March 1, 2015

Investing in Your Greatest Asset

Service centers ramp up in-house training programs to improve employee performance and groom leaders. - See more at: http://forward.msci.org/#sthash.q0Zwysgs.dpuf

“When times are tough, so-called soft expenses are the easiest things to cut,” says Paul Osterman, a professor of human resources and management at the Massachusetts Institute of Technology in Cambridge, Massachusetts. Indeed, Osterman’s research, summarized in a March 2014 report on manufacturing skills shortages from the Economic Policy Institute, shows that manufacturing companies in general have not increased their spending on training over the last five years—yet he says that many metals service firms are bucking that trend.

“The question,” Osterman continues, “is whether firms are willing to continue to have an investment and commitment to their workforce, as opposed to hire-fire policies that reduce worker productivity and quality.”

For many metals service centers, however, there is no question. Savvy companies in the industry are bolstering existing in-house training programs and creating new ones—especially programs that target the organizations’ future leaders. In part, some experts say this reflects the perception that the economy is steadily improving.

At Chicago-based Ryerson Inc., “we’re increasing the investment we’re putting into our training in the last few years,” says Mike de Leon, Ryerson’s director of talent management. As one of the largest North American processors and distributors of metals grows, de Leon explains, Ryerson must ensure that its employees know how to continually enable that growth. “We need to make sure our employees are equipped with the tools to drive that transformation and accelerate the growth of the company,” he says.

To that end, the company launched the Ryerson Academy in 2013. The six-month residential program trains up to 40 employees per year, primarily new hires, and is designed to give them the tools and knowledge to succeed as future leaders with the company. “We recognized that we may have had some inconsistent approaches to training around the company,” de Leon says, “which is why we built the academy—so we could have one consistent, robust program.”

Ryerson built a dedicated training curriculum and program based at its Minneapolis location, where employees learn the ins and outs of the company’s most critical areas—such as operations, supply chain, sales and marketing—through lectures and role-play exercises. The immersive program sends them out to some of the company’s 86 U.S. facilities, nine in Canada and three in Mexico to work with subject-matter experts in the supply chain group, for instance, or hands-on with products and machines in warehouses.

“We are more confident now that the training we’re giving people is adequate for them to be able to do their job. Before, we weren’t sure.”


Test Before Implementing

When designing its academy and other training programs, Ryerson followed a simple guideline: Test before implementing. “We pilot test programs with subsets of our population to make sure we’re on target before we expand it to a broader group of employees,” de Leon says. For an eight-day leadership training program that it began in late 2013, Ryerson first tried it out on some of its most experienced supervisors, then solicited and incorporated their feedback on the program’s modules, such as leading change, managing poor performance and communication skills.

Worthington Industries, in Columbus, Ohio, another of the industry’s 10 largest companies, also recognized that to drive growth it needed a more systematic approach to training future leaders. In early 2013, it took what had been a six-day class for entry-level leaders and expanded it into a leadership academy, encompassing four levels of increasing seniority. The entry level comprises a two-day training session for employees who could soon be promoted to an entry-level supervisory position, such as group leader or senior operator.

The second level, made up of four two-day sessions, targets employees who have recently become managers and trains them in leadership and management skills. The third level consists of three two-day sessions intended for those who have been in a leadership role for three to five years in areas such as hiring, communications and strategic thinking.

Lastly, the highest level identifies those who could become the company’s next general managers and vice presidents—and trains them for three days a month over the course of eight months. Among many experiences at this level, employees spend a day in the life with a plant operations manager and with a commercial sales employee, and they end the program by proposing specific business solutions for the organization. Of the six solutions submitted by the most recent class of top-level trainees, five were implemented in some way.          

Like Ryerson, Worthington trains its leaders to understand the entire organization, rather than just discrete divisions. “We don’t want our talent pool to be siloed,” says Tim Jameson, Worthington’s director of learning and development.

In the past couple of years, OmniSource Corp., a large scrap metal recycler based in Fort Wayne, Indiana, formalized a training program for new hires and current employees it identifies as potential leaders. The company drew up a risk assessment of its succession planning so that it could hire and train the leaders it would need. “That determines for three to five years how many people we need to recruit in our training program so that we can supplement our succession plan with top talent,” says Brian Rothgeb, OmniSource’s organizational development manager.

The program, which lasts from eight to 12 months, teaches three to five new employees—identified as “high-potential high performers,” Rothgeb says—about the entire business, from operations and transportation to marketing and support services. OmniSource either recruits these new hires—typically recent college graduates with impressive academic credentials—or selects them from the organization’s recent interns and current employees.


Smaller-Scale Training

Large companies aren’t the only ones taking a formalized approach to training. Four years ago, Westfield Steel Inc., a Westfield, Indiana-based steel processor with about 120 employees, began creating an on-the-job training process for new hires. Before then, the training was “more reactive,” says Abby Olson, human resources manager. “It was: Get them in the door, maybe partner them with whoever is available to help train in that department and then just let them try it out and see how it goes.”

But the company wanted to improve its retention rate and training quality. To begin, Westfield had managers track different tasks and their time frames for the company’s positions, from sales representatives to drivers of flatbed trucks or fabricators. “Now we analyze what each department needs as far as training and make sure we provide that,” Olson says. Based on those plans, the trainers—who are employees with related experience, strong job performance and an interest in training—teach the new hires.

Westfield’s managers tailor the training depending on the new hires’ previous experience and the capabilities they prove to have once they begin work. “You really don’t know someone’s capability level until they’re on the job,” Olson says. Consequently, each training program could last anywhere from four weeks to a few months. Employees spend part of the training period observing and part of it performing the work while being observed by their trainers. As training proceeds, trainees increasingly do the jobs themselves.

Even for smaller organizations like Westfield, the investment can pay off. “We do see that our quality is better” as a result of more intentional training processes, Olson says. “And we are more confident now that the training we’re giving people is adequate for them to be able to do their job. Before, we weren’t sure.”


Linking Training to Business Goals

“We’ve realized in our training programs that we’re constantly trying to link our business goals to what the training goals are,” OmniSource’s Rothgeb says. So for all frontline retail employees, OmniSource developed several courses to improve customer service, including one that covers how to treat customers and one on how to turn disappointed clients into satisfied, lifelong customers.

At Ulbrich Stainless Steels & Special Metals Inc., a North Haven, Connecticut-based, 700-employee global supplier of precision metals, continuous professional development is one of the company’s four tenets, says Tom Curtin, corporate director of human resources. “We take training very seriously,” Curtin says. Ulbrich has an introductory in-house training program for all hourly employees, with three days devoted solely to safety.

Like other metals service centers, Ulbrich has placed renewed emphasis on training potential leaders. In 2013, Ulbrich kicked off a new mentorship program, which trains 12 to 15 employees to act as mentors to current or new employees, exposing them to areas of expertise outside their own. For example, a new metallurgist might be paired with a product manager to learn about the commercial side of the business. “We wanted to engage people that were newer to the organization, inspire them and make sure we can retain them,” Curtin says. “We want to contribute to the development of our future leaders, so there’s a succession-planning component to it as well.”


Finding the Way

While companies agree on the “why” behind training—developing the workforce to improve growth—they don’t all agree on the “how.”

“I’m not a proponent of e-learning courses,” says OmniSource’s Rothgeb, though he adds, “Maybe it’s just that I haven’t found a great way of delivering it properly.” While he acknowledges that e-learning can be useful for simply relaying information, he prefers in-person training. “A lot more learning retention happens [that way],” Rothgeb says. “That’s where the real learning takes place—when you’re learning on the job.”

Rothgeb says that in-person classroom training not only helps employees retain information, but also helps them learn about and from each other. “Some companies make training part of an annual conference,” says Thomas L. Tanel, president and CEO of CATTAN Services Group Inc., a supply chain consultancy based in College Station, Texas. “You get them in a team environment,” Tanel says, “so you build camaraderie.”

For many companies, however, that’s simply not feasible.

At Marmon/Keystone, a Butler, Pennsylvania-based wholesale distributor of tubular products with about 600 U.S. employees, e-learning has proven an effective training model in part because it’s efficient: It’s not always cost-effective to fly employees to a central training facility and pay for travel expenses, says Linda McCue, Marmon/Keystone’s vice president of human resources. The company used to gather employees for two- to three-day seminars, but that proved too costly.

“There’s always a need for training,” McCue says, “but it becomes very expensive when an organization like Marmon/Keystone has employees all across the country.”


Looking for Cost-Effective Methods

So about three years ago, Marmon/Keystone began working with a vendor to provide its sales staff with training videos, each about 25 minutes long and devoted to various sales topics. The company has since added supervisory training covering topics like transitioning to a supervisory position and learning how to hire or discipline employees.

When companies need to bring in outside vendors as Marmon/Keystone did, they must do so carefully. Ulbrich’s Curtin says: Train the trainers. Whenever Ulbrich works with consultants, “we immerse them in our culture,” Curtin says. If consultants create training videos, for instance, he ensures they use Ulbrich’s own employees in those videos so they’re specific to their needs.

For Canada-based Metal Supermarkets, a small-quantity metals distributor with about 350 employees, it’s not a matter of choosing between online and offline training, but of balancing the two. In the past, Metal Supermarkets trained its franchisees at the company headquarters outside Toronto, and those franchisees passed on the training to their own employees. But the company found that strategy to sometimes be ineffective.

“We were doing field visits and finding that the staff were somewhat trained, but they were missing a lot of ingredients,” says Jason Jackson, Metal Supermarkets’ operations and development manager. One such ingredient: “A lot of employees of the franchisees weren’t closing the sale while they had the customer on the phone.”

Like Marmon/Keystone, Metal Supermarkets realized it wouldn’t be cost-effective to fly all of the franchise employees to one training location. So two years ago, it worked with a software vendor to create online courses that help franchisees train their own people. To determine what those courses should be, the company asked the franchisees themselves. Using that feedback, the company settled on 10 course subjects, such as product knowledge and customer service. Each 45- to 90-minute online course includes text, images, video, tests and audio—including seemingly small yet vital tips, like how best to answer the phone.

Now, Metal Supermarkets’ franchisees take the online courses before they travel to Toronto for two weeks of in-person training: one week of classroom training and one week of hands-on, operational training at a store. Then, before the franchisees can open their locations, Metal Supermarkets’ representatives identify any gaps in their knowledge and provide extra on-site training to make sure those gaps get filled.

“We need to make sure our employees are equipped with the tools to drive that transformation and accelerate the growth of the company.“


Measuring Impact

As companies expand their training programs, proof that those programs actually work isn’t always apparent. As organizations acknowledge the difficulty of putting in place quantitative metrics, especially for newer training programs, they rely instead on qualitative feedback—how employees respond to the training on evaluation forms and how managers assess employees’ post-training performance.

At Worthington, measuring the impact of training means that managers establish clear expectations with employees for what their training should accomplish, and then hold them accountable for results. Yet the biggest measure of the company’s training success, says Worthington’s Jameson, is the fact that an increasing number of employees ask for it. “We have a lot more people wanting to come [into training] and a lot more managers wanting to send their people than we have the capacity to handle,” he says.

Handing out course evaluations is an important piece, but it’s not the only one, Tanel says. Determining the true efficacy of training takes more than a questionnaire, he says; it requires ongoing conversations. “Managers should follow up with the trainees to question whether or not they got any value out of it,” Tanel says.

Yet the greatest measure of better-trained employees is a better-run company. “When an organization improves the skills of its employees, when it has more productive and effective employees, it improves the organization’s capabilities,” Tanel says. As Rothgeb says: “When we make an investment in our employees, we’re making an investment in our greatest asset.”

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