New management practices and enterprise training

Since the early 1980s, Australian enterprises have become exposed to increasing levels of international and domestic competition. In the context of the globalisation of markets and the free availability of technology, enterprises have been compelled to seek improvements in performance from the better utilisation of their human resources. As a result, Australian enterprises, together with their counterparts in other parts of the developed world, have implemented new management practices (NMPs) with enthusiasm in a bid to harness the knowledge and creativity of their workforces.

The introduction of NMPs has a significant impact on employee training. The implementation of change programs often depends on extensive training programs that involve employees at all levels in the enterprise. The results of the National Survey of Enterprise Training undertaken by the Group for Research in Employment and Training (GREAT) and the Research Centre for Vocational Education and Training for the Office of Training and Further Education and the Australian National Training Authority (Smith & Hayton 1999) underscored the importance of this relationship between organisational change and training. The survey demonstrated conclusively that, after size and industry sector, workplace change was the most important determinant of the extent and diversity of enterprise training.

Aims of the research

This research explored the changing nature of the demand for training in enterprises adopting new management practices and the implications for training providers of meeting the requirements of the fragmented training demand created by these changes. The research examined five NMPs:

• the learning organisation
• total quality management
• lean production/high performance work organisation
• teamworking
• business process re-engineering

These five NMPs were chosen because they reflect the most commonly reported organisational change processes in the existing literature. The study addressed five questions concerning NMPs and enterprise training:

1. To what extent are Australian enterprises adopting the new management practices?
2. What human resource practices are associated with the new management practices? Do these human resource practices form recognisable bundles?
3. What training practices are associated with each of the new management practices and how do they relate to other human resource practices?
4. How effectively have Australian enterprises adopting new management practices been able to meet their training requirements from the VET system?
5. What should training providers do to be able to meet the changing demand for training from Australian enterprises?

Methodology

The study involved two forms of research:

• a survey of over 3400 private sector enterprises
• a telephone survey of 80 human resource practitioners to follow up on issues arising from the survey analysis

The survey was mailed out to a range of private-sector enterprises in Australia. To facilitate the reliable and valid measurement of various concepts numerous multi-item measurement scales were employed. These scales were derived from previous studies and/or developed from related literature. The sampling frame employed for this study was derived from the Dun and Bradstreet database of Australian organisations, as of July 1998. The specific sampling frame used in this study relates to the database of identified human resource (HR) managers. This sampling frame was chosen because HR managers are well positioned to make informed comment upon both the implementation of new management practices and training expenditure and practices. The survey was distributed to 3415 HR managers in August 1998. In an effort to improve the overall response rate and to gauge the likely presence of non-response bias, two mail-outs were conducted. The second mail-out commenced three weeks after the first mail-out. Overall, the effective sampling frame consisted of 3241 organisations from which 584 useable responses were gained; this translates to an effective response rate of 18.0%.

The sample for the telephone interviews was developed from a sub-sample of the sample used for the main survey. A group of 200 were selected for contact. Of the 200 enterprises contacted, 78 agreed to participate in a 20-minute telephone interview, representing a 34% participation rate. The research team drew up a protocol for the conduct of the telephone interviews. This is reproduced at appendix E. Interview participants were faxed the protocol for the interview, including a brief summary of the nature and purpose of the research 24-48 hours before the time arranged for interview.

Extent of the adoption of NMPs

The survey revealed a very clear picture on the extent of adoption of NMPs in Australian enterprises. The main points were as follows:

• The enterprises in the sample have a relatively strong pre-disposition for a learning organisation philosophy, the use of total quality management (TQM) and the use of lean production methods.
• Learning orientation, TQM and lean production are more common in small- to medium-sized enterprises with some industry concentration in manufacturing, retail, construction and finance/business services sectors.
• The use of business process re-engineering methods is less widespread and more evenly distributed by enterprise size and industry type.
• The use of work teams is quite widespread with 63% of enterprises reporting their use of work teams.
• In enterprises where work teams have been established, the majority of employees are usually involved but with only a limited level of decision-making discretion. However, smaller enterprises tend to involve more employees in teams and grant them more autonomy.

The impact of NMPs on training

Learning orientation is highly correlated with a surprisingly large number of the training factors. The presence of a learning orientation appears to drive:

• a higher level of training expenditure
• a proportionately greater attention to the training of managers
• a focus on training for behavioural skills
• a greater use of coaching and mentoring
• a greater level of decentralisation of responsibility for training to line managers

Total quality management appears to be more common in small- to medium-sized enterprises in manufacturing, construction and retail. From the results of this study TQM appears to drive:

• a higher level of engagement with the VET sector (use of competency standards for training and accredited training) but,
• a lower level of reliance on external training providers. These findings together suggest TQM is a factor in the provision of accredited training for employees using in-house training resources
• a focus on training for behavioural skills
• the decentralisation of responsibility for training to line managers

Lean production is consistently associated with cost-cutting measures reducing the formality of training and the level of infrastructure devoted to training in enterprises. Lean production appears to drive:

• a more informal approach to the training process
• less likelihood of a training plan existing
• less likelihood of a training manager or workplace trainers/instructors existing

Business process re-engineering appears to drive:

• higher engagement with VET (use of competency standards and accredited training)
• a higher degree of workplace delivery of training and the use of coaching/mentoring
• more even distribution of training between full-time and part-time/casual employees

Teamworking. A high level of teamworking appears to drive:

• a more even distribution of training amongst all categories of employees
• a higher level of workplace delivery of training and use of coaching/mentoring
• greater decentralisation of the training function

Higher work team autonomy appears to drive:

• a greater use of external training provision
• greater formalisation of training

Key findings from the project

The survey and the telephone interviews have identified important findings in six key areas:

• Small business. The survey revealed that size was not positively correlated with any training practices except for the existence of a training manager. It is the adoption of NMPs such as TQM and teamworking in particular that have emerged as the most important explanatory factors for training. Small businesses are high adopters of organisational change and are, therefore, likely to make significant investments in training. However, the infrastructure for internal training is not so well developed in small business. Thus, small business will tend to develop less formal and more innovative methods of training to ensure that the right skills are developed in the workforce.
• The use of the VET system. An important finding from the research is that much training is sourced internally. Organisations do not rely heavily on external training. The telephone interviews revealed a relatively high use of private training providers and consultants. However, private providers tended to be used only for certain specialised forms of training. The use of TAFE by enterprises in both the surveys and the telephone interviews was quite low. However, many enterprises in the telephone survey highlighted the importance of TAFE for the training of individuals. This highlights an increasingly important role for TAFE as a major provider of adult retraining and professional development. This lack of engagement with the VET sector was further highlighted by the low use made of competency standards for training within enterprises. Most of the training carried out at the enterprise level in Australian organisations is not based on competency standards and would, therefore, carry no recognition within the National Training Framework.
• Importance of the individual. Many of the enterprises in the telephone survey sample were undertaking individual training needs analysis and/or introducing performance management systems that focussed on the development needs of individuals. There was a distinct move away from traditional methods of training which imposed the same training programs on groups of employees or all employees. Enterprises were increasingly concerned to focus their training activities so that they could achieve value for money and this process involved a shift towards individualised training programs. Thus, not only are individuals becoming more important in driving the provision of training within enterprises, they are also increasingly the focus of much of the training investments that are being made.
• Nature of training. Training is becoming more formalised with a higher than expected incidence of written training plans and the use of formal needs analysis processes to determine the training requirements of the enterprise. Responsibility for training is increasingly decentralised to line managers and the incidence of specialist training departments and training managers is quite low. At the same time there is an increasing number of workplace trainers/instructors, which suggests that training is being delivered primarily internally and by non-specialist training staff. Enterprise training is not linked to the National Training Framework. Competency standards are not being used to inform most enterprise training and much of the training remains uncredentialled. This raises the issue of the skills of workplace trainers/instructors. The apparent low level of accreditation or understanding of the national standards suggests that few workplace trainers/instructors have received much training in how to train and instruct. This raises serious concerns about the quality of enterprise training delivered by workplace trainers.
• Importance of behavioural skills. The results of this survey show that behavioural skills are a major focus for training effort at the enterprise level and that many of the new management practices demand these skills from employees. This suggests a shift in the nature of skill requirements at the enterprise level away from narrow technical skills and towards a new training paradigm that emphasises the need for developing broad sets of generic skills in the workforce in order to increase adaptability. The VET system, with its focus on technical, job-related training, may not be well placed to deliver the kind of training that employers need. Thus, enterprises are compelled to provide the training themselves and in so doing, do not turn to the VET system to meet their requirements.
• Organisational change. The research has shown unambiguously that most NMPs are associated with higher levels of enterprise training. TQM, teamwork and learning orientation are all associated with higher levels of training activity and a greater diversity of training. Lean production, understood in most enterprises to be synonymous with cost reduction, is associated with the reduction of training activities. However, teamwork, the most prevalent of the NMPs investigated in this study, is associated with a more even distribution of training in the workforce and, where teams are given reasonable levels of autonomy, with more formalised and externally sourced training.