Putting the customer first has been the mantra of many companies for a long time. But however correct the mantra may be, perhaps it’s time to question the wisdom of it. Some companies already have, that is, put the customer second, after employees. The results are surprising and enlightening – engaged and contented employees and companies cited for their best practices. Moreover, customers are satisfied. This author describes a model for putting employees first.
Steady, long-term competitiveness requires an organization to be committed to putting employees first and developing quality training programs that are linked to its strategic objectives. Without a true commitment to the employees at all levels throughout an organization, the journey to enhance organizational performance will be an elusive adventure. Quality employees equate to organizational success. Unqualified and poorly trained employees equate to organizational failure.
Allocating adequate organizational resources to achieve an effective training environment has been a budgetary and operational challenge that has eluded many organizational decision-makers, primarily because they do not realize that training is only the tip of the iceberg when it comes to enhancing employee performance. Lurking beneath the issue of training is the commitment that an organization makes to its employees as reflected by the HR policies that management has established. In a recent Wall Street Journal, article it was reported that despite the claims from a majority of executives that their organizations treat employees with respect and offer fair pay for the tasks performed, the evidence tends to indicate that most organizations do not practice what is preached.
The disconnection between what is stated and what is done can partially be traced to a marketing philosophy that began to dominate management theory after the production, product, and selling concepts faded in popularity. At the center of this philosophy is the notion that the customer should be the focus of all organizational activities and planning. Although the emphasis on the customer appears to be a logical premise for building organizational success, it is quite misleading. The deception begins with the fact that many organizations simply do not know who their customers are. For example, at a college or university, who is the customer – high school graduates, adults returning to college, graduate students, foreign exchange students, or individuals seeking a vocational trade? What is the socio-economic and demographic data associated with these classifications of students? Who is the customer for a retailer like Walmart? Is it the person who drives a Mercedes to Walmart in order to purchase everyday items at lower prices or it is the individual who uses public transportation to arrive at the store? A customer who can not be specifically identified in every detail is an illusion. Illusions serve as a poor basis for building successful strategy.
And once the “customer” has been identified, should he or she be placed at the center of every organizational activity? Doing so, I believe, pushes aside the true essence of the organization, minimizing its significance. The heart of an organization is its employees and its members. The abilities, decisions, plans, training, and actions of the employees of an organization are what draw individuals to a particular college or retailer or even to purchase a product or pay for a service. The primary driving force that brings people into a concert hall is to hear enchanting music performed by trained musicians whose skills and talents are on display. Highly qualified employees produce quality products and provide quality service that satisfies consumer needs.
Putting the customer second
An organization’s employees have always made the difference between a truly successful organization and a mediocre entity, but it’s amazing how often managers overlook or discount this fundamental recipe for economic survival. Organizations with cultures that focus on their people and that invest in their future will in the long-run, be more competitive than cultures that view employees as mere costs to be reduced in times of trouble.
My premise here is that an organization that plans every action around its employees will thrive in the marketplace. The Wegmans chain of grocery stores headquartered in Rochester, New York, has repeatedly been cited as one of the best employers in the United States. The company’s focus on its employees has made Wegmans a shining example of how a local, family-managed organization can successfully compete against national and international grocery chains.
As I explain in my recent book, Strategic Training: Putting Employees First, organizations that adopt a managerial philosophy of putting employees first tend to have a type “A” organizational culture. A type “A” culture exists when (1) the relationship between administration and non-administrative personnel is built upon trust, (2) cooperation between individuals and departments/units is encouraged while politicking and favoritism are discouraged, and (3) individuals feel that their actions have a meaningful impact on the organization and that their organization stands for something more than just the pursuit of profits- that the organization also contributes to the welfare of the community. In organizations with a type “A” culture nothing is more important than the training and development of its employees. It’s the employees who breathe life into an organization for it’s their skills and abilities that give an organization its competitiveness. As stated by Peters and Waterman, Jr. (2004, 1982) “productivity and the economic rewards that go with it are achieved through the people of an organization.” A fundamental rule of organizational survival is to put employees first and develop their abilities and skills by establishing a quality training environment.
The Strategic Training of Employees Model (STEM)
The Strategic Training of Employees Model (STEM) offers a methodology to effectively and efficiently design training and career-development programs so that organizations can generate the highest possible output value, given the realization that resources will always be scarce to some extent in all organizations.
- All training programs must be based on the strategic objectives of an organization. The STEM model provides a practical managerial structure for developing a quality training environment.
- The framework can help you analyze specific training situations and requirements, but it is flexible enough to be applied to any of a wide range of solutions, given the circumstances associated with an organization.
- The STEM model balances the need for production and the need for training.
- In the STEM model, the director of training is a key part of the strategic planning process.
- The model uses task analysis to help organizations determine what type of training they need. The task analysis is directly linked with the strategic objectives of the organization, which will help identify realistic training needs.
- Using the STEM model will increase management’s commitment to training because it links training with the organization’s overall strategy and emphasizes the need to collect data to measure the effectiveness of the training.
- The model provides a useful framework for employee motivation because it targets the knowledge, skills, and abilities employees will need to build on in order to achieve strategic objectives. Once employees’ skills and abilities match the job, the stage is set for generating high productivity and product output value.
The structure of the strategic training of employees model (STEM)
The STEM model consists of three levels: a macro and a micro-organizational training level, and an implementation, feedback, and evaluation level.
1. The macro-organizational training level
2. The micro-organizational training level
When determining training content, the “four Ps” (product, place, promotion, and price), first popularized in 1960 by E. Jerome McCarthy, will be used to provide a concise and practical framework for guiding training content decisions.
In the STEM model, the product is the training content that will be provided; the place is the set of location factors regarding training; the promotion element refers to how information that pertains to training is communicated; and finally, the price refers to any costs associated with providing training.
Once specific training programs have been developed, the final analysis level can begin: to implement, obtain feedback, and evaluate each training program.
Now let’s provide details about how the STEM model can be used to develop training and career development programs that will assist an organization in creating the highest possible output value.
STEM Application Example
Analysis at the Macro-organizational training level
Training situation
The vice president of general merchandise for a grocery retailer (i.e., Kroger or Wegmans) has decided to develop a merchandise-display training program to set consistent merchandising display standards. The training program will initially involve 10 stores located in Massachusetts. As a result of this strategic decision, a task analysis was conducted. It was determined that general merchandise department managers would require training.
Analysis at the Micro-Organizational training level
Employee target market
The general-merchandise department managers at the 10 stores in Massachusetts.
Product content objectives
The trainer assigned to develop this training program will meet with the vice president of general merchandise to determine the specific merchandise techniques and company display standards. A video of the training session will be made for future training purposes. Demonstrations and practice sessions will be part of the training content.
Place objectives
The training will be conducted at the most centrally located store in order to reduce travel expenses. Equipment and supply costs are illustrated in the cost analysis.
Promotion objectives
Since the director of training is a member of the strategic planning committee, the development of the training program can begin immediately.
The general-merchandise department managers will be notified of the training by their store manager. The training session will be highlighted in the company newsletter. The importance of establishing consistent merchandising displays will also be summarized in the company newsletter.
Price objectives
To minimize costs, an in-house training program will be developed. However, a local video production company has been hired to film and produce a video that will be utilized for future training. The same company will also produce an information booklet that will illustrate the merchandise displays.
Total cost of the training: $14,822.27 (see the cost analysis sheet)
3. The implementation, feedback, and evaluation training level
Three weeks after the training, the director of training will meet with each store manager to review the performance of the general-merchandise managers. The vice president of general merchandise will visit the stores to review the store displays and meet with store managers.
| TRAINING COSTS | ||
|---|---|---|
|
Direct Material Costs |
||
| Training Item and Explanation | Total Cost | |
| Instruction booklet ($30 for each of the trainees, plus a booklet for the trainer and vice president of general merchandising) Total booklets: 12 | $ | 360.00 |
| Miscellaneous supplies ($35 for each of 10 trainees, plus trainer) | 385.00 | |
| Total Direct Material Costs | $ | 745.00 |
|
Direct Labor |
||
| Training Item and Explanation | Total Cost | |
| Trainer Costs (salary and fringe benefits): | ||
| Trainer salary: $20,000 (40 hours/week x 52 weeks/year = 2,080 annual hours, which equates to $9.62/hour) | N/A | |
| Fringe benefits (35% of salary = $7,000 for 2,080 annual hours, which equates to $3.37/hour) | N/A | |
| Time spent with V.P. of general merchandising preparing training program (1.5 days x 8 hours/day @ $9.62/hour) | $ | 115.44 |
| Time spent in training class (2 days x 8 hours/day @ $9.62/hour) | 153.92 | |
| Fringe benefits (28 total hours @ $3.37/hour) | 94.36 | |
| Total Trainer Costs | $ | 363.72 |
| Other Training Department Costs (salary and fringe benefits): | ||
| Director of Training salary: $45,000 (2,080 annual hours, which equates to $21.63/hour) | N/A | |
| Fringe benefits (35% of salary = $15,750 for 2,080 annual hours, which equates to $7.57/hour) | N/A | |
| Meetings with V.P. of general merchandising: 1.5 hours + 1 hour with trainer (2.5 hours @ $21.63/hour) | $ | 54.07 |
| Fringe benefits (2.5 hours @ $7.57/hour) | 18.93 | |
| Clerical support (2 hours @ $6.50/hour) | 13.00 | |
| Clerical fringe benefits (2 hours @ $2.28/hour) | 4.56 | |
| Total Other Training Department Costs | $ | 90.56 |
| General Organizational Support (salary and fringe benefits): | ||
| V.P. of general merchandising salary: $75,000 (2,080 annual hours, which equates to $36.05/hour) | N/A | |
| Fringe benefits (35% of salary = $26,250 for 2,080 annual hours, which equates to $12.62/hour) | N/A | |
| Time spent (3 training preparation hours + 15 post-training hours @ $36.05/hour) | $ | 648.90 |
| Fringe benefits (3 training preparation hours + 15 post-training hours @ $12.62/hour) | 227.16 | |
| Store manager’s average salary: $70,000 (2,080 annual hours, which equates to $33.65/hour) | N/A | |
| Fringe benefits (35% of salary = $24,500 for 2,080 annual hours, which equates to $11.78/hour) | N/A | |
| Total cost associated with store managers (15 hours for all 10 store managers, or 1.5 hours per store manager @ $33.65 and $11.78, which equates to $504.75 + $176.70) | $ | 681.45 |
| Total General Organizational Support | $ | 1,557.51 |
| External Consulting Expense: | ||
| Training video (15 copies of the video @ $75) | $ | 1,125.00 |
| Consulting fee for producing video and information books | 2,000.00 | |
| Total Consulting Expense | $ | 3,125.00 |
| Total Direct Labor Costs | $ | 5,136.79 |
|
Overhead Costs |
||
| Training Item and Explanation | Total Cost | |
| Trainee Costs (salary and fringe benefits): | ||
| Trainee salary: $32,000 (2,080 annual hours, which equates to $15.38/hour) | N/A | |
| Fringe benefits (35% of salary = $11,200 for 2,080 annual hours, which equates to $5.38/hour) | N/A | |
| Time spent in training class (2 days for 8 hours @ $15.38/hour for each of 10 trainees) | $ | 2,460.80 |
| Fringe benefits (16 training hours @ $5.38/hour for each of 10 trainees) | 860.80 | |
| Total Trainee Costs | $ | 3,321.60 |
| Loss of Productivity while Training | ||
| General merchandise assistant managers worked 2 overtime hours (2 hours x 10 trainees x $14.72/hour overtime rate) | $ | 294.40 |
| Fringe benefits (2 hours @ $5.15/hour x 10 trainees) | 103.00 | |
| Total Loss of Productivity (while training) | $ | 397.40 |
| Equipment and Hardware | ||
| Equipment and hardware | $ | 0 |
| Refreshments (2 training days @ $5.50/day for each of 10 trainees, plus trainer) | $ | 121.00 |
| Facilities expense | $ | 0 |
| Travel and Lodging | ||
| Average travel time (1 hour for each of 9 trainees @ $15.38 and $5.38, which equates to $128.42 and $48.41 = $186.84 x 2 return trips) | $ | 373.68 |
| Gasoline cost (average travel miles: 40 for each of 9 trainees @ $3.25) | 1,170.00 | |
| Average travel time for V.P. of general merchandising (3 hours/day for 3 days @ $36.05 and $12.62, which equates to $324.45 and $113.58) | 438.03 | |
| Gasoline cost (total miles: 135 @ $3.25) | 438.75 | |
| Lodging expense for V.P. of general merchandising (2 nights @ $90/night) | 180.00 | |
| Total Travel and Lodging Expense | $ | 2,600.48 |
| Merchandise display contents | $ | 2,500.00 |
| Total Overhead Costs | $ | 8,940.48 |
| Total Cost for Training Program | $ | 14,822.27 |
| Cost/Trainee ($14,822.27 for each of 10 trainees) | $ | 1,482.23 |
Note: Future training costs for this program are expected to be reduced because of the training video. Travel costs are expected to be reduced by $2,100; external consulting costs will be reduced by $2,000. Projected training costs are forecasted to be $10,722.27/10 employees (or $1,072.72/employee). This represents a 27.6% decrease per employee from the original cost of training.
In their never-ending quest to improve performance, organizational decision makers chase after the most-recent technological breakthroughs or the latest marketing techniques or the “hottest” trends in management or finance theory just like puppies race in circles trying to catch their tails. After all that frantic scrambling around, what tends to emerge from those efforts are short-term cost reductions and momentary spikes in some numbers on quarterly accounting reports – no long-term solutions to organizational competitiveness and success.
Steady, long-term competitiveness requires an organization to be committed to putting employees first and developing quality training programs that are linked to its strategic objectives. Without a true commitment to the employees at all levels throughout an organization, the journey to enhance organizational performance will be an elusive adventure. Quality employees equate to organizational success. Unqualified and poorly trained employees equate to organizational failure.
