As Published in Business 2 Business, April 2009

Smart Training Tactics now!

By Ira S Wolfe, Success Performance Solutions

David Mahmood is a contrarian when it comes to managing his workforce.

While many or his competitors are cutting back and even turning out the lights for the last time, Mahmood is optimistic about his future. Mahmood’s believes that “in distressed markets, smart business people are able to find opportunity.”

“I’m old. I’ve lived through six major downturns. I’ve learned how to fail – and did. I’ve learned how to succeed – and did. During the Great Depression,” he shared, “75 percent of businesses failed. What I’ve learned is that smart people learn how to succeed under any circumstance.”

Mahmood, the 71 year-old chairman and founder of Allegiance Capital Corporation, exudes confidence when he says that his firm will be among the 25 percent of businesses that not only survive but grow during and following this recession. “The way to success is to be better, smarter and more competitive.”

That requires highly skilled people…and that requires training.

“As a young man I viewed training as ‘touchy-feeling stuff’. At the beginning of my career, I would have considered training to be a waste of time and money. As I gained more experience and maturity, I realized that all my assets go home every night. The best investment I can make isn’t in equipment or bricks and mortar but to help my people be more efficient and effective. If I’m going to make an investment it’s going to be in my people. If I can improve each person even by a small amount,” he says, “we expand our capacity and create a competitive edge.”

The return in investing in his people has been profitable and successful for both Mahmood and Allegiance Capital. Despite competing in one of the hardest hit industries – investment banking – during this economic downturn, his firm is busy. But Allegiance like everyone else is cutting back too. He and his team are taking stringent steps to reduce overhead. They have postponed or cut back several capital equipment purchases and upgrades. But training is not part of the cuts.

Allegiance Capital seems to be in the minority. Many companies still see people and training as costs, not assets and investment. HR Magazine in its February 2009 identified the “Ten Most Likely Cuts for 2009.” Topping the list was morale and team building – 60 percent of the respondents to an October 2008 survey felt these would be victims of the budget axe. Forty-eight percent felt professional development would be cut; forty-two percent suspected the same result for all staff training including anti-harassment and diversity.

Like Allegiance, Markley Actuarial Services falls into the half of companies that aren’t cutting back on professional development. “The economy,” says Vice President of Operations Cindy Cover , “has certainly made us tighten our belt.” She reflects back on previous ‘blips’ in the economy when Markley continued to invest in its staff. “By investing in ourselves we are positioned in our marketplace to be true experts. It is also a statement of commitment to our staff who we believe is our future. We will continue to reinvest in the firm, even when times are tough.”

Other companies are also resisting the temptation to trim the training budget. John Spence, a partner with Flycaster & Co., does training for a number of Fortune 500 companies. In a training needs assessment survey he completed recently, 30 percent of the respondents reported their training budgets have been cut with the average being 50 percent. But he’s careful to point out that it’s not so much that training budgets have been reduced, but that travel budgets have been frozen. The other 70 percent of respondents reported budgets were the same or increased from last year because these companies had fewer people to train.

“When you encounter difficult economic times,” says Richard Law CEO of Allyis, a small business with 215 employees, “that’s the time you definitely don’t want to cut back on training and career development.” Law offered a couple of reasons.

First there’s the obvious value to be smarter than your competitors. (Smart was a theme that ran through nearly every conversation I had with companies still investing in training.) “We place a high value on the body of knowledge our employees have. But beyond that it gives workers who have trepidation in this environment the motivation to focus on something positive, to improve their skills, to have a tangible way to improve their careers and feel they are making a contribution.”

Allyis offers all its new and recently promoted supervisors a two-day Supervisory 101 training. For all the employees the company sponsors more informal but continuous trainings in the form of brown bag and peer-to-peer knowledge sharing events. Allyis also works a lot with Microsoft technologies. This year they have a campaign for all employees to achieve more professional certifications to increase their stature with clients and with the partnership with Microsoft.

“We also have a budget line item for individualized training including tuition reimbursement for employees who self-select or who are identified by a manager.” To determine what trainings might be most helpful, Law holds a twice a year town hall where he asks all the employees what training they feel they need. That meeting is following by the development of individualized or group needs-based training.

Like all the executives and owners I interviewed, Law is putting more scrutiny on where the dollars are being spent. He insists they are not cutting back on training but have become more diligent at ensuring the training has a more one-to-one correlation to an employee’s career path and/or can contribute to the company’s growth. “If we’re paying for education, we want to make sure it will increase value for the company. There’s more competition than ever for everything we do. Anything that gives us a positive selling point to our clients is more important than ever.”

To measure the return on his training investment, Law polls his clients at least once a year. One of the questions he asks is “would you hire us again?” Last fall for the first time 100 percent of the clients said yes. The most common reason they gave was that they appreciated the fact that Allyis employees showed up on the job trained and ready to hit the ground running. They appreciated that Law took a proactive approach and bear some of the training costs before employees showed up at a client’s job site.

Scott Barer counsels employers regularly on the importance of training. It’s not surprising that Barer, an employment law attorney, is passionate about one training in particular. “If employers are going to cut back on training, the one area not to cut back on is Equal Employment Opportunity (EEO) training. It’s such a hot button area and employers are so at risk if they don’t conduct proper training to save a few dollars. It’s penny wise and pound foolish. “

When that inevitable lawsuit from a disgruntled employee comes, one of the ways for an employer to defend it is to show a “vigorous and aggressive training.” When an employer can document training, the claim, according to Barer, may be viewed as an anomaly. Without training, the employer has nothing to fall back on.

“It’s also foolish to think that as a small employer think that you are immune to Title VII.” What Title VII (of the Civil Rights Act of 1964) says is that every employer who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year is required to avoid any form of discrimination.

But that’s only federal law. Michael Moore, an employment law attorney with McNees Wallace & Nurick LLC, points point out that the Title VII threshold of 15 is only one set of laws. Pennsylvania, like many other states, have discrimination laws with lower thresholds. The Pennsylvania Human Relations Act generally applies to entities that employ 4 or more individuals. But many municipalities may have discrimination protections with even smaller thresholds. “To avoid exposure to discrimination suits, you must be very small, like less than 3 employees,” says Moore.

Both Barer and Moore agree: all it takes is one disgruntled employee who is laid off or fired and he can bring a lawsuit. Under current circumstances, employees may look to gender, age, race, ethnicity or religion as the reason their hours are being cut back or eliminated. Training isn’t only necessary in this environment, it’s the right thing to do.
Harassment and diversity training are not the only programs being offered to reduce exposure from disgruntled employees. Kalas Manufacturing is investing heavily in training their managers and supervisors. “Our training this year is focused on team communication, safety, quality and continuous improvement,” says Scott Smith, Vice President of Human Resources. “We pride ourselves in creating positive employee relations and associate involvement. In addition to improving productivity, we want to prepare our organization in advance of the Employee Free Choice Act, should it be passed.”

Despite all the positives, Mahmood advises managers and business owners not to expect miracles from training, especially during tough times. Training needs constant refinement and reinforcement. “All our training is designed to constantly re-focus us on our clients and the client focus constantly reinforces our training.”

That is a powerful lesson for uncertain times: the purpose of training is to improve customer focus. The last thing a business can afford to do these days is to take its eye off the customer – internal and external.

Sidebar #1- Results
David Mahmood’s commitment and passion to training his employees starts with him…but it certainly can’t stop there. Training isn’t always welcomed by employees. After announcing the business would be shut down for two days, Brent Earles, Vice President of Allegiance Capital, heard lots of comments like “I’m too busy” and “I’ve got clients to call, documents to complete, deadlines to meet.” He had to prepare everyone mentally to stop working in the business in order to “work on it,” stealing a phrase from Michael Gerber’s E-Myth.

Quite a few skeptics walked into the room on the first day. But by day two, everyone was on on-board.” Earles wants managers in other organizations to know that “while the investment is not easy to make, we know it’s how we get results.”

Sidebar #2 - Look at Me!
You can’t get any more basic than this: training people on how to get people to listen. Whether it’s during an economic boom or crisis, survival and success come down to this: effective communication. During good times, an organization might get away with one-way conversation. But when times get tough, messages that resonate and are crystal clear are an absolute necessity. If you are not speaking the same language as your customers, there is no way to make the sale or satisfy the customer.

CEO David Mahmood is passionate about making sure all his people are speaking the right language at the right time. But for David, language isn’t English, Spanish, French or Chinese but Driving, Expressive, Amiable and Analytical. “We must be communicating in a way that our customer responds to. I must provide the tools to our people to do that. We know that people communicate in four styles.” Mahmood’s energy level jumps a few levels when he talks about how deals are made in his business. He described a room with multiple behavioral styles sitting around the table at the same time. “We can have the buyer, seller, accountant, lawyer and even a spouse each having the same information but seeing it differently.” The facts don’t change but how Mahmood and his team present the facts must be in a behavioral language his clients understand. To accomplish this, Mahmood insists that all his employees are multi-lingual – at least when it comes to people reading through behavioral styles, most commonly referred to as DISC.

Norwegian Cruise Line is taking advantage of new technology to improve communication skills. NCL’s business language is English, but the company operates ships in parts of the world where English is not the native language – or may not even be spoken. NCL has implemented a program “Crew 2.0” which provides all NCL crew with access to the Rosetta Stone, the very popular language learning software. Dawn McAvoy, Director of Marketing and Operations at Rosetta Stone, helped NCL implement a program that would allow all 10,000 employees learn to speak to its customer base in their native language.

McAvoy is quick to point out that you don’t have to be a 10,000 employee company to gain immediate benefit from learning a second language. Nor do you have to spend an arm and a leg. With the world becoming more connected and customer markets more diverse, learning a second language -whether it be the universal language of DISC or spoken languages like Spanish or Chinese – can provide a business with the edge it needs to survive the recession and gain competitive edge.

Download a pdf of Smart Training Tactics now!

About the author

As president of Success Performance Solutions, Ira S Wolfe helps organizations find and hire the right employees and identify high-potential leaders. He speaks nationwide on hiring, workforce trends, managing the generations in a presentation titled Geeks, Geezers, and Googlization.