://knowledge.wharton.upenn.edu/article.cfm?articleid=1188&CFID=3898075&CFTOKEN=53249968).Consequently, they implement development programs which help employees seize opportunities and prepare for complex tasks that might reveal numerous latent skills or abilities. Additionally, employee development may be presented as a supplementary path to job security which has become a top need after the collapse of high-tech companies and September 11, 2001. A perfect example of a high-morale company in these terms is Southwest Airlines which, after the terrorist attacks in September, stated:"We will take a hit in our stock price and not lay off anybody" (http://knowledge.wharton.upenn.edu/article.cfm?articleid=1188&CFID=3898075&CFTOKEN=53249968).

Furthermore, training and development can exert a positive influence in the recruiting process. First of all, managers may wish to hire an elitist who doesn't correspond to job requirements because of a certain skill. If the company is ready to offer trainings for developing the missing feature, it could win a valuable employee who may be responsible for future performances. (for instance, a person applying for the PR executive position may be rejected because he doesn't correspond to a single requirement: updating the company's website. Although he is a performer and a fast learner, the organization prefers to hire a less brilliant candidate who poorly meets all the requirements instead of investing some courses in the first one. Such… READ MORE

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