Training and Development in Proctor & Gamble - Assignment Example

Abstract This report will try to throw some light on various aspects of training & development and performance management in order to understand their functionality. This study will try to analyze function of human resource department of Cincinnati base consumer goods giant Procter & Gamble. The essay will also try to analyze various conceptual theories of training and development in order to understand their significance on creating sustainable human resource pool. Final part of the study will try to elaborate application of balance score card in order to increase efficiency of performance management system. Performance management theories will be used to create a theoretical background for this report. Table of Contents 1.0 Training and Development 4 2.0 Performance Management 4 3.0 Proctor & Gamble 5 4.0 HRM in Procter & Gamble 7 5.1 Strategic Purpose 9 5.2 Administrative Purpose 9 5.3 Development Purpose 9 5.4 Strength 10 5.6 Criticism 11 5.7 Recommendation 12 6.0 Training & Development in Procter & Gamble 13 6.1 On the Job Training (OJT) 13 6.2 Training versus Development 13 6.3 Internal Training 14 6.6 Criticism 17 6.7 Recommendations 17 7.0 Conclusion 18 1.0 Training and Development Training and development plays cordial role on aligning strategic objectives of management with human resource pool of organization. There are four basic pillars of training & development and they can be summarized in the following manner. Training- Increasing the performance standard of employees by giving them proper instruction and practice. Develop- This technique creates bigger impact on human resource pool and systematically increases their skill level to perform the work. Educate- Giving instruction to employees in terms of social, intellectual and moral responsibility. Learn- Employees gain knowledge from their past mistake or they can get experience from ongoing management activity. In 1984, Farnham has indicated that training and development are more relevant to organization’s point of view but education and learning are more relevant to education and academic industry. In 1990, Fisher, Schoenfeldt and Shaw defined training as planned activity designed by organization in order to help employees to learn job related skills and knowledge. In 1989, Harrison defined development as primary activity helping employees and organization to grow in terms of achieving potential up to highest standard (Lundy & Cowling, 1996, p. 243). 2.0 Performance Management Performance management has three discrete components, 1- performance definition, 2- measurement of performance and 3- communication between supervisor and employees. In 1999, Banks & May have clearly segregated performance management from performance appraisal. They have stated that performance appraisal is more closely related to second component of performance management (Landy & Conte, 2009, p. 234). In 1992, Institute of Personnel Management has defined performance management as strategy related to every functional department of organization and designed to co relate with various aspects of organization like culture, style, human resource capital and communication system. Nature of the strategy depends on business objectives of the organization (Armstrong & Baron, 2005, P.7). One of the fundamental tasks of the performance management department is to look after the performance of employees. Furthermore it ensures effective and efficient performance from the employees. Some of the modern techniques include feedbacks from the supervisors and subordinates, setting benchmarks and comparing with that, 360 degree appraisal method and most importantly applying the concept of Balance scorecard. Balance scorecard gives importance on maintaining coordination between various departments of large organizational structure. Interlinked network of the departments help management to implement balance scorecard concept in two ways. 1- It helps every employee to understand organizational objectives and decreases the communication gap between various departments. 2- The organization can provide information regarding management objective to employees through a unified communication channel and the process helps them to reduce cost of maintaining different communication channels (Vos & Schoemaker, 2004, p. 31-35). 3.0 Proctor & Gamble Proctor & Gamble is a renowned American consumer goods company. The company is headquartered in Cincinnati, Ohio, USA. The organization was established by William Procter and James Gamble in the year 1837. The company serves over eighty countries across the world. Sales volume has touched a record mark of $82,500 billion in the year 2011. The company has established category leadership in various segments like House Care, Skin Care and Oral care. More than 127,000 people work in the company. The consumer goods company markets more than two hundred and fifty brands across the world. The company enjoys leadership in almost twenty four brands in its category and able to fetch billion of dollars annually from each of the brands. The consumer goods organization has established twenty eight technical centers across the globe (PG-Global, n.d.). Proctor & Gamble gives importance on adopting state of art technology integrated with research and development facility to achieve competitive edge over competitors. The company spends more than $ 5 million on research and development facility on a daily basis. They have implemented market research intelligence technique to understand purchase pattern of consumers and business pattern of trade partners. The company spends more than $100 million annually to conduct market research to understand consumer purchase pattern. They give high importance on designing value delivery model and also every steps of value chain is monitored by them to create strategic advantage over their competitors. The company spends more than four percent of sales revenue on research and development in order to deliver quality products to customers. They emphasize on manufacturing large volume of products in order to achieve economies of scale. Sales force of the company has been named as one of the top twenty five sales powers by various marketing magazines (Kotler, 2009, p. 253). 4.0 HRM in Procter & Gamble Human Resou8rce Management policy of the company is based on ‘Build from within’ concept. Attrition rate of the company is lowest in the industry and more than ninety five percent of existing employees have started their career with an entry level job in the organization and then moved upward in organization hierarchy. The company uses the concept of socializing employees with the organizational culture during the recruitment process. In the first stage of recruitment, candidates are interviewed by line managers who have associated with the company for long time period. Applicants begin to learn about traditional inheritance and organizational culture of the company in the course of the interviewer’s questions. Candidates are taken to head quarter of the company after successful completion of first three rounds of interview and general knowledge test. Candidates are selected on the basis of their performance during two way communication round with the top management in the head quarter. Selected candidates are undergone through series of socializing exercises helping them to understand traditional value and organizational culture of the consumer durables giant. In the socializing phase, employees go through various stories about commitment and dedication showed by past employees and this process motivates selected candidates to participate in organizational process. Recruitment and selection process is the key reason for low attrition rate of the company (Jackson, Schuler, & Werner, 2011, p. 278). 5.0 Performance Management- P&G Performance management of company defines the measurement of performance of employees and taking necessary steps to improve their performance. Reward system of the company depends on performance management report created by management. Company can quantify the performance of employees and based on the result they can fix yearly appraisal scheme for them. Performance management can help reward system in the following way. Quantification of job performance in terms of working hour, monthly task accomplishment and target achievement helps the management to plan reward system for employees. The process helps employees to perform at a highest level to fulfill target and achieve yearly appraisal. The model helps to create separate reward system for various departments due to presence of diversity in the nature of work for various departments. Performance is all about coordination between ability of the candidate and effort given by the person. Employees with high capability can produce large output in with minimal effort in contrast to output produced by employees having low capabilities. This situation produces low performance yield from highly capable employees and the process ultimately hurts interest of the organization. Performance management helps to eradicate this problem by setting performance standard highly capable employees. Sometimes individual effort might not be sufficient to produce organizational success. Employees need to work in a group to accomplish a particular task. Performance management helps to set performance standard for a team and the process not only helps the organization to plan reward system for the groups but creates synchronization among the individuals of group (Rao, 2004, p. 120-123). 5.1 Strategic Purpose Performance management synchronizes organizational culture with individual activities of the employee in order to achieve organizational objectivities. Strategic objective emphasizes on setting performance standards like achieving ninety percent of sales target, providing customer support to certain number of customers monthly for employees. 5.2 Administrative Purpose Performance management provides employee performance report to the management and based on the report managers takes decision about termination, lay off, payment increase and promotion for employees. 5.3 Development Purpose Development purpose of performance management emphasizes on increasing work efficiency among employees. Performance management provides management feedback on individual employee’s performance to them in a constructive manner. Developmental aspect of performance management helps employees to learn from their past mistakes by doing strength, weakness, opportunity and threat (SWOT) analysis (Aquinas, 2009, p. 147). The company shows strong commitment towards employees by giving them financial reward after evaluating their performance. Strong performance management of the company increases the motivation level among new recruits. The consumer durable company monitors performance of employees regularly and gives them annual appraisal in accordance with their performance. They not only provide performance appraisal to employees but also develop organizational culture among employees throughout work life cycle. Employees are assured by top management that they will be awarded in accordance with their annual performance. The company designed performance management objective for individual employees even before their recruitment. 5.4 Strength The company provides competitive salary package to their employees. Competitive working environment of the organization develops positive work culture among employees and motivates them to perform well. Employees get stock ownership, pension and travel facility as performance booster from the company. Performance management of the company tries to synchronize between horizontal and vertical integration of human resource management strategies. Vertical integration in terms of aligning individual goal with business objective of the company helps employees to understand job responsibility. Horizontal integration in terms of synchronization between reward system and performance management helps the organization to create sustainable human resource pool. Procter & Gamble emphasizes on aligning balance scorecard system with the existing human resource management of the company. They use the technique as critical business tool to solve internal and external problems of the organization. They use performance management to communicate vision statement to employees and also for creating a stable human resource management framework (Niven, 2006, p. 2). 5.5 Weakness The company emphasizes on financial rewards and other monetary benefits to improve performance of employees but many of the time these strategies are not sufficient to improve performance3 of employees. The company still emphasizes on performance appraisal system rather than giving importance on overall performance management system. In performance appraisal system, performance rating is done once in a year after meeting between managers and employees while in performance management it is necessary for the managers to meet at least thrice with their employees in every year. Relying on performance appraisal systems decreases communication between managers and employees in the organization. 5.6 Criticism Over reliance on performance appraisal creates perplex in human resource management process of the company. The company believes in developing organizational culture among employees through lifelong learning procedure. There is possibility that new employees might fail to understand organizational culture of P&G due to lack of communication with supervisor. The company needs to synchronize strategic objective with administrative objective of performance management. In many of the cases P&G fails to understand the importance of channelizing performance appraisal and performance management altogether to fulfill administrative objective. The company mainly focuses on strategic objectives like building organizational culture among employees and retaining the employees of performance management. The company lacks in giving importance to developmental aspect of performance management in terms of doing SWOT analysis for individual employee to correct problems regarding their performance. 5.7 Recommendation Procter & Gamble needs to use Balance Scorecard technique to integrate performance appraisal and performance assessment to create a sustainable performance management system. According to Kaplan and Norton, balance scorecard is a systematic technique to institutionalize cultural value and cultural process into management system. Architecture of balance scorecard has four strategic pillars. 1- Financial perspective in terms of growth, risk and profitability. 2- Customer perspective in terms of delivering values to customers. 3- Internal business process in terms of creating satisfaction among stakeholders. 4- Learning and growth in terms of creating organizational environment for change management process (Gill, 2006, p. 183). Strategic learning is a term used for describing non financial elements of performance management. Feedbacks and reviews of employee performance are directly linked with performance assessment technique. Balance scorecard emphasizes on four distinctive factors like translating the management vision from short term to long term objectives, communicating the organizational target and individual target to each employee by top level management, implementing business plan, gathering customer feedback on service quality. The consumer durable giant uses internal feedbacks (within the organization) and external feedbacks (service related feedbacks) to create a sustainable performance management system. Companies use performance management system to measure the performance of operational and financial activity. P&G needs to give importance on applying balance score card to measure performance of non financial activities. The company gives importance on achieving long term management objectives and they have integrated organizational communication framework with performance management system. Coordination between employee and top level management plays important role in balanced scorecard technique. The Cincinnati based consumer durables giant needs to give importance on measuring budgeted financial and non financial goal for each employee. Individual or departmental goal settings, capital allocation for each department, feedback collecting and learning from the feedback, strategic incentive distribution among employees are examples of critical business elements (Kaplan & Norton, 1996, p.7-10). 6.0 Training & Development in Procter & Gamble Training and development process is multi dimensional concept. Various companies use on the job training (OJT) as an efficient to build responsibility among employees. 6.1 On the Job Training (OJT) OJT is applicable for new recruits or inexperienced employees. New recruits try to learn about job responsibility by observing managers, peers performing their job. OJT is one of the most effective but informal format of training. OJT can be customized in accordance with the capability of new recruits. OJT helps new recruit to convert skills gained during training process into effective work performance. OJT is cost effective way to train employees due to low investment on external resources while strong participation of existing employee pool increases the potentiality of the process (Noe, 2008, p. 213). 6.2 Training versus Development 1- Development activity focuses on increasing broad range of skills like motivation level, management skills and operational skills among employees while training is intended for develop particular skills among employees. 2- Development process deals with increasing interpersonal skills and managerial decision making skills among employees while training deals with developing individual skills among employees (Grobler & Warnich, 2005, p. 300). The Cincinnati based consumer goods giant has always maintained a talented human resource pool in order to deliver superior service value to consumers. The company gives importance on bringing and promoting resourceful thinkers to important job position. They maintained the value delivery practice for last one seventy years. On an average annually more than 0.4 million candidates apply for entry level management position of the company but the company selects only half of one percent of them. They want candidates with a passion to improve lives of other people. 6.3 Internal Training According to William Reina (director- global talent), various skills like empathy, leadership ability, personal values and Innovation skills of candidates are measured during the selection procedure of the company. According to Chief Operating Officer Robert McDonald, training process for new recruits can be classified as career development process. Every department of the company has its own university. There are almost fifty courses designed by universities for the management trainee in order to provide him/her strong financial and analytics knowledge. The company believes in creating diverse knowledge and work experience among employees. It is mandatory for every general manager of the company to handle foreign assignment once in three years (Crockett, 2009). In 1989, research scholar McLagan has pointed out that knowledge training is integrated part of training and development process. Career development and organization development become essential part of training and development due to evolution of knowledge management concept. Career development can be termed as alignment between organizational career management policy and career planning process of new recruit. Career development process helps the new recruit to plan for career advancement in the company. The concept of Human Performance Improvement (HPI) can be used to understand the importance of career development process. In 1996, Rothwell described HPI as a systematic tool to analyze performance gaps and creating a cost effective and ethical way to decrease the gap. According to theoretical aspects of Human Performance Improvement, career development not only helps the organization to diminish performance but improves financial performance of the organization. Organizational learning and career development process synergistically improve the performance of human resource capital of the company. Integration between career development process and HPI also fosters the knowledge of ethical business practice among employees (Rothwell, Sanders, & Soper, 1999, p. 6-7). 6.4 Strength P&G rarely recruits external candidate for top management jobs because they believe in ‘build from within’ strategy. They develop human resource capital from the entry level position for top level management position by providing them constant training. In 2009, CEO A.G. Laftey has clearly declared that P&G will recruit candidates for top management from inside the organization rather than depending on external sources. They give importance on five types of training program. University Education OJT Coaching E-Learning Self study module The company has converted traditional training concept into learning in order to achieve better personnel performance. They also vertically integrated coaching module for all the employees. Coaching helps new recruits to get performance feedback and support from their supervisor. The company uses the soft aspects of human resource development in terms of valuing stake holder’s interest, empowering new recruits to develop their skill in independent way to rip off the benefits of training and development. Supportive and risk taking managerial style helps new recruits to learn about job responsibility. P&G’s resource based model gives value to their internal employee resource which in turn helps the organization to cut down cost selection and recruitment. Resource based model helps the organization to use their human resource capital more effectively with respect to their competitors. Long term involvement of employees helps the organization to synchronize organization culture with personal performance objective of employees (Armstrong, 2006, p. 117). 6.5 Weakness ‘Building from within’ strategy of the company might create strategic disadvantage for them. The process ultimately decreases level innovation and out of the box thinking among employees. Every employee has certain saturation level in terms of knowledge acquisition and knowledge assimilation. The company tries to maintain a stable workforce for long time in order to build strong organizational culture among employees while the process can decrease adaptation level among employees for new ideas and creative concept. Working with common peer group can also decrease motivation level among employees. The company relies heavily on the job training to increase understanding of job responsibility among employees but communication gap between employees and their supervisor can spoil purpose of OJT. 6.6 Criticism The company experienced their worst period during 1990’s due to their traditional managerial approach. Many research scholars believe that the company’s rigid organizational culture ultimately decreases level of innovation in the managerial process. Career development initiative taken by the company requires huge amount of capital investment and constant monitoring. For a large organization like P&G constant monitoring of career development process is problematic due lack of time and strategic thinking. 6.7 Recommendations Creative thinking among employees can be increased by implementing employee empowerment concept. Empowerment can be done by increasing participation of employees in the decision making. Organization control does not follow top down approach in a learning organization. Employees have the right to take decisions and communicate the decision to top management. Example of employee empowerment is given below. The company needs to call human resource pools as associates rather calling them mere employees. The company needs to follows ‘Lattice Management Structure’ to develop the concept of employee empowerment. Concept organizational hierarchy can be revamped by the company. Vertical model of organizational structure can be replaced by interlinked lattice structure. In the lattice structure top management does not believe in traditional concepts like appointing a leader to supervise other employees. Employees are their own boss and they can achieve the designation by gaining the reverence from other employees. Associates are encouraged to help other employees and proselytize new techniques to perform given assignment. Employee empowerment will help the company to innovate on the job training concept in a constructive manner (Pride, Hughes, & Kapoor, 2011, p. 295). 7.0 Conclusion Procter & Gamble used learning organization concept during the tumultuous period of late 1990’s when global sales volume touched its nadir. They took a lesson from their foremost competitor and decreased the volume of product system to gain better control over various product categories. Alan G. Lafley (CEO of the company) has used the concept of corporate restructuring to regain the market position for Procter & Gamble during the turbulent period (Zoltners, Sinha, & Lorimer, 2009, p. 183). From the above discussion it is clear that organizations need to give importance on training & development and performance management. 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