Investing in HRD in Uncertain Times Now and in the Future

Abstract

The Problem

We live in uncertain times, exacerbated by many direct and indirect effects of the global financial crisis. However, there is a lack of understanding about how human resource development (HRD) is responding to the global financial crisis or how HRD scholars and practitioners can best respond to these new realities and thus successfully ensure the future of HRD.

The Solution

To appreciate the future, it is critical to understand the past. Thus, this reflective piece outlines several factors that have caused, and continue to cause, uncertainty in the global economy, including structural changes in labor markets and developments in technology. A literature review revealed several HRD responses of firms to these new realities. These include technology-delivered instruction and social-learning tools. The article concludes by identifying characteristics of effective training and examines some distinctive practices of three firms that have been recognized as the global best in class for their leadership-development efforts.

The Stakeholders

Scholars and practitioners interested in the HRD, technology-delivered instruction, and social-learning fields.

Keywords

uncertainty global financial crisis HRD labor market intermediaries cloud computing technology-delivered instruction social-learning tools leadership development

The phrase “May you live in interesting times” is reputed to be the English translation of an ancient Chinese proverb and curse. Today almost all observers agree that we live in uncertain times (Dequech, 2004; Sheehan & Sparrow, 2012). To a great extent, this is due to ongoing economic turbulence, including financial constraints and financial market volatility, much of it brought on by the global financial crisis (Bresser-Pereira, 2010; O’Reilly, Lain, Sheehan, Smale, & Stuart, 2011; Rajan, 2010). One purpose of this article is to examine how human resource development (HRD) is responding to structural changes in labor markets and to developments in technology. A second purpose is to consider the leadership-development philosophies and practices of three companies recognized as global pacesetters in that area.

The article is organized as follows. It begins with a brief review of several factors that are causing uncertainty in the global economy, along with structural changes in labor markets and developments in technology. Then it reviews some recent findings about the HRD responses of firms to this uncertainty, with particular emphasis on new forms of training to address the needs of both virtual and physically co-located learners. Finally, the article will identify characteristics of effective training and examine the practices of several firms that have been recognized as the global best in class for their leadership-development efforts.

Uncertainty in the Global Economy

Much uncertainty remains following the global financial crisis. Bresser-Pereira (2010) has described the causes and consequences of the crisis succinctly:

The immediate cause of the crisis was the practical bankruptcy of U.S. banks as a result of household defaults on mortgages that, in an increasingly deregulated financial market, were able to grow unchecked. Banks relied on “financial innovations” to repackage the relevant securities in such a manner that the new bundles looked to their acquirers safer than the original loans. When the fraud came to light and the banks failed . . . consumers and businesspeople . . . sought protection by avoiding all forms of consumption and investment; aggregate demand plunged vertically, and the turmoil, which was at first limited to the banking industry, became an economic crisis. (p. 516)

The crisis was global in its scope, as consumers lost confidence for economic, political, and moral reasons.

Virtue and civic values were forgotten, or even ridiculed, in the name of an invisible hand or of an overarching market economy rationale that claimed to find its legitimacy in neoclassical mathematical economic models . . . Corporate scandals multiplied. Fraud became a regular practice in financial markets. Bonuses became a form of legitimizing huge performance incentives. (Bresser-Pereira, 2010, p. 517)

One consequence of the global financial crisis was that unemployment skyrocketed to 50 million worldwide by the end of 2009 (Bresser-Pereira, 2010). In the United States, several factors continue to suppress hiring and capital investment. One indicator of this is that U.S. corporations are holding enormous amounts of cash—$1.79 trillion at the end of 2012, according to the U.S. Federal Reserve Flow of Funds Accounts (Hodrick, 2013). The two explanations most frequently given for the growth in cash pertain to fiscal policy and structural factors (Sanchez & Yurdagul, 2013).

Fiscal policy affects cash holdings in two ways, both of which involve taxes. First, public firms are seeing their profits rise elsewhere in the world; if these firms were to bring these profits from overseas operations back to the United States, the profits would be relatively heavily taxed. Second, uncertainty about future taxes is on the rise. The failure of the U.S. Congress to agree on a long-term solution to reduce the national debt by some combination of reduced spending and increased revenue only exacerbates the uncertainty that executives face. Forced spending cuts in U.S. government agencies (“The Sequester”), which began in 2013, have curtailed spending on HRD drastically (National Skills Coalition, 2013). Nor is there certainty in the regulatory environment, as regulations are still being written to govern the financial-services industry under the Dodd-Frank Wall Street Reform and Consumer Protection Act (McCoy, 2013). A third factor that underlies muted hiring is that many firms are substituting capital for labor, and, as a result, they need many fewer workers to produce goods and services (Rotman, 2013). Unemployment remains stubbornly high in the United States as well as in Europe and the Middle East (Laub, 2013). To some extent, this is a consequence of the interdependence among global markets.

Interdependencies Among Global Markets

Globalization is a fact of organizational life, as countries, companies, and workers are interconnected as never before. Global trade connects the fate of every industry and laborer, no matter how small or seemingly self-sufficient, to the decisions of bureaucrats in China, shipbuilders in Korea, and bankers everywhere (“Bloomberg,” 2011). To illustrate, consider how the ripple effects of the Japanese earthquake of 2011 affected auto manufacturers. When the quake shut down parts suppliers in Japan, assembly of General Motors vehicles in Shreveport, LA, and Buffalo, NY, also shut down, and workers were laid off. Production slowdowns in Spain, France, and Germany affected GM, Toyota, and PSA Peugeot-Citroën (Ramsey & Moffett, 2011).

Another feature of globalization is that cheap labor and plentiful resources, combined with ease of travel and communication, have created global labor markets. This is fueling mobility as more companies expand abroad and people consider foreign postings as a natural part of their professional development. Beyond the positive effects that such circulation of talent brings to both developed and developing countries, it enables employment opportunities well beyond the borders of one’s home country. This means that competition for talent will come not only from the company down the street but also from the employer on the other side of the world. It will be a seller’s market, with talented individuals having many choices. Countries, as well as companies, will need to brand themselves as employers of choice to attract this talent (World Economic Forum and Boston Consulting Group, 2011).

Along with these trends, expect to see three more (Cascio, 2013). The first is increasing workforce flux, as more roles are automated or outsourced, and more workers are contract-based, mobile, or work flexible hours. This may allow companies to leverage global resources more efficiently, but it also will increase the complexity of management’s role. Second, expect more diversity as workers come from a greater range of backgrounds. Those with local knowledge of an emerging market, a global outlook, and an intuitive sense of the corporate culture will be particularly valued. Not surprisingly, talented young people will more frequently choose their employers based, at least in part, on opportunities to gain international experience. Finally, technical skills, while mandatory, will be less defining of the successful manager than the ability to work across cultures and to build relationships with many different constituents (Economist Intelligence Unit, 2010; Lublin, 2011). All of these changes and trends create uncertainty as well as challenges for employers, whether they operate only domestically or internationally across national borders. We will consider their impact on HRD initiatives in a following section, but first, we need to discuss two additional factors that are having major impacts on HRD policies and practices, namely, structural changes in labor markets and developments in technology.

Structural Changes in Labor Markets

An emerging trend is for organizations to employ workers from a variety of labor-market sources, that is, to use a splintered supply of labor (Milkovich, Newman, & Gerhart, 2013). In many cases, labor market intermediaries (LMIs) facilitate employment arrangements. LMIs stand between the individual worker and the organization that needs work done, shaping how workers are matched to organizations, how tasks are performed, and how conflicts are resolved (Autor, 2009). Bonet, Cappelli, and Hamori (2013) identified a variety of LMIs, including temporary help services, online job boards, social media sites, executive-search firms, outplacement firms, and professional employer organizations (PEOs) that become the legal employer of a firm’s existing workers. As Bonet et al. (2013) have noted,

The growth and increasing prominence of LMIs is important for all research associated with the workplace because we can no longer do a study of “workers” in an organization and assume that they are all employees. Some may be “temps” under contract to an agency, some may be “employed” by a PEO, some may work for vendors. (p. 340)

To appreciate the scale and scope of this change in the structure of labor markets, consider the largest professional social-networking site, LinkedIn. Begun in 2003, it now has more than 175 million members in more than 200 countries. It has 84 million members in the United States—almost 60% of the employed civilian labor force. About 2.6 million companies worldwide have LinkedIn pages (Daily Worth Team, 2013), and much of the activity on the site involves employers looking for job candidates and individuals looking for new jobs.

This is by no means only a phenomenon in the United States. Consider temporary help agencies, for example. Eighty-one percent of organizations worldwide use them to manage fluctuations in demand (Ciett, 2012). They are especially popular in Japan. In Europe, estimates put the number of individuals in the workforce who are not “regular” employees in excess of 30% (OECD Stat Extracts, 2012). Given the prevalence of LMIs, what this means is that we can no longer assume that everyone who works at a given organization is an employee of that organization. Even more important, LMIs require that we rethink existing paradigms to understand the workplace (Bonet et al., 2013). One of those paradigms is skill development, that is, HRD initiatives.

Impact of LMIs on HRD Initiatives

Bonet et al. (2013) argue that the short term of employment provided by temporary help services diminishes the incentives both of the temporary help service and the client employer to invest in HRD initiatives for these “temps.” Client organizations may have little incentive to invest in developing any skills other than those needed to perform the current job, because they will not have the chance to capitalize on their investment. Cappelli and Keller (2013) found that establishments that trained workers less were more likely to use non-standard workers in general, including agency temporary workers and PEO workers. Other research has found that companies that required high levels of industry-specific human capital were less likely to use workers from temporary help services (Mangum, Mayall, & Nelson, 1985). In addition, because they are not willing to provide firm-specific training, companies tend to assign workers from temporary help services to simpler jobs, which gives these workers little chance to learn on the job (Kalleberg, Reskin, & Hudson, 2000).

Temporary help services themselves typically provide general training to their temps, often in end-user computer skills such as spreadsheets and word processing (Autor, 2001). The incentive to do so is that the firms can bill the work provided by those temps at a higher rate. Other evidence indicates, however, that such training has little effect in helping temp workers to get ready for specific jobs or to build successful careers because they have limited knowledge about the kinds of skills that are necessary in the client company.

What this evidence suggests, therefore, is a more nuanced view of HRD initiatives. While some firms may provide extensive opportunities for training and development, at least among their full-time, core employees, the very same firms may provide little, if any, training beyond that need to perform the current job for employees hired from temporary help agencies or other LMIs that offer limited-term employment. There may be few incentives to do so, unless an organization uses temporary help as a screening device or as a “job tryout” for longer-term employment. Firms such as Cummins Engine or United Parcel Service fall into this category (Cascio, 2013). In short, workers who are most likely to receive opportunities for continued skill development are those with longer-term relationships with employers and whose skills are regarded as valuable or essential to achieve an organization’s operating and strategic objectives. This is consistent with findings from PWC Saratoga’s 2012 Global CEO Survey. Seventy-eight percent of CEOs plan to make changes to talent strategy in response to the global business environment (PWC Saratoga, 2012). HRD is an integral component of that strategy.

HRD Responses of Firms to Uncertainty in the Global Economy

According to an annual compendium of training, budgets, staffing, and programs in 300 U.S. firms that come from a representative cross-section of different industries and company sizes (O’Leonard, 2013), annual spending on HRD has changed dramatically since the depths of the Great Recession. In 2008 and 2009, for example, annual training expenditures plummeted by 11% in each of those 2 years. It rebounded a positive 2%, on average, in 2010, but then rose sharply, increasing by 10% in 2011, and then by another 12% in 2012. The lesson? Firms cut training expenditures, along with many other forms of corporate expenditures, dramatically during the Great Recession, but as the economy has begun to rebound slowly, expenditures on HRD simply could not wait. At least for full-time, core employees in today’s globally interconnected and interdependent economy, HRD is not a competitive nicety. It’s a competitive necessity and firms know it.

Given the pace of change and the pace of innovation, reskilling, and, in some cases, the development of foundational skills, is a competitive necessity if firms want to compete domestically, as well as to expand their operations more globally. Consider two such trends, public–private partnerships and “building” workforces in remote areas. With respect to the former, consider the partnership between the giant European aircraft maker Airbus and the U.S. state of Alabama. To attract the company’s $600 million in investment and 4,000 jobs to Alabama, the state offered $158 million in incentives, including $51.9 million for a 40,000-square foot, onsite training center, where workers will be trained, at state expense, for their new jobs. The plant, expected to begin production in 2015, will eventually turn out four planes a month (Dwoskin, Matlack, & Rothman, 2013).

A second response, particularly appropriate for firms operating in remote areas, is to “build” their workforces. As an example, consider mining-industry leader Anglo American PLC. When it moved to a remote area of Brazil to mine iron ore, it chose to create a mining-specific training academy to train its entire workforce. It renovated a crumbling grade school and filled the classrooms with control panels resembling those on its equipment, along with scale models of the mine. With an initial investment of $1.5 million, it has already graduated 151 students, mostly in their 20s, and plans to train more than 500 local people over the next 3 years. Twenty-two percent of the workers being trained are women, compared with 10% at mining firms globally. This is due, in part, to a monthly child-care allowance for mothers. Students learn everything from welding parts and changing light bulbs to repairing diesel engines and operating iron-ore conveyor belts.

Anglo American believes that training young people with few options gives it a more dedicated labor force. To fill senior-engineering positions, however, the company has had to cast a wider net, bringing in mining veterans from Canada, Chile, and other mining powerhouses, and paying global market rates of $150,000 a year or more (Miller, 2013).

Employees and managers at every level must learn to adapt to a workplace that is becoming more transient, more mobile, and more focused on self-service. Workplaces themselves have become seamless, and also endless, as they roll through a 24/7/365 cycle. Organizations of every stripe have become “borderless” to their customers as well as to their employees. The result of all of this change is that HRD teams are rethinking how best to align their offerings with business needs and evolving trends. Before we discuss them, let us first consider some advances in technology that have major implications for HRD design and delivery.

Technology in the Workplace

We live in the digital age. Many factors are driving change, but none is more important than the rise of Internet technologies (Friedman, 2005, 2008). As it continues to develop, the Internet is changing the ways that people live and work. In the workplace, the Internet gives everyone in the organization, at any level and in every functional area, the ability to access an expansive array of information—instantaneously from anywhere. Indeed, the percentage of the world population with access to the Internet has increased from 18% to 35% just from 2006 to 2011 (“A Wired World,” 2012). As for storing all of this information—from archiving and backup to content distribution, production, and remote processing—consider the growth of cloud computing.

Cloud computing—the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server—is exploding in popularity. It gives consumers, as well as companies, cheap, unlimited access to cutting-edge computing power and applications. As recently as 5 years ago, many organizations looked at cloud computing as a novelty or danger to security. Today, many of those same organizations are touting its agility, power, and ability to innovate business processes. Indeed, by 2015, a projected 2.5 billion users and 15 billion devices will be accessing cloud services. By 2014, companies are expecting to handle data demands from one billion smartphones alone (O’Mahony, 2013).

What do these developments mean for 21st-century organizations? In contrast to the hierarchical organization chart of the 20th-century organization, the 21st-century organization is far more likely to look like a web: a flat, intricately-woven form that links partners, employees, external contractors, suppliers, and customers in various collaborations. The players will grow more and more interdependent, and managing this intricate network will be as important as managing internal operations (Cascio, 2010). This has major implications for the design and delivery of HRD, as participants may be widely dispersed in different geographies and time zones. We will have more to say on this issue later.

As is well known, flexible work arrangements are becoming ever more popular, with women as well as men at all levels demanding them. Indeed, fully 89% of Generation Y (born 1980-2000) and 79% of Generation X (born 1965-1979) say that flexible work arrangements and the opportunity to give back to society trump the sheer size of the pay package (“Demographic Shifts,” 2011; SHRM Foundation, 2012). Technology in the form of smartphones and tablet computers enables such flexible work arrangements.

Technology also allows organizations to do more with fewer workers. As the 2007-2009 recession (“The Great Recession”) took hold and businesses laid off employees, corporations were forced to become more efficient—and they had the technology to do it. Employers are not about to go back to their larger, less-efficient workforces, and that will hit middle-class workers with no special skills the hardest. Fully 95% of the net job losses during the recession were in middle-skill occupations such as office workers, bank tellers, and machine operators. HRD challenges associated with reskilling, or up-skilling, these individuals will present a major public policy issue and also a significant opportunity for HRD specialists to contribute to the betterment of human welfare (Cascio, 2014). This is not a one-shot opportunity either; the MIT Center for Digital Business predicts that the next 10 years will be more disruptive than the past 10 (Dorning, 2012).

Fortunately, technology also enables innovations in HRD design and delivery that respond to the massive changes wrought by globalization and technology. The following sections present two such innovations, “technology-delivered instruction,” or TDI, and HRD using social-learning tools.

TDI

TDI is the presentation of text, graphics, video, audio, or animation in digitized form for the purpose of building job-relevant knowledge and skill. TDI includes asynchronous (meaning that it is not delivered to every user at the same time) text-based courses, job aids, educational games, and video and audio segments, as well as synchronous media, such as video-conferencing and chat rooms (Aguinis & Kraiger, 2009; Jana, 2006; Totty, 2005).

Whether training is web based, delivered on a single workstation, on a PDA, or on an MP3 player, TDI is becoming more popular. Here is just one example of it. Canon, Inc. uses a video game to train copier technicians. The technicians must drag and drop parts into the right spot on a copier. As in the board game Operation, a light flashes and a buzzer sounds if the technician gets it wrong. According to Canon, workers who played the game showed a 58% improvement in their training scores compared with older training techniques, such as manuals. Canon uses 11 other training games as well. Corporate trainers are betting that the games’ interactivity and fun will hook young, tech-savvy employees, and help them grasp and retain sales, technical, and management skills.

TDI is projected to boom in the next 5 years, as both demand and supply forces encourage its adoption. On the demand side, rapid obsolescence of knowledge and training makes learning and relearning essential if workers are to keep up with the latest developments in their fields. In addition, there is a growing demand for just-in-time training delivery, coupled with demand for cost-effective ways to meet the learning needs of a globally distributed workforce. Finally, there is demand for flexible access to lifelong learning.

On the supply side, Internet access is becoming standard at work and at home, and advances in digital technologies now enable training designers to create interactive, media-rich content. In addition, increasing bandwidth and better delivery platforms make TDI particularly attractive. Finally, there is a growing selection of high-quality products and services.

Features such as these allow small companies, such as Broadwing, Inc., a Cincinnati-based telecommunications firm, to offer a safety course delivered over the Internet. They also permit large firms, such as General Motors, to reach more than 175,000 employees at 7,500 dealerships in less than a week, using interactive distance learning (IDL) technology. IDL will let employees view a live course beamed in by satellite and ask questions of the instructor without leaving their dealerships, which slashes travel time and costs, and improves quality, because GM can select its best instructors to teach each course.

Simulation games are one popular type of TDI. They refer to instruction delivered via personal computer that immerses trainees in a decision-making exercise in an artificial environment to learn the consequences of their decisions. The games are intrinsically motivating, and some people report that they actually lose track of time when playing their favorite ones. When used for training, they seem to pay off quite well. Meta-analysis results indicate that relative to a comparison group, post-training self-efficacy (belief that one can succeed) was 20% higher, knowledge of facts was 11% higher, skill-based knowledge was 14% higher, and retention was 9% higher for trainees taught with simulation games (Sitzmann, 2011).

Trainees learned more when simulation games conveyed course material actively rather than passively, trainees could access the simulation game as many times as they desired, and the simulation game was a supplement to other instructional methods rather than stand-alone instruction. Trainees learned less, however, when the instruction the comparison group received as a substitute for the simulation game actively engaged them in the learning experience.

There are drawbacks, however. Computer-based simulation games are more expensive to develop than other forms of TDI, with complex simulation games costing between $5 and $20 million to create. Traditional online training takes an average of 220 hours to create each hour of instructional content, whereas online simulations require 750 to 1,500 hours to create each hour of instructional content (Sitzmann, 2011). Needless to say, to maximize the utility of simulation games, designers need to focus on content reuse, using software that streamlines the game-development process and offsetting development costs with savings in travel costs for training that used to be delivered via classroom instruction. A final consideration pertains to borderless workplaces.

Although some people may relish the opportunity to squeeze in a little training via a computer or CD at home, on a plane, or in a hotel room, others may regard after-hours training as an unwarranted intrusion on their personal time. This raises an interesting question: If a company does not provide time for training during regular working hours, is it arbitrarily extending the workday? Some firms, such as GlaxoSmithKline, urge managers to provide time for training during the workday. Other employers provide tools to help employees carve training time out of their workdays. Cisco Systems gives employees police tape to stretch across their cubicle doors. Others hand out signs saying “Learning in Progress” (Cascio, 2013). As learning becomes more a part of every job—and of day-to-day life—researchers might fruitfully examine the kinds of HRD policies regarding these issues that seem to be most effective.

Social-Learning Tools

As O’Leonard (2013) notes, “Employees have always learned from one another, but technology has made it possible for workers to collaborate in ways that were almost unimaginable a decade ago” (p. 13). This has led to a dramatic increase in the use of social-learning tools. In 2007, for example, just 7% of U.S. companies were using wikis¹ in a learning environment; by 2012, that number had hit 24% (O’Leonard, 2013). Likewise, just 11% of companies were using communities of practice (CoPs)² in a learning environment in 2007. By 2012, that number had tripled to 33%. In addition, 26% of U.S. organizations use social media such as Facebook, Twitter, and Yammer in their employee-development initiatives (O’Leonard, 2013).

Corporate spending on social learning has grown similarly. In 2012, for example, U.S. companies spent $13,675, on average, on social-learning tools and services. That is a 39% jump over 2011 levels. Large companies made the biggest investments, spending more than $46,000, on average, in 2012, nearly triple the spending just 2 years earlier (O’Leonard, 2013).

It is important to note, however, that a key objective of the increased expenditures on HRD in an uncertain world is to create the kinds of learning environments that will fit evolving structural changes in the nature of work and in its execution. At the same time, it is important to note that traditional, instructor-led classroom training is still popular, ranging from 37% of total training hours in manufacturing to 63% in insurance (O’Leonard, 2013). Organizations of all sizes, from 73% of small ones (100-999 employees) to 93% of large ones (10,000+ employees) are using learning management systems³ to coordinate these efforts (O’Leonard, 2013).

Social-learning tools can be extremely effective if they are combined with more formal training programs. To do that, organizations are creating employee networks, connecting novices to experts through online expertise directories, and sharing knowledge through CoPs. This has resulted in a shift from blended training programs to continuous learning environments (O’Leonard, 2013). For HRD researchers, the rapid development of social-learning tools raises several important questions, namely, what is the relative effectiveness of alternative social-learning tools? Which features of such tools seem to have the greatest impact on long-term learning and positive transfer to the job situation? What circumstances make social-learning tools more or less effective? Are there interaction effects between social-learning tools and more formal training programs? While the popularity and expenditures on alternative social-learning tools have risen dramatically, research on their overall effectiveness is still in its infancy.

Leadership-Development Training in Uncertain Times

When times get tough, reducing or eliminating training and development programs, especially those with results that are hard to quantify objectively, such as leadership development, become a tempting target. Training is expensive, and, at least in some companies, moving high-potential managers into developmental assignments is seen as a luxury that can wait for better times. Sure, it is easy to proclaim that “people are our most important asset,” but the true test of whether people are seen as assets to be developed or as costs to be cut comes when the economy falters.

In a 2012 study of about 1,000 firms worldwide, CEO.net, in partnership with Chally Group Worldwide, identified the top 40 companies for developing leaders. The best companies for developing leaders share two characteristics in common. One, they generate dramatically greater market value over time than the weakest companies for leadership development. Two, their CEOs commit a higher priority to leadership development in spite of the added burden of more complex and “distracting” environments with added pressures for short-term financial results (Donlon, 2013).

Among the top three companies rated—Procter & Gamble, GE, and IBM—here are some illustrative practices. Procter & Gamble exercises a razor-like focus on internal succession planning at all levels. From its inception 175 years ago, promotion from within has been a hallmark of the company. To facilitate that it uses a rigorous process with managers to develop managers below them. In general, your boss can’t be promoted until you are ready to be promoted. Each year, the CEO personally looks at the top 300 to 400 executives and reviews the progress of key candidates with the board of directors. The most important element is short feedback loops that include 360-degree reviews, where the system tries to prevent derailment.

At GE’s world-famous Crotonville, NY, facility—on which GE reportedly spends about $1 billion a year—the firm offers 13 courses involving leadership skills that all senior executives should have, such as presentation skills, project-management skills, and financial literacy. These courses are managed through the Crotonville staff but are delivered at GE businesses around the world, including Shanghai, Munich, and Bangalore, among other places, by using a “Train-the-Trainer” model. GE trains 50,000 to 60,000 people a year digitally and an additional 9,000 attend courses at Crotonville. It is little wonder why so many other organizations covet the company’s graduates.

IBM has a long history of innovative leadership development and cross-discipline mentoring. Its Basic Blue for IBM Leaders, Shades of Blue, and Accelerate Executive Leaders programs for new executives, and Executive Insights for newly hired or acquired executives, are among the many examples that involve deeply integrated programs for identifying, assessing, and developing some 60,000 high-potential leaders at all levels. Each year, for example, IBM sends teams of high-potential employees around the world to work with local organizations on local problems. Its succession process has been a major reason that it is one of the few firms that has lasted a century. It has one of the most closely watched institutionalized succession plans of any company in the world. This was evidenced by the smooth transition of CEO responsibility in its past two successions.

Practices such as these reinforce four characteristics that distinguish companies with the most effective training practices (Colvin, 2012; Rifkin, 2011):

Top management is committed to training and development; training is part of the corporate culture.

Training is tied to business strategy and objectives and is linked to bottom-line results.

Organizational environments are feedback rich; they stress continuous improvement, promote risk taking, offer one-on-one coaching, and afford opportunities to learn from the successes and failures of decisions.

There is commitment to investing the necessary resources, and to providing sufficient time and money for training.

Uncertainty remains about the direction of the global economy. Despite such uncertainty, the very best companies for leadership development take a longer-term view; they tend to engage in downsizing only as a last resort (which preserves their investments in training) and tend not to demand immediate economic returns from those investments.

Conclusions

All the major forces that will affect the workplace in the next 20 years are already in play (Meister & Willyerd, 2010). Ruona and Coates (2012) aptly described these future trends and forces as those that are pulling HRD—stretching it away from its current state and acting as a positive stimulus and propelling force for creative action and change. In an uncertain world, HRD expenditures may dip during economic recessions, but there is no evidence of their long-term demise. Competitive pressures to deploy well-trained workforces that can innovate constantly will not go away. Changes in the structure of labor markets (greater use of labor-market intermediaries), in the forms of organizations (from vertical hierarchies to networks), in social trends (demands for more flexible work arrangements and explosive growth in the use of social-media tools), and changes in technology (cloud computing, smartphones, tablet computers) demand constant attention in the design and delivery of HRD initiatives. Technology-delivered instruction and social-learning tools are two such innovations, and there is every reason to believe that many others will follow.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

Author Biography

Wayne F. Cascio holds the Robert H. Reynolds Chair in Global Leadership at the University of Colorado Denver and is a distinguished university professor. He has served as a president of the Society for Industrial and Organizational Psychology (1992-1993), chair of the SHRM Foundation (2007), the HR Division of the Academy of Management (1984), and as a member of the Academy of Management’s Board of Governors (2003-2006). He is a senior editor of the Journal of World Business. He has authored or edited 27 books on human resource management, including Investing in People (with John Boudreau, 2nd ed., 2011), Managing Human Resources (9th ed., 2013), and Applied Psychology in Human Resource Management (7th ed., with Herman Aguinis, 2011). His work is featured regularly in business media, including The Wall Street Journal, Newsweek, Time, The New York Times, National Public Radio, and Harvard Business Review, among others.

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