The theory of employee developmentFocusing on soft skills, in the context of customer loyalty.
This paper will discuss training and development of employees and focus on soft skills. This will be compare the literature with case studies and conclude on the benefits of training in organisations.
Skills of employees are broken down into two main headings, hard (technical) that allow them to perform the tasks that make up the role, and soft skills that encourage interactions, with colleagues, peers and customers. This paper has concluded that both skills need to be present to gain the most from the customer relationship, although soft skills will increase the benefit of hard skills, they allow the communication of technical skills.
Soft skills are the interaction between individuals, which includes communication and empowerment, autonomy and decision making. Soft skills are discussed as the last competitive edge organisations can posses, that add value. This skills are difficult to assess, many are already present in employees, but not nurtured.
The theorist during the early 1990’s discussed soft skills from a management perspective; it was discussed as the hidden value (or skill) that organisations could offer. This perspective has now changed, to one of marketing theory, discussed in areas such as relationship marketing and customer value.
This is opinion by marketers is that by encouraging soft skills in employees it will add value to the product. Marketing theory discusses that customer loyalty can offer the organisation repeat business; this is valuable as it utilises economies of scale, lowering marketing and production costs. This is a cost effective method to maintain and increase business, leading to a higher level of revenue, but it requires the organisation understanding what the customer requires from this relationship.
The question raised at this point, is should customer loyalty be taken for granted, or can it be effected by actions from the organisation, therefore should it have resources ploughed into it. Can employees be trained to meet the needs of the customer? Can organisations build on this through skill utilisation of the human resource, can training affect the relationship, and will lack of training have a negative affect on this. The skills that are needed are classified as soft, in contrast to the hard technical skills that are required for job performance.
At first the area researched was the customer’s opinion of their loyalty, why they made repeat purchases and what actually influenced their decisions. This area proved subjective, they enjoyed the experience of purchasing, and often attributed to the organisations representative.
It then followed to look at the skills of organisations in further depth, studying the skills of their representatives, and how the training and developing of soft skills could add to this relationship.
Literature states that the evaluation of training is neglected, although it must be noted that there is no universal method that can be employed. Evaluation of training is a subjective area, with various factors that impinge on the successful transfer of new skills.
Numerous organisations were contacted, but the response level was low, therefore it was decided to review soft skills within three organisations, as an interaction with both colleagues and ultimately customers. The three organisations that were chosen are all in different industry sections and in different stages of the life cycle.
The first organisation agreed to the research, but then became reluctant to disclosure further information. The organisations felt that the economic position they were in would not be helped by a report written into the possible causes, although, it was stressed this was not the purpose of the paper. It was agreed to keep the organisation anonymous, but meant that their accounts could not be discussed in relation to training.
To maintain neutrality throughout the paper all three organisations would study in the same method. This focussed the paper on utilisation of soft skills, the amount of training invested in them and the ultimate benefit to the organisation.
The paper concludes individually on all three organisations. Assessing their levels of commitment to skills training, the value they place in this, and the culture that encourages the transfer of skills. The main conclusions are drawn from this section.
3.0 Aims and objectives
The aim of this paper is to study the value of soft skills training in terms of attracting repeat customers and increasing company profits. This aim is wide, to allow for other discussion which after reviewing the literature review and case studies, will appear relevant to the paper.
The first objective is to determine the extent to which training can improve the soft skills of employees that are customer facing, combining this with practical experience. In terms of being combined with experience, it may be useful to study whether training before extensive experience of dealing with customers is more effective than training employees who already have significant experience. Do employees get stuck in their ways and find it harder to change. Although it must be noted that the organisational structure and culture will have a direct affect on level of transfer of new skills.
The second objective will be to determine to what extent employee and managerial soft skills can influence the tendency of customers to become repeat, and potentially loyal, customers. Again, soft skills will only be one potential factor influencing customer choices, and it will be necessary to attempt to determine the impacts of the other aspects of the marketing mix: price, promotion, place and product. It is hypothesized that there will be certain combinations of the various aspects that will have the desired effect; however this may vary according to customer demographics.
The third objective will be to determine the extent to which soft skills can be converted to company profits, as a result of gaining more customers, and repeat customers, and how this is affected by company training policies and expenditure. In other words, the data will be used to attempt to discover if expenditure on soft skills training actually produces significant rewards for a company.
It will be necessary to study several organisations who have invested in soft skills training programs, and attempt to determine the perceived improvement in the soft skills of their employees. This should also be compare against an organisation that have not invested in soft skill training, to contrast the skills of the employees.
The areas that will be examined will involve the structure, culture, leadership and training programmes within the organisations. These findings will be compared to the literature review and a marketing database Factiva to determine the importance customers place on the soft skills of company employees. Surveys of customers were considered; however they may produce even more distorted results, as many customers are unsure of their personal reasons why they make repeat purchases.
The surveying of organisations will determine their expenditure on training, both in time and capital, and focus on soft skills. This should be discussed with the value they place on the customer and the level of repeat business they expect.
This chapter discusses the research methods used for the project and the justification for the choice of methods. It discusses methods that were not used, with justification of why they were not included. Included is a critique of methods selected, and with hindsight identifies any changes that would have enhanced the research.
This paper evaluates customer loyalty that is demonstrated through repeat business. Can organizations influence the level by training their employees in soft skills? Selection of the topic was stimulated and formed the identification of customer loyalty perhaps being the last competitive edge that organisations can offer. The nature of the research was discussed with colleagues and fellow students this not only added practical ideas and suggestions, it opened new avenues of thought. This was the discussed with lecturers sounding out ideas, gauging opinions and clarifying the question. Focusing in on the question was obtained by employing relevance trees, narrowing the research area. This gave direction to the research, although with reviewing the literature this changed several times (Buzan, J. 1995).
Next, a research proposal was compiled, with the benefit of organising ideas and setting a time-scale for research. Theoretically, the proposal would highlight any difficulties with the research question and access to data. Creating a time-scale would focus on targets and meet deadlines in the completion of the paper. This time scale proved invaluable when new avenues were investigated, it helped focus on where the project should be.
The literature review, discussing theories and ideas that exist on the topic formed the foundation of the paper. The findings from the research are then tested on theories for validity (Saunders, M. et al 1997). The literature review was challenging, there is a great deal of academic research on training, but very little on the topic area. Journals and books were the back bone for the review, both in marketing and management theory.
Tertiary data sources, such as library catalogues and indexes were used to scan for secondary data. This produced journals and newspaper articles, books and Internet addresses. With the amount of literature, it took time to sort out relevant material to the research. Narrowing down the search Bell’s (1993) six point’s parameters was applied. Applying key words that were identified in the first search produced relevant and up-to-date material (Bell, J.1993). A limitation on the literature search was the amount of time to read all articles and books on the subject. Whilst reviewing the literature references to other publications were followed and reviewed. Bells checklist on identifying the relevance of literature found was a practical method to reduce the amount of reading (Bell, J. 1993).
Ethical considerations in research fall into three categories, during design, collection, and reporting of the data. These areas were carefully considered at all stages of the research (Oppenheim, A.1996:84). The data sought throughout the research should remain within the scope of the project (Saunders, M. et al 1997). Participants were instructed on the purpose of the paper and how their input would be used. The person privacy must not be evaded during interviewing Oppenheim (1996) referred to this saying “respecting the respondents right to privacy, as the right to refuse to answer certain or all questions” (Oppenheim 1996:84). By participating in the research, no harm should fall on the participant. Consent must be obtained from both the organisation and individuals before commencement of research. The data sought throughout the research should remain within the scope of the project (Saunders et al 1997).
Questionnaires were selected to obtain the overall picture of soft skills from employees and there relevance to customer retention. Before the questionnaires were distributed a letter was delivered given to all employees explaining the purpose of the research, and how the information was to be used. The letter contained a contact number for the researcher, and gave a guarantee of anonymity of the information. An advantage of communicating to respondents before the questionnaire was that it increased the response rate, and addressed ethical concerns (Saunders et al 1997). Fellow students were used to pilot the questionnaires; to test the information gained from the questions and the time take to complete it. From this, adjustments were made on the wording, removing technical jargon (Bell 1993). Closed questions maintained the anonymity of the participants, but had the disadvantage of limiting the data that could be collected, therefore a mixture was used. A copy of the questionnaire is in appendix four.
Processing the data from the questionnaires was achieved using a spreadsheet programme; variables were coded and entered into the computer. This information was quantitative and proved easy to evaluate. Other methods of research gave qualitative data; this was evaluated using key words, and summarising the script to show trends, although some subjectivity will always remain (Cresswell 1994). Classifying the data into categories before it was analysed, putting it in groups of similar responses, allowed the data to be workable, then conclusion were drawn (Saunders et al 1997).
Interviews were used on key employees to gain the formal structure, market segment and background of the organisations (Wass & Wells 1994). After the questionnaires, some employees came forward interested in offering themselves for further input to the research. Although helpful, they could show bias; those coming forward could have an axe to grind, using an interview to grind it, therefore this was rejected (Saunders et al 1997).
Case studies of organisations that through varying levels require repeat business to compound and improve their market share have been reviewed and compared to the literature. The case studies discuss the organisations strategy, culture and management style. To produce primary data on customer loyalty proved to be a vast task, taking a lot of time to produce results. Internal and external operations of several organisations would have to be compared to reach any level of validity.
Other methods of data collection were considered and rejected. Focus groups would have offered free flowing information. This could have been facilitated with discussion led by the researcher. The idea was rejected due to the limited resources. The amount of data collected would have taken a long time to analysis, and could have been bias.
It was decided to do case studies on organizations and interview employees. The questionnaire remained anonymous, not only to protect employees, but to allow for the information to flow without recourse. The findings of this will be presented in section seven and in the appendices.
Choosing a multi-method approach for a research strategy allowed several methods for the collection of data. Adding validity of findings and different perspective to the research, each method selected complimented and triangulated the results of another. Questionnaires and interviews triangulate the results from observation (Saunders et al 1997). Each method employed for research has its own advantages and disadvantages’; using a multi-method approach reduces bias and increases validity (Saunders et al 1997).
Multiple regression analysis will be the best method for analysing the data, once potential bias has been identified and removed. Several models will need to be tried, as the relationship may not be simple, and the model that is found to be most accurate would have implications for the analysis of the third objective, as there will potentially be an optimal level of soft skill training, above which the rewards will not match any further increase in expenditure.
Multiple regression will often be the most apt form of analysis, as it will offer information on the explanatory power of certain variables, which will be useful when concluding whether training or experience are most important for soft skill development, the relationship between training and experience, and any potential significance of which of the two is acquired first. Also, for the second objective, multiple regressions can be used for both employees and managers, to determine whether it is the soft skills of employees, or of managers, that have more impact on the number of repeat customers a company receives.
The major limitation of the study lies in its relatively small sample size and the limited coverage. This was mainly attributable to the limited time and other resources available for the study.
5.0 Literature review
This section of the paper is broken down into five sections, which are all relevant. The first section will discuss training and development, followed by the changes in modern organisations, and what is expected of them. The third section will discuss skills and the requirements from them followed by a section of the theory on how to train; if the method selected for training is not appropriate then the end result will disappoint the organisation. The final section will discuss from the marketing aspect the value in attracting repeat business.
5.1 Training and Development
This section will discuss what training and development is the benefits to the organisation and focus of the soft skills.
5.11 What is training and development?
Training can be defined as a planned process to change attitudes, knowledge or skills and behaviour through a range of activities to achieve effective performance. When this training is in the work situation, it develops the employee to satisfy current or future needs of the organisation (Beardwell, I et al 2004).
It is generally accepted that methods of training can usually be separated into two categories: on-the-job, and, off-the-job. On-the-job training is implemented at the trainee's workplace, while off-the-job training is conducted away from the trainee's workplace and takes them outside of their work environment (Mullins, L. 2005).
Training can be used as a change agent, to change the culture of an organisation. It is a tool that can improve organisational effectiveness, especially in fiercely competitive markets. All too often organisations that are facing financial problems will cut back the training program, where as they could be used to increase overall performance. The training budget is viewed too often as an expendable, and the first to cut or even go in crises (Rogers 2004).
5.1.2 Why train
Nobody in business would disagree with the cliché that a company is only as good as the people in it. But opinions differ on how that translates into practice, and what it means in terms of the way a firm goes about gathering and developing a world-class staff line-up. With near full employment in the UK, the fight for talent is as ruthless as ever, and getting, hanging on to and developing those people remains the HR issue of the moment.
The principal function of any organisation is to increase the value of the business and therefore enhance the wealth of its Owner(s). This is obtained by efficient use of the limited “resources” available to them (T Blackwood, 1995). Garrick (1998) discussed that HRD is inextricably linked to market economics, that "knowledge is prized in so far as it can generate a market advantage“(Garrick 1998:5). Leading to the assumption that HRD can give the organisation advantage aiding the ability to increase profit.
Therefore using that theory HRD should be viewed as a vital function of all organisations, and not just there to satisfy training issues, a proactive role. Garavan et al (2000) discusses the emergence of strategic HRD practices, which are directly linked to the organisation’s strategies, with profit maximising paramount, HRD is a tool that should be employed to obtain and support this (Garavan et al, 2000).
It is argued that organisations require new skills to survive; the new thinking is based on complexity and chaos theory. Organisations are viewed as self-regulating, emergent, open, whole systems. This contrasts the metaphor of organisations being machines to that of organisations as living systems (Capra 2002 cited in Nixon 2004:58). For organisations to prosper in the future global economy, workplace culture needs to enhance a learning organisation, fluid responses to the ever changing environment. This can only be obtained with proactive HRD policies, disseminating a culture of learning through out the organisation (Nixon 2004).
Since the late 1990s the business environment has drastically changed (Mullins, L. 2005). Chaos theorists have argued that the world of the organisations is “turbulent and chaotic, making it impossible for them to predict the future”. Therefore conventional approaches to strategic decision making are no longer appropriate (Harrison, R. 1997:78). Competition and the pace of change in business require continuous improvement, therefore it means continuous learning. From this demand the market for business education has grown with a proliferation of courses, full- and part-time, 'open' and bespoke (Mullins, L. 2005).
Investment in training and development is an issue that provokes varying reactions amongst business managers. The allocation of time and resource is an issue to organisations, therefore there is a tendency to focus towards "on the job" training and learning through experience.
5.1.3 What are Soft Skills
The term that describes this interpersonal dimension of life at work is soft skills. Soft skills are attitudes and behaviours displayed in interactions among individuals that affect the outcomes of such encounters. These differ from hard skills, which are the technical knowledge and abilities required to perform specific job-related tasks more formally stated in job descriptions. In the past, it was felt that managers and employees did not need soft skills as long as they could do their work, but now even positions in hard, task-oriented roles require soft skills as well as technical skills (Muir, C. 2004)
This introduces new challenges on how the organisation responds to the interpersonal evolution, how do you measure the need for soft skills, and how to design programs that address such needs? One theory is to ensure the workforce is a high-performing by (1) the requisite knowledge, skills, and abilities for the organisation to accomplish its current mission and that is (2) appropriately prepared for achieving the vision for the future (Muir, C. 2004)
This position includes working collaboratively with Human Resource and Development partners in staffing and employment, organisation development, diversity, performance management, and total compensation to recruit, develop the capabilities of, and retain desired staff. This is used to create conditions that engage employees in productive, meaningful work. These conditions are a result of designing systems, providing needed resources, and implementing policies that support employees and that develop their skills and knowledge in ways that match the organisations evolving challenges and priorities. Guidance is vital in the training function, throughout the organisation to foster an enterprise-wide view of capability development (Muir, C. 2004)
Soft skills development has been viewed as a fad. This is now viewed as a necessary component in organisational development. These skills it can be argued that these skills are at the very heart of creating capability in employees and leaders. Individuals require the technical skills unique to their role, whether they are craft workers in a maintenance department or payroll specialists in accounting. However, even at the individual employee level it soon becomes apparent that little work gets done in isolation. All employees must be skilled at participating in team projects and affirming others. They must be adept at managing conflict and creating inclusive relationships that improve team performance and launch ideas. Indeed, the soft skills of negotiating solutions are the essential tools of effective contributors everywhere (Muir, C. 2004)
Moreover, those formal leadership roles, it is vital to be proficient in "soft skills". Thinking systemically and acting strategically is the linchpin of effective leaders, but excellent soft skills are necessary to actually implement the vision and to communicate values, standards, and expectations. Although this is limited where "command-and-control" approach is appropriate. Individuals support what they help create, and "soft skills" are the essential tools for helping them contribute to their full potential (Muir, C. 2004)
While soft skills are apparently essential workplace requirements, they are also it appears that they are lacking. According to Field and Ford (1995) soft skills are like an iceberg, `under the surface', and although hard to understand, help employees contribute fully to the new, challenging work environment. This makes them liable to subjectivity, difficult to define, observe or measure and open to the influence of work organisation and the social construction of skill in the workplace. Thus, it is the premise of this paper that an organisation's culture, the predominant management style and the extent of management/employee soft skills will have an influence upon workplace participation (Field, L and Ford, B 1995).
Soft skills are an important factor in the success of decentralised, participatory work environment programs. Soft skills include teamwork, decision making and conceptualisation. Changes to workplace organisational structure require soft skills to foster improved communication and understanding of accountability. The subsequent globalisation of markets, deregulation of various sectors and the pressure to be competitive have all had major implications for the management of organisations and the skills required of the workforce (Connell, J. 1998).
5.2 The changing nature of organisations
Over the past decade organisations are changing, through pressure from the markets and the environment. This has forced change on many, this section will discuss the implications on organisations and how it has forces a change in the skills required from employees. This section will also discuss management sttl and the culture of organisation, and how this impacts on training.
5.2.1 Changing environment
The present challenge facing learning facilitators is how will training continue to be relevant in today's ever-changing business landscape? Political, economic, social and technological factors are irrevocably changing the way and the nature of commerce. Throughout the UK, the economy is a state of flux, swinging from a traditional manufacturing base to small to medium-sized service based organisations.
The sustained strength of the pound has not helped UK businesses that export products, thereby witnessing the decline of manufacturing. Forward thinking businesses are now recognising that it is through their people that competitive advantage can be achieved.
Best (2001) discussed the “new economy, as a knowledge-based economy without borders, where the race is between companies and locales over how to learn faster and organise more flexibly to take advantage of technology-enabled market opportunities” (Best (2001) cited in DeFillippi, R. 2002). Organisations have changed in the way they operate, shifting from immobile-wired infrastructures to mobile, miniature, and wireless modes of communication, computing, and transacting. Customers now demand 24 hour service, with “any time, any place" solutions of their problems (DeFillippi, R. 2002).
Radical shifts are taking place in management theory; these shifts need to be reflected in the theory of training and development. The move towards a knowledge economy makes these shifts vital to the survival of the organisation. Ideas of training tend to focus on results; typically they are short-term and assume transferable skills. Ideas of personal development may be insufficiently focused on the workplace. Therefore for an organisation to enter the knowledge economy, it is vital for them to review their training and development to a broader aspect (Bryans, P. & Smith, R. 2000).
Increasingly, as the nature of business and organisations change, its' leaders are recognising that their most valuable assets are their skilled employees and, more significantly, the knowledge, both tacit and explicit, that is possessed by these employees. The "knowledge is power" cliché has never been more accurate than in today's corporate world. This added value that this can b e seen in products and services is now dependant on knowledge based intangibles (Rogers 2004).
5.2.2 Organisational Structure
There is conclusive evidence that the world of work has changed significantly over the past 20 years. Handy (1989) sees fundamental changes in organisational life reflected in what he refers to as the "shamrock" model with its three groups of workers core, contract and temporary or flexible. Guirdham (1995) says that the nature of work, the nature of organisations and the structure of the workforce have all changed and will continue to change (Handy (1989) and Guirdham (1995) cited in Falconer, S and Pettigrew, M 2003:49)
Reshaping of organizations, re-engineering, restructuring; all these things have led to leaner organizations and the dismissal of a lot of people. Many workplaces have disappeared from the scene, many competences are also disappearing and there is a risk of "destroying 'uniqueness' of some cultures as a whole" (Civelli, F 1997:248).
The corpus of knowledge, experiences and abilities, position or job status in an organisation was traditionally also a guarantee of job security. However, these are losing their traditional importance. In the marketplace it is difficult to recognize and get to know the abilities and knowledge of whole populations of young, highly educated people; the marketplace has difficulty in understanding the traditional value of experience (Civelli, F 1997).
The major problem is how the knowledge, experience and capabilities can be actualised. The "product" in a society of more and higher educated people and with more institutionalised training is, paradoxically, a poorer work market. The relationship between people and work is "institutionalised" as a qualification at school and work experience. People learn not only inside the boundaries of "institutions", but in everyday life situations. Illich, (1971) stated that "most part of things we learn we have learned outside schools" and outside works, factories, offices, banks or training courses (Illich, (1971) cited in Civelli, F 1997:248).
Handy (1994) wrote "... instead of an organization being a castle, a home for life for its defenders, it will be more like a condominium, an association of temporary residents gathered together for their mutual convenience" (Handy, C. (1994) cited in Civelli, F 1997:250).
5.2.3 Management Style and Organisational Culture
The major viewpoint on work organisation this century have focused on increasing worker productivity through various strategies such as scientific management, human relations, the quality of working life and attempts to change organisational cultures. While the culture of organisations has increasingly become the focus of multidisciplinary research, concepts and definitions are as elusive as they are controversial. Arguments tend to polarise between anthropologists and management writers. Anthropologists view culture as the sum of the behaviours, values and attitudes of the group or the organisation, while management writers tend to adopt the view that culture is the product of management strategy and, as such, can affect productivity depending on whether it is weak or strong (Wiener, 1988).
The strong (Deal and Kennedy 1982) and the excellent (Peters and Waterman 1982) culture strategies linked `positive' culture with increased productivity. These culture strategies functioned for a time as the “new management panacea” amongst American organisations, when faced with losing the competitive edge they looked to Japan for an explanation of the qualities which led to their success. These qualities included transformational leadership style, encouraging the creation of a shared vision and a collective commitment to achieving organisational goals which had previously been neglected (Connell, J. 1998).
The `hard vs. soft' versions of human resource management share similar characteristics to the leadership strategies: the `hard' version of HRM being concerned with rational business strategy; while the `soft' is focused on communication, leadership and motivation (Storey, 1989). Transformational leaders ensure participants `buy into the dream', it is acknowledged that transformational leadership appears to require exceptional soft skills in order to encourage employees to `go the extra mile' (Storey, J 1989).
At this point it should be noted that the higher productivity levels perceived as a result of cultural change through the empowerment of employees, may in reality be attributed to resigned behavioural compliance. Legge (1995) suggests that employees are `keeping their heads down in times of high unemployment, resulting in labour intensification and low levels of labour turnover, absenteeism and lack of industrial action reflecting fear of job loss, rather than commitment to managerial values' (Legge, K. 1995: 206).
The cultural approach as a mechanism for management control is a prevalent in literature. This rests awkwardly with the rhetoric which advocates that workers take more initiative and responsibility for their own organisation and management, this in an attempts to encourage innovation, flexibility and entrepreneurial spirit. If participation is to succeed, management will need to change from a directive to a facilitative style; explicitly, `social skills tend to become more important than technical skills (Connell, J. 1998).
A fundamental change in management actions and assumptions are required as well as a change in responsibility taken by non-management employees. Mechanistic job descriptions, supervisors and hierarchical forms of control remove responsibility from workers, encouraging passivity and dependency. However, in some cases, workplace participation schemes are planned to do just that by increasing workers' acceptance of change, while leaving the structure of managerial power either strengthened or untouched (Connell, J. 1998).
Each organisation is different and therefore must be treated as an entity. As firms evolve, they pick up skills, abilities and resources that are unique to them, reflecting their particular path through history (Barney, (1995) Cited in Paauwe, J & Boselie, P. 2003). This is particularly true of a firm's human resources, employees who are recruited, trained and who become part of the specific organisational culture and network (Paauwe, J & Boselie, P. 2003).
Culture is said to be a product of individual minds that is expressed as shared meaning, values and purpose within the whole of a group. It is very often hidden and unpredictable. It can be nurtured, but not controlled. Morgan (1998) notes, "The metaphor helps us to rethink almost every aspect of corporate functioning, including strategy, structure, design, and the nature of leadership (Morgan (1998) cited in Stalinski,S. 2004).
Handy has expanded on the earlier work of Harrison, categorising organisational culture into four main groups, from these groups the styles of leadership can be identified. All organisations have their own unique culture larger organisations can have several cultures and sub cultures (Handy cited in Mullins, L. 2005).
5.2.4 Employers’ requirements
The core skills sought by employers, such as the ability to communicate effectively, team working, numeracy and information technology. These core skills are both soft and transferable. Greenwood et al. (1987), who have undertaken three research studies across a period of some 13 years into the characteristics or skills which managers expected of business graduates, identified three groups: knowledge, skills and traits or attributes. The knowledge category includes technical or academic skills, while traits consisted of more personal attributes such as Harvey and Knight's (1996) commitment and energy (Greenwood et al. (1987) and Harvey and Knight's (1996) cited in (Falconer, S and Pettigrew, M 2003)
Three studies completed in 1973, 1983 and 1986 in which hundreds of managers were surveyed to identify what skills they look for in employees. The study conducted by Greenwood et al's (1987) identified four groups of skills that all managers discussed and were common to all the studies. (1) Communication, the ability to be able to communicate at all levels (2) analyse data, propose solutions, and make decisions; (3) Plan, develop, organise, co-ordinate; and (4) Work with others, motivate. Their conclusion was that there was “commonality among the results, which emphasised people-oriented skills and, consequently, their view was that soft skills should be the focus training” (Greenwood et al's (1987) cited in Falconer, S and Pettigrew, M 2003:55)
Guirdham (1995) concluded that across the five-year period from the beginning of the decade, the value and need for inter-personal skills development had been widely recognised. Changes in organisational life had increased the demands on the inter-personal skills of people at work, partly through a reduction in the degree to which work is organised through procedures, rules, authority and supervision. Today’s employees are information handlers, this is despite the increasing use of information technology, and information continues to be obtained through contact with other people, resulting in a demand for communication skills. Therefore teamwork is an integral component of the workplace, the need for people to be able to "gel" is vital. (Guirdham, M.1995).
These views are supported by Harvey et al. (1997) who state that team working, communication and inter-personal skills are inextricably interlinked in the delayered organisation. Harvey et al stated that “it is highly unlikely that someone with underdeveloped inter-personal skills would be able to engage effectively with colleagues and clients, let alone inspire a team”. These softer skills are now a business requirement (Harvey et al. (1997) cited in Falconer, S and Pettigrew, M 2003:55)
This section will discuss the new skills required from the changing organisational structures and environment. This will be discussed from both the perspective of the employers and employee’s side.
5.3.1 The changes in organisations and the new skills required
The progressively more interpersonal nature of the workplace has been extensively reviewed; Peter Drucker (1994) discussed "The Age of Social Transformation," describing the effect of the decline of manufacturing which has created a "knowledge worker" class, which is estimated to be a third of the labour force at the end of the 20th century. An effective knowledge worker works in teams, multitasks, and is a vital and creative thinker. These worker’s must adapt well to social and operational contexts, for the managers in such environments, supervision is a social rather than a technical function because subordinates can and must work independently, and often remotely, needing little supervision but much coaching and coaxing (Drucker (1994) cited in Muir, C. 2004:95)
Henry Mintzberg (1994) takes this point further, proposing a amendment of the traditional (and highly theoretical) role of managers from performing discrete functions of planning, organising, communicating, and controlling, to a three-level concentrated model. These levels are (1) is managing by information, acquiring and processing information. (2) Managing through people, information is disseminated. (3) Managing action, individuals take action desired by the organisation (Mintzberg (1994) cited in Muir, C. 2004:96)
Mintzberg adds to the importance of the latter points, by identifying the key skill that managers must develop “effective communication, that include the ability to scan the environment informally while interacting non-verbally and orally to gather information and to focus on affective aspects of the organisation” This point alone reinforces the value that managers must place within the organisation. While their role is to manage, the vital point is to not take their eye off the organisation (Mintzberg (1994) cited in Muir, C. 2004:96)
In response to the call for reduced costs and higher productivity, the downsizing of many organisations became an increasingly common human resource strategy, resulting in a reduction in the layers of traditional hierarchies (particularly middle management). Technology also helped to change or eliminate jobs, with consequences for work practices, job design, skills and learning. This has led to the necessity for flexible responses to market dynamics rather than standardised price-competitive production (Hollinshead, G and Leat, M 1995).
The changes described led to some organisations changing from Fordist structures to post-Fordist structures. The Fordist organisations are defined as mechanistic, rigid with pyramidal structures, formal rules and close controls. Information can be distorted as it floats up the hierarchy. On the contrary the post-Fordist organisation is based on weak power controls, decentralised leadership, horizontal communication and self-regulating units, with a focus on employee participation, team development and the devolution of responsibilities down the line from managers to team members (Thompson, P and McHugh, D. 1995).
The benefits of employee participation have been extensively commented on as beneficial for both employees and workplace productivity. Although it is noted that managers reportedly lacked the soft skills to enable them to fully engage in consultation and participation. In post-Fordist environments where consultation and participation are advocated, soft skills are not only important for managers but for the whole workforce. Skills referred to as `soft' are also commonly referred to as generic, social or simply people skills. They include interpersonal skills, the ability to be flexible, problem-solve and work co-operatively in a team, and they apply to work generally rather than particular occupations and industries (Connell, J. 1998).
Workplace skills are intensifying, technical skills are no longer sufficient, at all occupational levels employees need more soft skills. Employees no longer merely perform repetitive tasks, they often work in teams; taking greater responsibility for quality; they solve problems; they work with advanced technologies (Connell, J. 1998).
5.2.2 Flexible Working
The development of working life has been a constantly evolving process with some flexibility inherent, this sometimes is to enable workers to keep up with developments. In particular, workers have always moved between jobs at certain stages in their career. In the 1960s when redundancy payments legislation was introduce this was seen to actively encourage the movement of workers by the government. Therefore, there is less permanency of employment, although, regardless of the movement towards a flexible workplace, a considerable proportion of the workforce is likely to remain with the same employer for the major part of their working lives. (Falconer, S and Pettigrew, M 2003)
There is a body of opinion which states that workers' expectations are changing and people can no longer anticipate remaining for the duration of their working lives in one occupation and with the same employer. Harvey et al. (1997) stated “that a guarantee of lifetime employment is increasingly unrealistic in many organisations and thus lack of organisational loyalty to the individual has created mobile workers, who are less likely to be loyal to the organisation”(Harvey et al. (1997) cited in Falconer, S and Pettigrew, M 2003:53)
Organisations no longer offer “a job for life” there is no longer guaranteed employment, with a pension as a reward for loyalty and compliance. The "psychological contract" between employer and employee has shifted. Employees are increasingly mobile, changing employment for promotion, reward and job satisfaction; top employees have more choice as to where to work. To retain these key employees the organisations culture needs to allow an environment of personal growth (Harrison 2002). With less job security, the best reward an organisation can give an employee is transferable skills (M Marchington & A Wilkinson, 1997).
In order to meet the challenges posed by the flexible working environment, it is recognised by Handy (1989) “that individuals must accumulate experience and expertise, certainly incorporating professional and technical knowledge, but also more personal skills that can be transferred between organisations and between roles within organisations”( Handy (1989) cited in Falconer, S and Pettigrew, M 2003:53). This is reinforced by the fact that in the year 2000 80 per cent of all jobs would require cerebral rather than manual skills, a complete reversal from half a century ago and, while a proportion of these cerebral skills will be technical or professional, a considerable amount will be transferable (Falconer, S and Pettigrew, M 2003)
5.3.3 Transferable skills
Workers have been forced to take more responsibility for their own careers, going where the work is rewarding and where they can develop skills that will guarantee their employability in whatever organisation. This mobility and "free agency" has created greater competition for skilled workers between organisations. Good workers have more choices than before, and are more liable to use them. With all the costs involved in recruiting and training new employees, organisations need to retain them. And key to this is the intrinsic rewards (Harrison, R. 2002).
Career development is important to the individual employee; Harrisson (2002) noted this as an organised planned effort comprised of structured activities or processes that result in a mutual career-plotting effort between employees and the organisation. This is a central component of the psychological contract that binds the individual to the organisation (Harrisson 2002). This further complicates the role of the HRD practioner, balancing organisational needs with the individual’s expectations. Some employees will develop their career with one employer, while others require transferable skills. The organisation requires employees with the right skills to ensure and sustain competitive advantage (Gilley and Eggland, 1989:48).
Harvey et al (1997) recognised the changes and anticipate the need for employees to be prepared to deal with this new work environment by evolving into "portfolio workers" who have accumulated a portfolio of skills and experience to be able to adapt to and cope with the challenges which will face them in the workplace. The key to successfully landing jobs will be in developing a portfolio of transferable skills (Harvey et al (1997). The acquisition of transferable skills has become a very important issue in recent years; it is now recognised by educational institutions including universities. This is by no means a new approach and, as far back as 1988, the Secretary of State for Education said (Davies, L. 1990).
There is a link between transferable and soft skills, Harvey and Knight (1996) list these skills as a willingness to learn, teamwork, communication, problem solving, analytic ability, logical argument and ability to summarise key issues. These transferable skills include personal attributes such as commitment and energy. The development of soft skills such as leadership, negotiation and communication, is vital when acquiring transferable skills (Harvey and Knight (1996) cited in Falconer, S and Pettigrew, M 2003)
5.4 How to train
This section will discuss different training programmes, and how to evaluate them. To develop employees’ takes time and money, this needs a systematic approach both in evaluation of needs and of training. If this approach is not used then the organisation can waste valuable resources.
5.4.1 Evaluation of Needs
Employees appraisals is a tool used as to identify development issues within the organisation. Harrison (1993) suggests that they are “a system and process for the provision of both feedback to employees on all aspects of their performance, and the opportunity for discussion to agree actions to assist their future development” (Harrison 1993:256). Mullins defined the advantages of regular staff appraisals as “a formalised and systematic appraisal scheme will enable a regular assessment of individuals’ performance, highlight potential and identify training and development needs” (Mullins 1996:639). The information collected from the appraisals can be used for strategic development of employees.
Outcomes can be used as measurement of success from the initial objectives. Harrison (1997) defined three outcomes that should come from appraisals, feedback on performance, work planning and diagnosis of training and development needs. If these outcomes are satisfied in the appraisal, then it will have a motivating effect on employees. If one of these outcomes is not satisfied, then the others cannot be satisfied (Harrison 1997).
5.4.2 Skill of the Facilitators
Education, training and development for managers, especially in the UK, has traditionally fallen into the “nice to have” category rather than the “must have”. This view of business is persistent, with the assumption that managers are born and not made (Stern, S 2002). The majority of managers have learnt their skills through on-the-job experience, their technical skills are good, but posses little people skills. . The conventional assumption, that managers learn best through “doing” whenever possible (Reader, A. 1998).
Focussing on the concept that the human resource is the highly valued, systems should be in place to protect their importance. Development for managers who manage employees is a basic component of management development (Marchington & Wilkinson 1996). Mumford (1997) discussed the reason for failure of some of the processes has been “clearly been due in some instances to the absence of the required skills” (Mumford 1997:78). The majority of Managers would profit from training, but they are not capable of managing even with the intervention of training. These managers would still find in difficult to transfer the new skills and practices into their work place. The people who should train are not trained themselves (Walton 1999).
In the UK the majority of managers have been trained in a skilled occupation, and consequently promoted through the system (Beardwell & Holden 1994). Although highly trained in their primary occupation, the challenges of the managerial role are foreign to their skills. Rees commented that “few people start their careers off in a managerial role; they have to acquire skills in organising employees effectively in an ever increasing competitive environment” (Rees cited in Beardwell & Holden 1994:373).
Good employee developers make a difference to the individual employee and/or their organisational performance. A new employee with a skills gap can be made to feel part of the organisation when he is developed into his role. Employee’s can be identified who have the potential for more demanding work or promotion but who require support to make this change. This can then set up a cycle of good behaviour that is passed on when the 'receivers' become managers and developers themselves. An IES study found examples of increased skills and knowledge, work experience, self-confidence, improved motivation, job performance and job satisfaction, all thanks to the developers (Sparrow 2004).
Soft skills training may simply remind and motivate employees to do what they already know how to do but don't always. Subsequently, it's difficult to measure the acquisition of soft skills. The true test of time management, for example, isn't being able to answer questions about time management; it's being able to manage time. This is a result of changing and clarifying values, such as balancing work and family, which involves changes in people's perceptions, habits, and relationships. These changes can only happen gradually, the results aren't immediately observable (Stoneall, L 1992).
Trainers who deal with such topics can't afford to neglect trainees' feelings. Being sensitive to their emotions may ultimately enhance trainees' performance and productivity. Information-giving, lifestyle changes, interpersonal skills, emotional issues, and personal growth require flexible training objectives. Trainers may still need objectives to help them stay on track, and they may still seek changes in behaviours. But the objectives should not be just performance-based (Stoneall, L 1992).
Flexible objectives allow each participant to get something different from the training and to apply it to his or her life. Each trainee's background and situation are unique, flexible objectives must remain open to individual differences. The demand for soft skills is increasing, but changing technology is also creating demands. Therefore both soft and hard skills should be part of a training programme (Stoneall, L 1992).
5.4.3 The Value of the Human Resource
To fully exploit the wealth of knowledge contained within an organisation, it must be realised that it is in human resource management that the most significant advances will be made. As a result, the human resource department must be made a central figure in an organisation's strategy to establish a knowledge basis for its operations (Mullins, L. 2005).
There are fundamental differences in the approach to HR. Storey (1987) discussed these as 'hard' and `soft’ versions of HRM.. The 'hard' version places little emphasis on workers’ concerns and, therefore, within its concept, any judgments of the effectiveness of HRM would be based on business performance criteria only. In contrast, 'soft' HRM, while also having business performance as its primary concern, would be more likely to advocate a parallel concern for workers’ outcomes (Storey cited in Guest, D. 1999).
These models of HR theory, will justify why there has been an increase in this management practice. Walton (1985) defined HR as “mutual goals, mutual influence, mutual respect, mutual rewards, and mutual responsibility”. Walton further added that the 'psychological contract' under this unitarist, high commitment model is one of mutuality, but it is a mutuality strictly bounded by the need to operate within an essentially unitary framework (Walton cited in Beardwell, l. et al 2004)
There is a need for a higher value to be placed on employees. And therefore get the best performance from the employees. According to Delany (2001) “successful organisations keep people issues at the fore front of their thinking and at the core of their decision making and planning”. Delany adds “organisations that get the people things right are the organisations likely to be around in the future” (Delany (2001) cited in Mullins, L. 2005:748).
The role of human resource explicitly views employees as another resource for managers to exploit. In the past, managements had failed to align their human resource systems with business strategy and therefore failed to exploit or utilise their human resources to the full. The force to take on HRM is therefore, based on the business case of a need to respond to an external threat from increasing competition (Guest, D 1999).
This view reflects a longstanding capitalist tradition in which the worker is viewed as a commodity. The consequential exploitation may be paternalist and benevolent; but, equally, it may operate against the interests of workers. Essentially, workers are simply resources to be squeezed and disposed of as business requirements dictate. More importantly, the interests of workers and their well-being are of no significance in themselves. As John Monks (1998) stated “In the wrong hands HRM becomes both a sharp weapon to prise workers apart from their union and a blunt instrument to bully workers” (Guest, D 1999).
Human resource development (HRD) is faced with a highly controversial contradiction in its present form. Civelli, F (1997) discussed that “people are less and less important because (ergo) their competences are very important". New information technologies, new ways in networking, new automation in manufacturing are giving a new emphasis to people within their jobs, tasks and duties (Civelli, F 1997:248).
5.4.4 Learning Theories
Organisations have an economic need for all employees to be flexible within the workplace. The culture should encourage them to use their own initiative and apply the knowledge to undertake a variety of tasks. Cognitive learning lets the workforce learn strategies, and then transfer the learning to be able to solve problems. Lewin (1958) broke the learning down into three key stages. The first stage is the disposal of the old level (unfreezing), second stage is to implement the new structures and processes (moving) and the final stage involves stabilising the company with its new structure (refreezing). This technique was used so the organisation and the employees would be able to understand and implement improvements to their methods of working. Problems that arise from organisational change, which it is not flexible and cannot adapt swiftly to situations such as economic recession (Lewin (1958) cited in Buchanan, D and Hucczynski, A 1991).
Wilson (1999) summarised on three main adult learning theories. Behaviourist theories of learning recognise learning as a response to external stimuli. Maintenance of the new behaviour is enforced by positive and negative reinforcement, a system of punishment and reward. Cognitivist theories of learning emphasise the proactive nature of development This school of thought perceives human beings as seekers of knowledge in an attempt to understand our own identities and positionality. Humanist theories believe that learning occurs as a result of our natural inclination towards it. People learn because in an environment of “warmth, care and understanding” (Wilson, 1999:197) we cannot help it. In this sense education is learner-centred; the student initiates the development environment and needs assessment.
People continue to learn throughout their life, whether this is formally taught or just experienced. The process of life long learning requires continuous adaptation. This is gained from increased knowledge and improved skills, which aid the individual to adapt to or change the environment. This allows for new possibilities and outcomes from situations that they face. These changes can raise the individuals self esteem and confidence. Therefore the learning can generate far reaching changes in both the individual and the environment (Beardwell I et al 2004)
Reinforcing learning within in an organisations, requires what Hawkins (1994) called "a change at the heart” this change is in “the understanding of learning, a shift from viewing learning as being abrupt facts to learning as a more multi-faceted and dynamic process". As Hawkins suggests, it is not that we are learning any differently than before but "our understanding of how we learn has begun to catch up with what happens in practice" (Hawkins, 1994:9). The learning process has been challenged to create a culture that allows continual learning throughout the organisation. As knowledge is what matters, organisations and individuals alike must become continuous learners (Hawkins, 1994).
Unlike most traditional methods of instruction, role-playing has proven effective in many training settings. With the traditional methods of training, the tacit belief is that trainees are made to learn too much by cramming and too little by understanding. In most cases, concepts learned are soon forgotten because they are often taught in isolation of direct practice. This is so, especially with such traditional or conventional training methods as lectures, reading, writing, and workshops. In contrast, role-playing accelerates acquisition of knowledge, skills (both hard and soft.), and attitudes, and offers educators, trainers, and learners the opportunity to observe growth and progress in both teaching and learning transactions in a more practical way (Sogunro, O 2004)..
Many programs for leaders, administrators, managers, supervisors, teachers, counsellors, and social workers among others, often lack the rationale of actively engaging learners in the process. Rather, they are predisposed to too much theory and less practical application. Evidence suggests that participate actively in a learning activity are more likely to demonstrate greater cognitive and skill understanding of concepts learned than many traditional educational forms of instruction. Role-playing encourages practice and direct experience in specific activities similar to real-life situations. With direct experience through role-playing, much is learned by understanding and comprehension of the learning activity (Sogunro, O 2004).
5.4.5 Competence based approach
The competence based HRD approach is not constrained with definition, identification or classification, it is not linked to knowledge but it is "a combination of knowing and being able to do." Webster (1994) put forward a definition that it is "the state or quality of being capable or competent; skill; ability" (Webster (1994) cited in Civelli, F 1997:249).
There are three main approaches to competencies. (1) The US approach: it is strictly linked with David McClelland's approach. This author sees "competence" as an "underlying characteristic causally related to superior performance". In this approach strong emphasis is on top performers in managerial people. This approach is defined as "behavioural competence". (2) French approach: Claude Levy-Leboyer, highlights a competence approach which is oriented to consider this as a resultant of several psychological elements of a person and with a basis in "self-image". Levy-Leboyer points out an approach of competence related to aptitudes, personality traits, and acquired knowledge. (3) UK approach: this development of the competence-based approach has in part been due to activities of the MCI (Management Charter Initiative) and of NCVQ (National Council for Vocational Qualifications) ... and is much more geared to certification and accreditation. Occupational competence is defined as the ability to perform activities within an occupation to the standards expected in employment. The element of competence identifies a required function which the competent individual should be capable of carrying out (Civelli, F 1997).
Some aspects of identifying competencies are linked to the recognising it, communicating it, in a defined social context, and obtaining it as a differential output of behaviours, of actions and ultimately performances. Lanzara (1994) discussed that to "learn a competence means to become an insider, the social actor has to learn to act as a member of what it is a social community in itself.... A competence has a crucial, social value and it grants identity or social visibility" (Lanzara (1994) cited in Civelli, F 1997:250).
The competences approach cannot be viewed only as a rational approach. It requires an interpersonal and communicational dynamics. We can recognise actions, behaviours, in an understandable form of communication. It is important to remember that the competences that we can identify can be particular to an organisation. Human resource management and development departments are highly involved (Civelli, F 1997).
5.4.6 How to develop soft skills
Organisations use many avenues to create strategic development plans that address current and future capability needs. The Human resource a function as strategic business partners to the organisation are prepared to help assure that employees have the required proficiency in soft skills. Data is gathered using both informal and formal methods ranging from interviews with managers, observations of employees at work, use of surveys, and review of job requirements. Although a lack of soft skills can be identified by a pattern of employee complaints, i.e. unfair treatment, ineffective management practices, or strained co-worker relationships.
Organisations can utilise their job evaluation or job classification systems to define the essential functions of a given job or group of jobs. Those evaluations typically list required knowledge, skills and abilities, and the preferred qualifications. Most evaluation systems assess the number, complexity, and hierarchical level of individuals with whom a focal individual must interact to get the job done. Designing soft skills development requires paying close attention to the organisation's mission, ethical stance and strategic vision (Muir, C. 2004)
The future of organisational initiatives increasingly spans the organisational boundaries, with the need for collaboration, understanding of diverse perspectives, and for integration of knowledge work. This can only be successful if soft skills capability in every participant is an important issue (Muir, C. 2004)
5.4.7 Evaluation of training
Organisations undertaking a development initiative are encouraged to look beyond simply evaluating training programs, with success depending not only on effective training but also on such important elements as expert facilitation, contextual awareness, formal and informal support, real-world application, self-study, self-awareness, stress and celebration (Crosbie 2005).
When organisations do not employ the resources to evaluate the benefit gained from training, the needs analysis is not completed. Therefore any benefit gained is not known to the organisation. A study in 1989 revealed that only 3 per cent of UK organisations reviewed any cost-benefit analysis of their training intervention (Deloitte et al (1989) cited in Santosand Stuart 2003).
This approach within the UK has barely changed in fifty years. Evaluation of training intervention does not receive the consideration that accepted opinion demands; it is not an important factor in determining the allocation of resources to training. The important factor within an organisation is the focus of HR on the training and development needs, so they are focused on the learning needs of the organisation.UK organisations fail when assessing the effect of training, to both the individual and the organisation (Sloman 2004).
Continuously during the late 1990s and into the current century there has been a shift in organisational HRD rhetoric. Walton (2004) has discussed this shift in practice as “from how to support learning to how to manage knowledge, from the learning organisation to knowledge management” These are new implications for the HRD practitioner in what has loosely been named the new economy (Walton 2004).
HR department are administration based within UK organisations. Rogers (2004) stated that “the threat revolves around a fundamental mismatch between the functions of HR departments today and the real strategic human resource needs of a modern business, which those departments it should be serving“ The image of HRD has changed and can be used a key driver for delivering shareholder value (Rogers 2004:25).
Rogers (2004) discussed the “role of developing human capital strategies that HR has a real opportunity to shine”. There are numerous HR departments are failing to deliver the goods. This is caused by “too many departments are dominated and viewed by the board as fulfilling a mainly administrative role, dominated by endless form filling” (Rogers 2004 :25).
Strategic HRD is not embraced by all organisations; some view other resources as more valuable. There are many individual interconnected components, that impact on the performance of the organisation. The human resource is in theory the most valuable resource, but does not always receive the respect, and the financial recognition to develop (Walton 1999). Mumford (1997) agreed with this stating that “other resources within the organisation have a higher value placed on them and they are protected by rules and regulations” (Mumford, A. 1997:78).
Traditional taxonomic tools used in order to interpret and evaluate training are inaccurate and inadequate. Statistical data processing fails since it frequently describes some phenomena which result, other than the ones it was trying to describe (Civelli, F 1997).
5.4.8 Allocation of Funds
The trend in the UK of under allocation of resources for training appears to be changing. Organisations are increasing training budgets as there is a fear of a skill shortage. The Training and Development Survey 2004 from the CIPD, concluded that there was little change in training budgets between 2002 and 2003, a third of organisations expect their training budget increase in 2004. In a third of UK organisations, employees receive more than five days training per year. Although this is not the case for all employees, a fifth of employees receive less than three training days a year (Reade 2004).
Jessica Rolph, CIPD (2004) discusses the findings stating that "If anticipated increases in training budgets do not materialise, current skills shortages could translate into wage inflation, leading to adverse implications for interest rates, growth and the economy as a whole” That economic uncertainty has led to a “'wait and see approach to investment in training” The danger from this under investment could lead to skills shortages, and unrealistic salaries and unfilled vacancies that would hit the profit of organisations hard (Rolph (2004) cited in Reade 2004).
The CIPD survey has revealed a large disparity between the training budgets of public and private-sector training. Over a third of public sector organisations reported that their training budget had decreased, and they expected this trend to continue. This trend will increase the skills gap between both sectors, development as a recruiting tool will favour private organisations (Reade 2004).
5.5 Customer Relations
This final section will discuss the value of good customer relations and how this can lead repeat business. This is seen as an added value to the organisation, customer loyalty is now discussed as the last competitive edge.
5.5.1 Relationship Marketing
Organisations should build a stronger relationship with their profitable customers. There are five different levels of relationship marketing that can be practiced. The basic level does not really involve building a relationship, for example it is when a car salesperson smiles and sells you a car and waves good-bye as you drive it off the lot. You never see him again; if you need service you talk to someone in the service department (Kotler, P. 1992:52).
Reactive marketing is the next level of relating. At this level, as the salesperson wave’s good-bye to the customer, he says, "By the way, if there's any problem, please call me. You don't have to call the service department; I am responsible for your satisfaction." The employee has taken on some of the responsibility of managing the customers needs (Kotler, P. 1992:52).
A higher form of relationship is accountability. At this level, the salesperson calls the new car owner within two weeks of the sale and asks how he likes the car, and if there is any way the car could have been better. This type of information will help organisations to continuously improve their customer service level (Kotler, P. 1992:52).
Still, a higher level is proactive, where the salesperson will call the customer from time to time, to see how they are enjoying their purchase. Customers get a sense that the company still is interested in their needs. Partnerships are the ultimate form of relationship marketing. They involve actually living with the customer and are mostly confined to business-to-business relationships (Kotler, P. 1992:52)
Each level requires more cost, so it is important for organisations to determine when it is worth going to the next level. Two dimensions that are particularly critical are the margin that the firm makes on the business and the number of customers making purchases. For example, a low-margin business with many customers, for example selling toothpaste would operate at the basic level. The organisation has so many customers for that product and makes so little per unit that it would not be cost-effective to develop a high-level relationship (Kotler, P. 1992:52).
There are five levels of response for each customer service and retention tool. Those levels vary within companies; an organisation might be reactive with respect to technical assistance, accountable with respect to service and basic in terms of value-added. The important thing is to know where your competitors stand, what is their profile with respect to relationship investments, and what things should you do to be superior to the target market.
5.5.2 Service Quality
The organisation has to decide and implement which level of value added service it will offer its customers. This experience of the customer will reflect in customer loyalty.
Relationship marketing strategy will decide the level of service a customer will receive. Training of employees would appropriate at the proactive level This can offer the customer a higher level of service, making them feel valued by the organisation. Many manufacturers offer in house training to the employees within the dealerships (Kotler, P. 1992:52).
Frequently organisations move from one strategic initiative to another with little consideration of their natural progression. This has been the case for many companies that have moved from an emphasis on quality in the 1980s, to customer satisfaction in the early 1990s, to customer loyalty and retention today. Managers proclaim that they have moved beyond quality and customer satisfaction to focus on what really matters, namely loyalty and profitability. Although it is argued that there is “no such thing as moving beyond quality and satisfaction. They are essential building blocks toward building loyalty and a valuable business organisation.” (Gustafsson, A. and Johnson, M. 2002:249).
The service quality perceived by the customer varies across the spectrum. Relationship benefits are perceived advantages that the regular customer receives over and above the core service. These are rewards; the individual has gained over time by being a regular customer. The benefits tie him or her to the company by making it unattractive to switch provider (Liljander, V. and Roos, I. 2002).
5.5.3 Customer Value
Customer value management (CVM) has become a major focus in current marketing, as value marketing has become a slogan among marketing practitioners. Sinha, I and DeSarbo, W. (1998) defined this as “in the marketplace, value often is defined as quality at the right price" and is seen as more important to consumers than quality, because value is quality that the consumers can afford (Sinha, I and DeSarbo, W. 1998:236).
Zeithaml (1988) reports considerable heterogeneity among consumers in the integration of the underlying dimensions of perceived value. They define the perceived value as a trade off of "higher order abstractions," such as perceived benefits and sacrifice, which are formed from both intrinsic and extrinsic product attributes, including texture, quality, price, performance, service, and brand name (Zeithaml (1988) cited in Sinha, I and DeSarbo, W. 1998:236). Zeithaml 1988:236).
There is a strong link between relationship marketing and customer value, the higher value placed on the customer will reflect in their purchasing choices. True and spurious relationships are the extreme points on a continuum. At the lower end, customers may be behaviourally committed to the service but satisfaction is only latent. At the higher end, customers are more manifestly satisfied and more affectively committed to the service (Liljander, V. and Roos, I. 2002)
Berry (2000) proposed three relationship levels of customer perceived value. These are based on financial, social and structural bonds. Financial bonds, such as loyalty programmes, are considered the weakest form and may only lead to spurious relationships. Social and structural bonds are more closely related to true customer relationships. According to Berry (2000), “structural bonds offer value-adding problem solutions that are not dependent on individual service representatives, and which are difficult for competitors to copy” (Berry (2000) cited in Liljander, V. and Roos, I. 2002:598)
5.5.4 Customer Loyalty
Customer satisfaction can be considered the central determinant in all phases of the contact chain. Multi-dimensional recording of customer loyalty reveals clear differences in the interactions first with brand loyalty and, second, with supplier loyalty (Huber, F and Herrmann, A 2001)
The relationship between the purchase intention and customer satisfaction has been widely investigated (for example, Oliver 1980; Bearden and Teel 1983). The evidence suggests that there is a strong positive relationship between the two. Several of these studies indicate that higher levels of satisfaction lead to greater customer loyalty (Yi (1991); Anderson and Sullivan (1993) Boulding, Staelin, Kalra, and Zeithaml (1993) all cited in Dervaraj, S. et al 2001:425)
Consumers who purchase higher quality vehicles expect to receive a higher quality service, therefore the assumption is made that poor service will lead to greater dissatisfaction among those that purchase the higher quality vehicles. An explanation for such behaviour is that there is a correlation between the perception of quality and the perception of the quality of service. Therefore, high customer expectations of service quality can lead to better service performance which, in turn, this positively influences customer satisfaction with service (Dervaraj, S. et al 2001:425)
Oliver (1999) suggests that “ultimate customer loyalty is a function of perceived product superiority, personal fortitude, social bonding, and their synergistic effects. His arguments generally support the assertion that measures of loyalty that are constrained only to repurchase considerations fail to capture the richness of the loyalty construct “ (Oliver (1999)cited in Taylor, S. et al 2004:219).
If loyalty is essentially an irrational and emotional attachment to a product, service or business, then marketers need to focus on elements that create this emotional attachment. In developing a strategy that draws on the irrational attitudes of consumers, brand equity plays an important role. All the elements that contribute to the development of brand equity are difficult to measure, often based on consumer emotions rather than on rational behaviour, and the objective of brand marketing is, in part, to create a generally favourable impression of the product or service without the use of objective or tangible factors. It is this intangible element that gives brands their value since, without such intangibles, brands become worthless (Kotler et al 2005).
The dilemma with subjective measures is that they take marketers back into the territory which they though they had left behind. Back to the world where we know half our marketing works but not which half. Five decades of scientific marketing has resulted in a situation when a crucial concept such as customer loyalty gets defined in terms of elusive consumer emotions and on a (not unreasonable) assumption that consumers will continue to act irrationally from time to time (Taylor, S. et al 2004).
6.0 Case Studies
The organisations chosen for the case studies are all in different stages of growth, they all have different structures, culture and leadership styles. The approaches and value placed in training differs in all three organisations.
All of them have different requirements from repeat business, but to each organisation it is a valuable asset. The case studies will examine how all of them approach this aspect and value the soft skills that will help them retain customers.
6.1 Company One
Company one is a Motor Insurance Broker that has been trading for nearly 25 years, offering customers the personal touch. Although it is a within a very competitive market, the organisation has good relationships with the insurance providers, this relationship is deteriorating due to market forces.
The organisation has recently struggled to gain repeat business; this has been mainly through competition from the internet. Cost is a factor in the purchase of the product. The customer service level does not build strong relationships with clients.
There are approximately 30 braches spread out in the south of England and the midlands. Each operates unit, but all the financial decision come from above. Branch managers have very little control of the running of the branch; this is dictated from head office.
There are 300 employees in the branches and at head office. The majority of employees are administrative roles that are customer facing.
Recently a couple of branches have closed due to business demand; the employees have been offered jobs in other parts of the organisation. This is viewed as business necessity, and employees have with reluctance accepted the change.
The key points are
- The organisation has a rigid hierarchical structure, with decision making coming from the top down.
- Early in the review it became apparent that the culture in head office was significantly different to that of the branch offices. The chief executives autocratic style has a stronger influence at head office, and for this reason.
- Head office employees view the branches as an “easy way to earn money”, they feel the work load is not distributed evenly.
- 89% of all employees are female with a higher percentage of them being administrators
- The founding Chief executive is still in the same position, along with many of the original board.
- Motor insurance is highly competitive and attracting new customers as well as retaining the existing ones is a major concern for employees at all levels.
- The chief executive is very paternalistic attitude towards the largely female workforce, providing paid shopping days at Christmas
- There is a lack of management development, which is indicated by only two female employees in middle management and none in senior management
- There has been a confrontation with the union over the attitude towards the female employees, as being low skilled administrators.
- This was disputed as a typical management attitude, that did not understand what an administrator does
- There is no formal training of customer facing employees
6.2 Company Two
This organisation will be referred to as Company two. Although the organisation was helpful when gathering data, because company one had requested anonymity it was felt that for the purpose of this paper, all organisations will remain anonymous.
The organisation is a small manufacturing organisation base in the south of England; the product is unique in the area, but faces competition for cheaper sources in the Far East. In the area there are few manufacturing companies, so specialist employees tended to remain with the organisation for quite a few years.
This organisation was going through a change process; with the new culture training was introduced as a change agent. With the recent reduction in staffing levels there are approximately 250 employees.
The key points are
- Over the previous 5 years the organisations employee numbers had reduced by 150 with further downsizing predicted.
- The organisation was in the process of restructuring, downsizing, and introducing a best practice culture change program.
- The general manager, the unions and an external change agent worked together to design and implement the change program.
- The old culture in the organisation was low trust and conflict, the objective of the change was to introduce a culture that was customer focused, increased productivity and allowed employees to gain new skills and an environment which they could transfer their skills. This meant employees would be not only more involved but accountable for their actions.
- To introduce soft skills the program included the appointment internal and external facilitators, this would train the employees in team processes, communication and problem solving.
- The organisation’s structure was delayered, supervisors changed to team leaders and managers became team sponsors. Through the culture change these teams were able to make their own decisions and accept more responsibility and accountability.
- Employees were empowered to become fully committed to workplace participation.
- With less employees productivity continued to rise, this was attributed to higher levels of work participation, as a result of the culture change program.
- Representatives visit customers at their premises, adding value to the relation ship
- Although there is competition from cheaper sources, the organisation gains repeat business as they offer customers the personal touch
- Employees were trained on both technical and soft skills; delivery of the intervention was usually in lecture form, with exercises to complete. The technical skills offered a recognised qualification in the area of expertise.
6.3 Company Three
This organisation is based just outside of London, although it operates through out England, specialising in the design and fitting of bespoke kitchens. There are 10 employees in the head office, whose roles range from customer sales to accounts. There are approximately 50 skilled workers who work in teams who fit the kitchens, covering all aspects of the project. Depending on the size of the job each team can consists of between three and ten fitters. There is a small warehouse operation that employs 3 people; the product is order in for each customer.
The organisation is nearly 10 years old and is growing steadily. With expansion the founder believes in keeping in contact with all employees, and values their contribution. Advice on employee relations is taken from a HR consultant, who will visit the head office once a week.
Although the gap between repeat business can be up to 20 years, these are expensive purchases for the customer, therefore they rely on word of mouth to increase sales This can increase sales more than advertising, and is cost efficient.
Customer service skills are important and all employees undergo training in this area. The relationship is built with the customer they first enquire about the product and continues after completion, with follow up calls.
The key points are
- The organisation has an open culture, where opinions matter, there are frequent discussion meetings on projects, employee participation and work issues
- The founder of the organisation still works occasionally as a team leader, so he does not forget the complexity of the role.
- The belief in the organisation is that every one is as important as each other. All employees are valued for their contribution
- Employees are kept informed of progress of the organisation by regular bulletins from the founder
- There is no formal structure in the head office, everybody knows their role, there are few rules and regulations
- Team leaders will visit the customers home, design the product and oversee all the work involved, this builds a strong relationship between the customer and the organisation
- The organisation is looking to expand into the manufacturing of the units, this will guarantee the standard of the product and prevent delays
- Only in an emergency situation will they sub contract work, the organisation feels they do not have control over a third parties work.
- The organisation takes full responsibility for the project from design to completion and will guarantee its work
- The customer is highly valued, this is evident through the whole process
7.0 Findings and analysis
This section of the paper will review the case studies against the literature review, to determine whether the theory backs up the findings Each case study will be analysed separately allowing for further discussion in the conclusion
7.1 Company One
There has been a very Victorian attitude until recently; employees were not allowed to enter the management floor at the top of the building, this reinforced the structure and culture of the organisation (5.2.2, 5.2.3 and appendix 4).
This led to employees describing the Chief executive as a “mythical figure”, who communicated to his employees by memos; these were then passed down the relevant communication channel (5.2.2, 5.2.3 and appendix 4).
The organisation is very “stuck in its ways” and is slow to react to the changing markets. The organisation is described as reactive to market forces, at a slow pace, therefore is in decline (5.2.1, 5.2.2 and 5.2.3).
This method of communication would often fail, as memos were left on desks instead of passing them on. Both managers and supervisors held on to the information, this power struggle reinforced the hierarchical structure of the organisation (5.2.1, 5.2.2, 5.1.3 and 5.2.3).
The lack of interaction and communication between management and workers was demonstrated when they visited 3 offices and were not recognised (5.2.2, 5.2.3 and appendix 4).
In all questionnaires it was apparent that the Chief executive was recognized as the creator of the organisation’s culture, this was described as old fashioned. Senior managers discussed the top-heavy hierarchy where decision making is concentrated on the top layer; there was no formal discussion with decisions, There is one power base, and this was not to be questioned (5.2.3 and appendix 1).
Several respondents commented that this style of management had not changed since taking up the position. The chief executive was the major decision maker, retaining information and making all the decisions (5.2.3 and appendix 1).
Recently there had been more contact between the chief executive and management although they had been given little autonomy with decision making (5.2.1, 5.2.3 and appendix 4).
There is a distinct lack of consultation and employee participation, this was directly attributed to hold on the organisation that the chief executive had. The frustration and inability to make decisions trickled down the ranks from management to workers: Several senior managers discussed that even when he was not at work they could not make any decision without contacting him first (5.1.3, 5.2.3 and appendix 4).
This is evident through the numerous examples of manages not being able to purchase basic office supplies without his permission. Management and employees have discussed that the company is in the dark ages, there are so many dedicated employees but with this attitude it is frustrating and we wonder what we are doing here (5.2.3, 5.3.3, appendix 1 and 4).
The majority of the organisations training budget consists of initial training, with approximately 7-8% of payroll per annum being spent on induction training. There are no formal training plans after the induction process (5.4.7 and 5.4.8).
The organisation does not place a high value on customer service and loyalty, which is now, affected repeat business. Although there is more competition the organisation has not reacted to this change, placing itself in a declining market (5.2.1, 5.5.2, 5.5.4 and appendix 1).
All respondents agreed that the only training takes place when new computer systems or motor insurance initiatives are introduced. Supervisors are trained and then are expected to train the workers who report to them (5.1.2, 5.4.1, 5.4.8 and appendix).
The majority of training for workers is `hard skill' training on computers. Management training is ad hoc and consists of attendance at seminars and one off training sessions which managers can apply for on an individual basis (5.1.2, 5.2.4 and 5.4.8).
Despite a number of workers and managers wanting to become more involved in decision making, it was recognised that employees were reluctance to take on any more responsibility (5.1.3, 5.2.3 and appendix).
This was attributed to the lack of formal training, the old fashion practices and individualism not being encouraged (5.2.2 and 5.2.3).
The organisation has no clear goals, when a mission statement was developed it was not consultative and it has not been communicated down the line (5.2.2).
Employees discussed methods for improving communications in the verbatim, but found it difficult to change it with the current structure. They also felt that management could benefit from training in people management, to help build relations with all employees (5.2.2, 5.2.3, 5.1.3 and appendix1).
Employees were worried about the lack of repeat business, and felt this was caused by the reluctance to train employees in customer service skills. Employees thought that the lack of repeat business could force more closures, and they did not possess enough skills to gain other employment (5.3.3, 5.5.2, 5.5.3 and appendix 4).
In this organisation the quantitative data indicated that management scored more positively than non-management for each of the 14 dimensions, apart from the `environment' dimension (customer focus and sensitivity to the external environment), where management scored below average. Non-management responses were below average for six dimensions which in descending order were: leadership, commitment, innovation, structure, workplace relations and communication (Appendix 1 and 4).
7.2 Company Two
The chance of success with the change of culture was supported by the strong commitment from the general manager. This was compounded by working with the unions, demonstrating a commitment to the future of the organisation (5.2.1, 5.2.2, 5.2.4 and appendix 2).
Employees had less trust in the external change agent; than in the advice from unions, the external agent was felt to be a waste of money (appendix 2).
The change program was generally considered to have made only small differences to the common style of management; although senior management commented that supervisors (team leaders) were using terms such as empowerment and responsibility they were acting the same as before (5.2.2, 5.2.3 and appendix 2).
This was further endorsed by some employees who commented on the presence of a number of managers who still managed in a power and command style (5.2.3 and appendix 2).
With the flatter structure and the change in role tittles, it was evident in the questionnaires that employees still referred to team leaders as supervisors and team sponsors as managers (5.2.1, 5.2.2 and appendix2).
From the comments section on the questionnaires it was evident that there was still an “us and them” on the factory floor. The managers still operated separate from the workers. The lack of management presence in the factory was viewed as their lack of commitment to the training program (5.1.3, 5.2.3 and appendix 2).
Many of the team members failed to accept any responsibility or accountability; this was stated as not being their job, they had only paid lip service to the change (5.2.3, 5.4.4, 5.4.7 and appendix 2).
It was accepted that management set the goals and the business plan but even now with best practice, they are still very focused on production. If anything goes a little bit wrong, then it is back to the "old" management style (5.2.2, 5.2.3, 5.2.4 and appendix 4).
Some respondents had utilised the new communication channels but had become disillusioned with the new practice when they believed their suggestions were not reacted upon (5.2.2 and appendix 4).
The move to teams had accompanied the apparent decentralisation of decision-making down the line. Some workers did not apparently want to be `empowered', discussing the fact they did not want any additional responsibility and/or accountability (5.2.2, 5.2.3 5.5.1 and appendix 2).
The majority of managers believed the problem was linked to attitudes, commenting: “Attitudes have a big impact on productivity, as many people do what they have to do and go home” Best practice is unlikely to work while some people are so entrenched in their ways and these things will hold us back from moving into the 21st century (5.2.1 and appendix 4).
The Organisation began restructuring process in 1998 that involved widespread retraining for multi tasking. The restructuring process had necessitated an extensive training program for workers at the cost of approximately 4.5% of annual payroll (5.1.2, 5.4.7, 5.4.8 and appendix 4).
This expenditure was to be evaluated by any increase in either/both production and repeat business. The training process would be on going and not a one off cost (5.4.7, 5.4.8 and appendix 4).
The training budget was allocated for the culture change program, concentrating on team training, communication and quality improvement processes for everyone All levels within the organisation would have a training plan, with targets set during appraisals (5.4.1, 5.4.3, 5.4.6, 5.4.8 and appendix4).
Senior management also attended extensive leadership training for personal development, this focused on soft skills. These skills were targeted to change the style of management that was prevalent within the organisation (5.1.3, 5.4.1, 5.4.7 and appendix 4).
Both positive and negative effects of restructuring were considered, the advantages to employees included the opportunity to be trained in different skills and the higher pay and seniority received as a result of position (5.1.2, 5.2.4, 5.4.1 and appendix 4).
It appears that the overall objective was not achieved, although the organisation is still attempting this change process. Top layers of management still are backing the change process, although they do not easily accept the reasons for failure. There was no deep commitment to the change program (5.2.2, 5.4.4, 5.4.7 and appendix4).
However the reasons given varied as to why. These included: supervisors not encouraging newly-trained workers to utilise recently acquired skills; i.e. the environment did not encourage transfer of the new learning (5.4.4, 5.4.7 and appendix2)
Some employees felt they had to protect their role, and only with reluctance shared their knowledge with others. This was stated as insecurity, they did not want others to out perform them (5.3.3, and appendix 2).
Over a period of time some of the new skills became stagnant and insignificant. One manager explained that prior to restructuring there were narrow job description, allowing individuals expertise in a small area (5.4.4, 5.4.7 and appendix 2).
Respondents to the questionnaires referred to their technical background as having a strong emphasis on hard technical skills. They did not consider prior to the training a need for soft skill (5.1.3, 5.2.1 and appendix 4).
With the changing emphasis on work practices managers concluded that there was a need for soft skill improvement, particularly in the areas of communication and teamwork (5.1.3, 5.2.1 and appendix 4).
They concluded that both managers and workers needed to be able to communicate better, communication is a huge problem. The introduction of teamwork would require conflict resolution, problem solving and responsibility (5.1.3, 5.2.1 and appendix 4).
Management also remarked that there was a need to encourage both workers and supervisors to accept a changing balance in roles between problem solving and decision making, responsibility and accountability (5.1.3, 5.2.1, 5.4.7 and appendix 4).
One senior manager noted that “It is extremely difficult to get teams to realise they have the ability to make decisions and solve problems without putting it all on their supervisors. There is a tendency to allow supervisors to make decisions and supply resources (5.1.3, 5.2.1, 5.4.7 and appendix 4).
The teams need the skills to solve the problems allowing them to gain ownership and achieve results, rather than thinking about what they won't do because of lack of confidence (5.1.3, 5.2.1 and appendix 4).
The reasoning for introducing the changes was grounded in customer value; although not a complete success it has raised awareness in the organisation of the value (5.1.3, 5.5.1, 5.5.3, 5.5.4 and appendix 2).
When the quantitative data Company Two were considered, teamwork rated as the highest dimension and communication the lowest. Skill utilisation rated sixth, although management scored significantly higher than non-management, indicating management utilise more of their skills. The scores of management and non-management were not closely aligned in their perceptions of their workplace and generally the quantitative data supported the qualitative data, particularly in the areas of skill utilisation, communication and management/non-management morale.
7.3 Company Three
The response from this organisation was higher than the other two organisations. The respondents stated that everyone knew who the boss was, and respected his management style (5.2.2, 5.2.3 and appendix 3).
The founder’s door was always open; employees did not have to make an appointment to see him. Employees dressed informally, with field operatives wearing casual corporate clothing (5.2.2, 5.2.3 and appendix 3).
The culture encourages decision making from all employees; mistakes (apart from the very costly ones) are viewed as part of a learning process. With talk of expansion all employees have been consulted for their opinion (5.2.2, 5.2.3, 5.2.4 and appendix 3).
Several team leaders discussed the regular meetings with the boss, he holds group discussion so we can discuss our project, with any problems, and other team leaders input helps us resolve issues (5.1.3, 5.2.3 5.3.1 and appendix 4).
Reporting is done directly with each department; reports are drafted and discussed with all the employees that are involved. There is nothing hidden, apart from personnel records; we can request to see any report (5.2.3, 5.3.1, 5.4.6 and appendix 3).
Most employees across the operation knew each other, and contact was maintained through employee consultation. The teams are not in competition with each other as each project is individual, and is treated as such (5.2.3, 5.3.1 and appendix 3).
There is slight fear with the respondents that if the organisation continues to grow, it will be sold, and it will not be the same working environment. Employee turnover is virtually non existent, new employees are taken on as the organisation expands (5.2.1 and appendix 4).
Some employees were wary when the HR advisor starting, but this has helped to formalise individual training plans. This training offers technical skills to those who need it and soft skills to all employees (5.2.1, 5.2.4, 5.4.3, 5.4.7 and appendix 4).
The organisation prides itself on relationship marketing, which is built and maintained through out the process. There is high value through this, relying on customers to spread the word about their experience with the organisation (5.5.1, 5.5.3 and 54.5.4).
The training budget equates to approximately 10% of the wage bill, this is split between induction, technical and customer service skills, all are weighted equally (5.4.7, 5.4.8 and appendix 2).
There is now an employee induction scheme, which tells new employees about the company and the importance of customer service. The unofficial motto of the organisation is to treat the customer the way you want to be treated, give respect (5.5.1, 5.5.2, 5.5.3 and appendix 4).
The customer service skills course is mainly based on role play, which the respondents felt this helped them to transfer the new skill to the work environment. When we have completed training, the new skill is encouraged and respected (5.4.6, 5.5.3 and appendix 3).
Several of the head office workers were concerned that with the lack of structure there was little progression within the organisation. The majority of employees are happy in their role, and feel this reflects on the customer (5.2.2, and appendix3).
The customer is highly valued by the organisation, and if they perceive a problem the organisation will rectify this as soon as possible. There is a perceived high value in this for of marketing (5.5.1, 5.5.2, 5.5.4 and appendix 4).
Both the quantitative and the quantitative data for Company Three considered teamwork communication and Skill utilisation high, there was no difference between management and non management as the organisation had no formal managers. The quantitative data supported the qualitative data, particularly in the areas of skill utilisation, communication and morale.
This section of the paper will conclude on the findings and analysis from the case studies. They will be concluded individually, each one has introduced a different perspective of soft skills utilisation within organisations. These require concluding separately, and then concluding with the subject as a whole.
>From all three organisations it is apparent that the culture and the structure of an organisation will have a direct affect on how they view soft skills. The organisations have placed different values in soft skills and training in general, this value is then relevant to how much training offer employees.
8.1 Company one
This company is very rooted in the past, and has allowed technology to outpace growth of the organisation. The systems that are in place are very dated, and inefficient. The employees lack technical skills to be able to compete in the current environment, therefore they feel insecure within their position and with the organisation.
There is only one power base, this is not questioned, although it is not respected either. The Leader has not adapted to the changes both in the organisation and the environment. This has left the organisation with an uncertain future, it needs to modernise and compete in the new electronic environment.
Communication is a major problem within this organisation, this is one of the basic soft skills, no one within in the organisation is encouraged to utilise these skills. Autonomy is openly discouraged. The knowledge received from communication is viewed as a power, and to remain in a power role, information must be kept.
The allocation of funds for training is mainly used in the induction process; there are no formal training plans. This does not give the employees transferable skills, which leaves them feeling stuck in the job. This negative aspect would affect the customer relationship, reducing repeat business.
By not placing value on the human recourse, they are not motivating their employees. This factor will be apparent to customers who will receive a negative experience when purchasing.
A worrying trait from this organisation is the way they view their female employees, who make up the majority of the workforce. There is no formal career planning, therefore they do not get promoted, leaving the top layers male dominated. This is discriminatory practice and should ceased immediately
Company one requires a change of culture before it can move forward, all customer facing employees require soft skills to help build and maintain customer loyalty. Management would benefit from soft skills to build relationships will fellow employees, and to be able to make decisions. The communication channels need to open between all levels; this could be in the form of forums, employee participation, and news letters.
The soft skills are clearly missing from this organisation, and they are suffering through the neglect of basic skills. Although their position cannot be fully attributed to the lack of training, it has been a contributory factor.
8.2 Company Two
This organisation has reviewed its position within the environment and realised that change was required, even to remain stable. This change has been carefully planned through consultation with the union and an outside provider.
The intention of the change of culture was to empower employees to work in teams, which would self regulating, taking control of the situation. Employees were trained on the soft skills that would assist them in their new roles. The major factor that prevented this from being completely successful was the lack of transfer on the new skills. Employees were allowed to slip back into their old ways.
The commitment from the top management to this change was high, although this did not filter through the organisation. Middle management held on to its power base, not embracing fully the change. They should resistance to the change, and uncertainty if they let go of their power.
Although a lot of resources were placed in the change program, it appears the rationale behind it was not disseminated to all employees. The manager was committed to the future of the organisation, and felt change was the only way forward.
Employees did not fully understand the change, with a few quite resistant to the change. This could be attributed to a lack of knowledge in the reasoning and purpose, leading to fear of the unknown. This can be overcome by forums, discussion groups and employee participation.
Although soft skill training was introduced, there appears still to be problems with communication and team skills. These require the environment to transfer the skills; this will only happen when middle management embrace the culture change with commitment.
The middle layer of management has delayed the change process, and requires further training to understand the organisational benefits of this new culture. Although the change has not completely succeeded, the organisation has attempted a move in the right direction. There current position should be the starting point, and they should continue to push for this change.
The organisation has now placed a higher value on the customer relationship, and is looking for ways to improve it. By recognising this area, it has raised awareness to the value of repeat business. This leaves the organisational culture open to methods that will improve the customer value.
Through the training in soft skills employees have now identified communication problems within the organisation. Although they are not practising all the new skills, they can now identity problems that not using soft skills cause.
8.3 Company Three
Compared with the other two organisations this organisation would appear to have got things right. They place a high value in their customer relations, and although not strictly repeat customers they a reliant on word of mouth to increase business.
All members of the organisation receive training in both technical and soft skills, all employees at some stage during production are customer facing. With a team leader put in to maintain the relationship with the customer through out the whole process.
Employees are happy to work in the organisation, but are a bit worried about the lack of progression that this flat structure offers. The organisation has one manager who is still part of the team, all other employees are equal. If the organisation continues to grow this can then cause problems with communication, and the current structure would need reviewing.
Soft skills are openly encouraged both with the customer and between employees. Communication is kept open and flowing, this factor has proved vital in the success of the organisation. Every body knows what is expected from them, and how they will achieve this.
The training budget is considered to be important to the organisation; this has placed a high value on the employee. This commitment has been responded to from the employee’s perspective; they feel a valued member of a team. This is demonstrated by their high commitment to the organisation, there is little turnover of staff, everyone respects the boss, with the majority happy in their working lives.
Where this organisation is in the initial growth stage some employees feel uncertain about their future, but the training they have received will give them transferable skills. This places them well within the labour market should the current situation change. This satisfies the psychological contract, adding stability to the work environment
8.4 Overall Conclusion
From reviewing all the literature and studying the organisations it has become apparent that it is not just in performing a customer facing role that soft skills are vital. Within organisations all employees can benefit from an increase in soft skills, sometimes it is just reinforcing what employees already know, but do not practice.
The value that the organisation places in training demonstrate the value they have for their employees. The higher level of commitment from the organisation to a training program will increase the rate of any intervention.
The organisations are in different stages of their life cycles, therefore it is difficult to compare, although the contrasts are strong. The organisations could be reviewed in five years to ascertain if the changes have been successful, and the level of soft skills it utilised.
Individuals within organisation can naturally have a level of soft skills, but it takes an open culture to allow the free use of them. These employees can benefit from training, which will reinforce the value that these skills can bring to the organisation. This can benefit the organisation, adding value encouragement to individuals to utilise their soft skills.
Evaluation of training is a subjective area; so many factors can impinge on the success. The skill of the facilitators can directly affect the employees experience in either a positive or negative experience. The culture of the organisation can prevent the transfer of newly acquired skills. Even the when these conditions are ideal for training, the ability of the individual can affect training. Therefore, when evaluating a training intervention, all factors must be reviewed and considered. There is no panacea.
To ascertain the cost to the bottom line is difficult, organisations have few competitive edges left, and the last one is said to be “the skill of the employee” Although this paper has not concluded that training in soft skills increases profit it has ascertained that not possessing these skills reduces the bottom line. Customer will only go back to where they had a good experience, and not where the service was poor.
Soft skills in isolation can not meet the demands of work, although in today’s environment neither can technical skills alone. Therefore the current environment requires a balance of skills, for employees to be prepared for the challenges that the turbulent markets offers.
Organisations are under a moral obligation to satisfy the psychological contract through preparing their employees to be able to operate within the environment. Where this training is not sufficient, employees’ level of trust is reduced; this then leads to a negative attitude from employees, which can affect the customer relationship.
Skills of employees are broken down into two main headings, the hard (technical) that allow them to perform the tasks that make up the role, and soft skills that allow the interactions. Both skills need to be present to gain the most from the customer relationship, although it must be noted that soft skills will add to the benefit of hard skills, allowing communication of technical skills.
Therefore it can be concluded that the skill of the employee has a direct affect on this relationship, technical skills will help satisfy the customers knowledge and the confidence that the product is the correct one for them. But it is the soft skills that will communicate this clearly to the customer. Therefore soft skills are vital to produce and maintain a valuable customer relationship that the organisation can reap the benefits that include economy of scale, reduced advertising costs and lower production cost that come from repeat business.
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