At many of the bluest of blue-chip companies, training programmes are scattershot at best. A new framework helps your top executives see that truly world-class training means much more than an executive MBA programme here or there, says Bain & Co

Scan those "Best Companies To Work For" lists and you'll see abundant evidence of commitment to training, training and more training. You'll read all about the benefits of web-based self-learning and executive coaching and MBA course credits-in no particular order.

What you don't get are signs of a holistic approach to training, for the simple reason that few businesses think or act that way. They should. The usual narrow view hurts an organisation's chances of reaching its full potential because training is unlikely to mesh well with the business strategy. That's not lost on the best companies. But they haven't had a framework for pushing persuasive arguments to the contrary.

The strategy-consulting firm I work for, Bain & Co, has long studied the way businesses tackle the discipline of training. Yes, training strategy is increasingly a high-level issue in large corporations. We see decent levels of investment: on average, about 2% of payroll goes to training-almost a week's worth per employee per year. Many large companies are careful to measure the returns: Motorola believes that for every $1 spent on training, it gets back $33 in benefits. And chief executives spend more time on it—Jack Welch, when he headed General Electric, was famous for teaching classes at Crotonville, GE's management school.

But we find that not many chief executives—even those who never cut their firms' training budgets—are clear on where they should put the emphasis on training. If they are hazy about which programmes cost what, they're even less confident about what they get for the money. And most have little idea of which programmes will most effectively propel the company's prevailing business strategy.

In working with clients in industries as diverse as telecommunications and toy retailing, Bain has arrived at a framework that we believe will help. It opens up the perspective beyond this executive coaching programme or that e-learning initiative, allowing senior executives to assess all levels of training at once and move quickly to identify and remedy weaknesses.

The right kind of framework will help training directors determine where and when to place the training dollars that are so vulnerable to the accountants' red pens. It can help resolve disputes about training priorities. And we believe it will help top management see the gap between the training approaches that really help their businesses and the kind of training their firms are probably running today.

The framework is straightforward (see chart). It is a pyramid four layers deep-one layer for each of the four components of training. The pyramid is surrounded by three training elements, each of which applies to all four layers. Most organisations do well at specific training components, but it's the whole seven-segment approach that really counts.

By always thinking about the four layers at the same time, executives are unlikely to prioritise one over another, or lose sight of any of the four. Let's go through the framework segment by segment:

Employee skills
This base layer of training encompasses initial and recurring skills, or the education required for entry-level and non-managerial employees to complete assigned tasks. Topics for the audience include technical procedures, company policies and handling routine customer interactions. Methods for training include computer-based "virtual universities", hands-on recurring training, off-site seminars and skills-based interviewing.

All new employees need some sort of initial training. Disney's initial training programme is for all new hires. Students in the initial training class can include all levels, from vice-presidents to cast characters to dishwashers. Instructors teach three topics: company heritage, expectations and rewards. The heritage portion addresses Disney's history, from current operations to Disney's inaugural cartoon character, Steamboat Willie. The expectations module is a new hire's first introduction to Disney's renowned emphasis on service and customer experience. Instructors finish the day with a review of benefits for employees including pay, vacation and admission policies. Later training is focused on the specific skills required for each job. One creative way Disney concludes its initial training for its most senior hires is to dress the executives up for a few hours as Disney characters, and have them walk the theme parks so they experience the firm's history and customer service firsthand.

Here at Bain, the initial training consists of one intense week of what we call "new consultant training" for hires with an MBA, and a two-week training named "associate consultant training" for undergraduate hires. Topics taught by senior managers relate directly to the skills consultants will need to solve clients' problems and to work well with clients' teams. The curriculum introduces new hires to the Bain Virtual University, an online resource that we use as a recurring training tool to promote analytical, team-building and role-playing exercises, among others. When employees are promoted, they attend a week of training addressing the skill set needed to enter the higher level.

There are numerous examples of how companies can fulfil recurring training needs. For manufacturing and repair companies, training may take on a formal, hands-on seminar format to effectively introduce new techniques. For companies with computer-based service representatives, recurring training via short pop-up modules may be appropriate. More and more organisations are using the "beamed in" ten-minute tutorial approach that walks employees through a technical exercise, at their own workstations and their own pace.

A few years ago Pacific Bell was faced with the challenge of turning 5,000 service reps from order takers to sales people. The telecoms provider successfully incorporated pop-up modules into its training programme. Periodically, representatives would be removed from the calling queue and given a 20-minute training module online. The interactive modules taught the front-line employees the features of new products and alerted them to potential cross-selling opportunities, ensuring that they kept products and policies fresh in their minds. When finished, the calling system routed calls to their extension again. The PacBell reps reported the modules a success because the training was timely and it came in digestible portions.

So what are the key elements of an employee skills training programme? Administrators should ask themselves:

Is the training, both initial and recurring, tied directly to the skills required for each person's job?
Is the training practical and hands-on?
Does the training reinforce the company's values and help each employee contribute to the firm's strategic goals?
Are the right processes in place to track employee participation, to tie modules directly to productivity gains and to ensure solid training feedback?
Manager and supervisor training
Training for mid-level and junior managers includes initial and recurring education focused on the tools needed to manage teams and processes. Examples of topics are communication, work planning, leadership and advanced customer relationships. Methods for delivery include virtual universities, or online modules; periodic off-site seminars; and regular on-site seminars led by more senior managers.

Typically, attendance is mandatory, and the level of training is fairly standardised for all staff at a given level. You'd expect between 1,000 and 1,500 potential participants in a 10,000-employee company.

McDonald's is a recognised leader in training managers at "Hamburger University", based in Oak Brook, Illinois. The corporate university is designed exclusively for instructing McDonald's employees or managers of McDonald's independent franchisees. All training programmes begin with one essential ingredient: "the basics of McDonald's operations". Class sizes average about 200. Today more than 65,000 managers in McDonald's restaurants have graduated from Hamburger University. Because of McDonald's international scope, translators and electronic equipment enable the faculty of 30 resident professors to teach and communicate in 22 languages at once. McDonald's also manages ten international training centres, including Hamburger Universities in England, Japan, Germany and Australia.

A second example is the leadership-development programme at CDW Computers Centres, a retailer headquartered in Vernon Hills, Illinois. Several years ago, senior executives tried to roll out companywide the successful training programme used by the technical and sales staff. The executives soon realised something startling-and ironic. They saw that the top training need was to enhance management's ability to foster leadership qualities in themselves and coworkers. The outcome? CDW launched its "College of Leadership", kicking off with a three-day seminar at the Kellogg Graduate School of Management at Northwestern University. A few months later, CDW began a series of 26 instructor-led management courses, ranging in length from four to eight hours, for supervisors through senior executives. CDW executives taught about 66% of the courses; corporate trainers ran the rest.

At Bain, we have a comprehensive approach to manager and supervisor training. It begins with new manager training, an intensive weeklong off-site seminar. There are three major thrusts: leading efforts to analyse and solve business problems; achieving client results; and developing Bain employees and teams. Senior managers or partners lead the seminars. Refresher training comes in online modules on Bain's Virtual University.

To assess the strength of a company's manager and supervisor training programme, administrators should be able to answer these key questions:

Does the programme identify generic needs for the company's managerial level?
Does the standardised induction programme effectively train new managers on management processes, and does the recurring training really refresh managers' knowledge?
Are the lessons that each attendee then applies actually tracked in performance evaluations?
Training the stars
Every organisation has its stars. Most people recognise the standouts with high potential; all managers have a duty to identify and groom them as future leaders. Here, the company should practice a key element of "leadership supply"-ensuring that there are adequate supplies of the right kinds of management talent in the right positions, all the time. Specifically, the candidate group should always include enough high-level managers and junior executives to ensure that a ready, well-trained pool of talent is continuously available to replace departing senior executives. For a 10,000-employee company, the top 300-400 should participate in the "high-potential training" programme.

A catalogue of courses is the primary skills-building approach in this case. The catalogue aims to broaden a potential executive's education base. After the individual's performance review, the mentor and reviewee should select the catalogue courses most pertinent to the individual's next challenges. The courses can take several forms: executive-education classes at business schools, for example, off-site seminars led by senior executives or computer-based collaboration exercises.

For maximum impact, high-potential training should begin with one or two weeks of core training enhanced with job rotations and seminars. Then, the employee should dedicate one week annually to study the agreed-upon curriculum without the distraction of normal job responsibilities.

PepsiCo takes its star training seriously. In the mid-1990s then-chairman and chief executive Roger Enrico spent more than 100 days a year personally conducting workshops for senior executives at the food and beverage giant. A cornerstone of Mr Enrico's efforts was an executive boot camp called "building the business". Only nine Pepsi executives, all carefully screened by top brass, attended the programme at a time.

To start with, programme participants created a "growth project" that would dramatically affect the business, receiving 360-degree feedback on their leadership style. Then the executives attended Mr Enrico's five-day boot camp. After 90 days of implementing their "growth project", participants reconvened with Mr Enrico for a three-day follow-up.

The programme wasn't traditional in any sense. It was an ongoing, highly practical exercise designed to foster the leadership qualities PepsiCo's senior executives needed.

At General Electric a cross-functional group of senior managers is brought together for a two-week programme. They're handed a critical business issue; for example, they might have to recommend a solution to this challenge: "how should we fix the falling profitability of our light-bulb business in India?" At the end of the programme, the students present their findings directly to top management.

Pepsi and GE are by no means alone. Big players such as Ford, IBM and Target all enjoy strong reputations for the excellence of their star training programmes.

Here are a few of the gauges of the robustness of a high-potential training programme:

The company uses a formal process for identifying high-potential employees
There is a catalogue of courses, and employees select classes according to individual need
High-potential training is used not only to build skills but also to expose managers to senior executives and firm strategic issues
Training is backed up by job rotations and mentor programmes to build well-rounded future executives
Executive coaching
At the top of the pyramid is a programme limited and tailored to the individual needs of the most senior executives. In a $1bn company with 10,000 employees, there might be no more than 50-75 such candidates. Executive coaching is highly tailored to address an executive's weaknesses-examples typically include conflict resolution, addressing the media, negotiations and public speaking. Effective coaching methods range from instruction by retained external advisers, fostering mentoring relationships and periodic job rotations.

ExxonMobil recently tested some executive coaching concepts for 12 months in its Mexico affiliate and in its California fuel-marketing operations. The project used predetermined measurable goals. Brian Baker, president of Mobil's marketing and refining operations in North America, said, "We wanted to tap into the powerful human trait of people wanting to give more, to take that extra leap forward. People at the highest levels in sports and other areas work with coaches, so we decided to give it a try."

Mr Baker hired a top specialist; the coaching worked so well and provided such concrete benefits that Mobil expanded the programme to other operations. Companies also hire coaches to help with specific needs. General Electric hired Bill Clinton's speech coach to help executives prepare for a question-and-answer session with shareholders.

While these needs are often individual in nature, sometimes the senior team needs training in communications, leadership or simply in working collaboratively. Top teams rarely have time or tolerance for classroom training, but given the importance of trust at their levels, the right simulation or "adventure" session may be good preparation to help the team survive an unexpected business emergency one day.

Executive coaching programmes work best when they embody these features:

Identify the skills that need strengthening in individual executives
Include enough personal training to enhance those skills
Encourage executives to collaborate effectively to network their strengths and compensate for weaknesses
Training mechanisms
Surrounding and encompassing each of the four layers described are three training tools that can boost the effectiveness of the programmes. These tools are performance management, virtual training and succession planning. Performance management is perhaps the most critical and serves as the foundation that supports the training pyramid.

Performance-management system. A performance-management system is a formal review process designed to define, encourage, recognise and reward high performance. It will define required skill sets for each level of management, and quickly identify staffers who are exceeding or lagging behind company expectations. The system provides a basis for rewarding positive performance, and remains a key mechanism for determining which employees should move to higher layers of training.

There are three critical components:

It must develop, publish and educate employees about the skills and standards necessary for each position
It must produce, once or twice a year, written formal evaluations of employee performance against established standards
It must be structured to help reward employees according to performance
The US Navy's fitness reporting system is a good example. The expected performance standards are widely publicised, and periodically reviewed to ensure compatibility with the Navy's goals. All Navy sailors receive semi-annual written reviews, with both quantitative and qualitative assessments of how well they performed against the standards, and what they accomplished. Commanding officers also note how well each sailor performed relative to others of similar rank and time in service. All reports are submitted to the Bureau of Naval Personnel for storage and future reference for promotional consideration.

At Bain and Co, each employee has two performance reviews per year. The written reviews affect future staffing decisions, compensation and promotions. They also identify weaknesses in skill sets that employees can then address using modules offered on our virtual university.

A top-notch performance management system programme will include:

A formal, written, timely review process linked to development planning
Frequent feedback between evaluations
Personal development plans that tie directly to skills needing development
Employee rewards and promotions linked to evaluation processes
Enough flexibility to allow skills to be revised when job skills and firm objectives change
Virtual university. A virtual university is an online forum for teaching the core competencies of a company. Topics include analytics, procedures or information to perform tasks; company policies, history and culture; and basic management techniques. Virtual universities are most useful at the employee skills level of training; they become less important the higher the level. They can be used both to teach basic skills and as a reference tool to provide a refresher course.

It's smart to look at virtual universities as one component of what has been branded "corporate universities". A corporate university uses a variety of teaching methods, including a mix of practical, classroom and online training. Corporate universities have proliferated over the past three decades: from about 200 in the US in 1970 to almost ten times that number today. About 40% of Fortune 500 companies use corporate universities as a primary education channel, spending on average $1,100 annually on each student.

Usually the most difficult task is deciding what must be taught in the classroom versus what can be effectively taught online (see chart). Classroom-type training is most effective when experience-sharing and role-playing are critical to the learning process. This tends to be most appropriate for conveying information that concerns managers or supervisors. Dealing with an angry customer or a touchy personnel issue requires aptitudes that come best through a classroom environment or group work training. Classrooms are also rich with associated features not readily found in a strictly online environment-for example, cultural exchanges, networking opportunities and role-playing of real-world situations.

Online training happens through a company's virtual university, for initial and recurring training. Such training is typically conducive to teaching subjects that are more technical or procedural. The format for a virtual university should be consistent and conform to a global standard, yet remain customised enough to accommodate various learning styles. It should feature a sophisticated search function and make extensive use of hypertext links. Because it's computer based, it employs a just-in-time approach and is built for on-demand learning. A good virtual university knows the audience it is targeting, and it has the scope and depth of learning aids to meet the needs of that audience. Today's web-based standard applications make such a facility cost effective.

Bain's Virtual University (the BVU) offers 150 online learning modules, presented in a variety of formats: web-based PowerPoint presentations, hands-on exercises, multimedia courses and interactive videos. It's now such a routine part of working life for our consultants that it receives a million hits a year from our 2,800 employees worldwide. Consultants and support staff use the BVU in different ways and at different times: to learn analytical techniques for the first time; when they've received feedback indicating a need for improvement; as pre- or post-training; or for self-initiated learning. The BVU does not replace classroom training; it augments it.

In a recent competition for the use of technology for continuous learning, The Institute of Management and Administration named IBM's Corporate University its winner. IBM's facility, comprising 3,400 professionals in 55 countries, offers more than 1,000 separate courses on the web, including modules for both experienced sales representatives and new hires.

The hidden value of a virtual university comes from what we call hybrid training. This does not mean conducting computer training in classrooms. It means effectively combining the modules of classroom and online training to improve training efficiency and productivity. Online units are used to pre-train students, exposing them to concepts and methods before classroom work begins; that way, costly classroom time is devoted to exercises, role-playing and discussion. The virtual university can provide pre- and post-testing, learning checks, a reference library and deeper detail on the topics presented in the classroom. Some companies have shortened classroom training by a day by moving lectures online, enabling students to learn routine and technical procedures more efficiently.

To assess the strength of a company's virtual university programme, administrators should ask themselves:

Do employees view the virtual university as a tool critical to the routine functioning of their job?
Is the programme's scope and depth of content good enough to meet the training needs for targeted audiences?
Can it be used as a refresher for all the skills introduced in formal training programmes?
Are all the modules self-contained, and can employees master them in units taking 20 minutes or less?
Does anyone periodically review the content for timeliness and relevance?
Succession planning. Succession planning is the piece of the training puzzle that gets the least attention. It is defined as rewarding, developing and promoting high achievers for the purpose of grooming one's successors. The goal is to be prepared for surprises.

Many organisations do not have adequate succession plans, or they miss the direct link to training and development. A great succession planning mechanism spots potential successors and includes a training programme that ensures that managers are sufficiently cross-trained. Such planning mechanisms can be put into play immediately in case of unforeseen events. It calls for job rotations, and it often broadens a rising manager's geographical experience. It is generally unimportant for anyone below middle manager, but absolutely critical for the top two or three levels of executives.

Each year, training and human-resources directors should draft a list of key positions and potential succession candidates. The highly confidential list should be shared between the chief executive and the board of directors. In addition, the CEO should discuss the succession plan annually with the chairman. Few CEOs have ever taken succession planning more seriously than Jack Welch when he was at General Electric. Mr Welch had a 15-year track record of attending workshops, conducting bi-weekly sessions with managers and spending one month a year on succession planning.

Recently, Bain helped a client avert a potential succession crisis and implement a succession planning mechanism. The client-a telecommunications company-faced a shortage of qualified leaders to meet its strategic goals. A division head was unable to fill key open positions; the company had barely enough successors to fill more than 100 critical top positions. Bain identified the underlying causes, which included a sporadic evaluation system, undifferentiated training and compensation for star performers, reactive external recruitment and placement, and a failure of line managers to manage talent the same way they managed their profit-and-loss centres. As a result, the client implemented two pilot programmes: one to address the most severe shortfalls and another, in the form of a long-term strategy, to overhaul the infrastructure required for providing a steady supply of leaders.

Key to the strength of a company's succession planning programme are good answers to these questions:

Are two or more potential successors identified for top line and staff executive positions?
Is the programme sufficiently well linked to executive recruiting when gaps are identified?
Are formal training, mentoring and job-rotation programmes established for the next generation of leaders?
Conclusion
Nobody is above training-especially in today's high-speed, high-stakes economy. No organisation can afford to continue with a scattershot approach to training. And nobody can afford training programmes that don't pay off for the business.

Training can't be prescribed like vitamin pills, as circumstances dictate. It doesn't apply just to one job level, career stage, time of year or time of day. Instead, training programmes must be mapped out thoroughly, comprehensively and in synch with the company's priorities and objectives. And they must be built to flex so they're always aligned with the business goals.

Rome wasn't built in a day. We know that training doesn't go from happenstance to world class by next week. We know too that when training budgets come under the accountants' glare, bad things can happen to good programmes. All of which is why we firmly believe that structuring a company's training needs can add real value, and viewing them through a holistic framework is imperative.

It's one thing to have a handle on the cost effectiveness of different training tools. It's quite another to see them all together, and in light of their considerable influence on company performance.

Steven Tallman is Bain & Co's Vice President of Global Services, responsible for all knowledge, training and technology functions. He divides his time between the firm's San Francisco and Brussels offices.

A version of this article appeared on www.TrainingMag.com in October 2002.

Source: The EIU ebusiness forum.