In order to undertake an effective strategic learning and development analysis, HR professionals need to hone their commercial awareness skills. Before you read any further complete the simple self-assessment tool below to assess your own general level of business awareness. Once you have done that, count the number of 'Yes' and 'No' ticks. If you ticked 'No' eight or more times, then your business intelligence may need to be improved.

In Part 1 of this series I explained the different types of Learning Needs Analysis (LNA) that training and HR professionals can conduct. Essentially these break down into three areas: organisational or strategic needs, departmental or operational needs, and individual needs. This month, I will focus on how to identify organisational or strategic learning and development needs. In order to conduct a thorough strategic LNA you will require a good awareness of what is happening or is anticipated to happen in the macro (far) and micro (near) business environment. You will need to assess how this will impact on the required skills, behaviours and knowledge of employees in the future. This analysis will help you to initiate, structure and implement a learning and development plan to effectively manage business change.

DRIVING FORCES OF CHANGE

One of the certainties of organisational life is that change is constant. Change is not limited to one event, programme or initiative. In business today, employees can expect an ongoing series of boundless changes rather than discrete and controlled events. Markets, technology and products are constantly changing; customers are becoming ever-more demanding; and quality and service standards are constantly going up. As a result, training and development needs are also constantly changing. The organisational or strategic LNA should take account of these factors.

Training professionals need to be aware of the driving forces for change in their organisations. For example, advances in technology - particularly the Internet - have led to changes in buying patterns and consumer demand. Organisations such as e-Bay have grown in popularity through offering the consumer the opportunity to buy and sell according to demand. Consumer desires and expectations are changing. Advertisers have coined the term 'kidult' to describe 20 to 35 year-olds who spend hours in front of a PlayStation and break all rules of age-related marketing. Older consumers are becoming increasingly important to companies. Over 6os now account for 20 per cent of the UK population. It is reckoned that over 503 control three-quarters of all assets in the UK and half of discretionary consumer spending power. Yet many consumers are time-poor. In the decade to 1996, the number of hours spent in shopping malls by the average American dropped from seven hours a month to two and a half.

The increasing development of technology and loss of cross-border trade restrictions has led to the rise of globalisation and increased competition. The Organisation for Economic Development (OED) reports that crossborder mergers and acquisitions and strategic alliances grew more than fivefold between 1990 and 2000. International joint ventures and strategic alliances increased six-fold during the same period. Statistics published in November 2004 by the Office of National Statistics in the UK show that the volume and value of mergers and acquisitions involving UK companies has grown 14 per cent between the second and third quarter of 2004 alone.

A further driver of change is deregulation. The UK car industry, for example, has seen the withdrawal of the 'block exemption' ruling. Prior to 2003, the European Union (EU) allowed manufacturers in the UK the right to select and appoint approved dealerships to sell their brand of cars. With block exemption coming to an end, garages throughout the UK have the right to sell any make of car. Deregulation has had a great impact on sectors such as the utilities, telecommunications and financial services in the UK.

There is a trend towards shareholders playing an increasing role in shaping the way organisations are run. In 2003, institutional shareholders were also prepared to use their voting power to veto pharmaceutical company GlaxoSmithKline's proposed senior management remuneration increases.

There has been a fundamental shift in the psychological contract employees have with the organisation that employs them. The term 'psychological contract' was first used in the early rgoos, but became more popular following the economic downturn in the early rggos. It is seen to be the employee's and employer's perceptions of their mutual obligations towards each other.

Changes in the work environment include.

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* The nature of jobs - more employees are on part-time and temporary contracts; more jobs are being outsourced.

* Downsizing and delayering of organisations - 'leanness' means doing more with less, so individual employees have to carry more weight.

* Decrease in importance of technology and finance as sources of competitive advantage - 'human capital' is becoming more critical to business performance in the knowledge-based economy.

* Increase in fluidity of traditional organisational structures - teams are often the basic building block; new methods of managing are required.

All these changes affect the skills, knowledge and behaviours that are required of the effective employee. The training professional needs to take account of these changes when compiling an organisational development plan. (see Figure 1 for a synopsis of the changes mentioned.)

PESTEL

One useful way to categorise influences in the far (or macro) environment is the PESTEL model, which relates to political, economic, socio-cultural, technological, environmental and legal influences that may impact your business now or in the future.

Political

Political influences relate to government or constitutional policies that may affect your business. For example, potential government legislation may allow businesses to register that they do not want to receive unsolicited calls. This may restrict cold calling on a business-to-business basis. The recent expansion of EU boundaries may have an impact on certain businesses.

Economic

Economic influences relate to the economy as a whole. Rates of interest have an impact on, for example, levels of borrowing. The strength of the stock market has an impact on the types of investment made.

Socio-cultural

Socio-cultural influences encompass factors such as class, age and gender as well as issues such as culture and diversity. For example, the drinking habits of people in France are different to those of people in the UK.

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Technological

Technological influences include the use of the Internet, advances in mobile telephones, Bluetooth and wireless networks, data management and customer relationship management systems that may have an impact on your business.

Environmental

Environmental issues have an impact on many businesses today. Corporate social responsibility is now higher on the public's agenda. Organisations such as Shell and Nike have been affected by adverse publicity relating to environmental issues.

Legal

Legal constraints also affect business performance. The Working Time Directive, paternity leave and the minimum wage are examples of this. In certain industries there are legal constraints imposed by regulatory or watchdog bodies.

THE EXTERNAL (FAR OR MACRO) ENVIRONMENT

The gaming industry is an example of one sector that has been affected by changes in the external (far or macro) environment. Traditionally, UK betting shops such as William Hill have always been a 'horses and dogs' business. As recently as iggg this made up 80 per cent of their business. The proliferation of sports and topics that people can now place bets on has led to huge changes in the world of gambling. The twin forces of technology and deregulation have also resulted in alterations. Gamblers can now place bets on the Internet, via interactive TV, on WAP-enabled mobile telephones, and via high-street shops and call centres.

Bookmakers are open during the day and evening seven days a week to cater for different work and leisure patterns. There are proposals on the table to further modernise the gambling laws in the UK which relate back to rgoos, and licence and regulate the industry. The proposed changes will impact the people agenda and hence employees' learning and development needs.

You can conduct a PESTEL review by interviewing key stakeholders in your organisation about the potential changes that will affect how your business trades, by accessing sources of industry knowledge and by keeping abreast of general business trends affecting the business world and your sector in particular.

THE INTERNAL(NEAR OR MICRO) ENVIRONMENT

By looking at the far environment the training professional can anticipate changes and their consequences in terms of learning and development. Within your own organisation the agenda for change will typically be identified via the planning mechanisms that are in place to establish organisational priorities. Most organisations have an annual planning cycle. In identifying organisational learning and development needs, the HR professional should be aware, and take account, of the organisation's plans for the future. These should include the following organisational drivers.

* Organisational vision. This is a picture of a desired future state of the organisation that is sufficiently appealing and compelling to drive change forward. Your business's vision should set the agenda for the type of learning and development that is important to the organisation. For example, one pharmaceutical company had a vision 'to be disease's greatest enemy'. The emphasis of its learning and development strategy was around innovation and continuous improvement.

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* Mission. This is the purpose of the organisation -what the organisation sets out to achieve.

* Values. These are the underlying principles and ethics that drive the organisation. One organisation with which we work has values around customer focus, teamwork, professionalism and innovation. Its training and development agenda is linked to these core principles.

* Goals. These are the objectives or targets the organisation is trying to achieve.

* Strategy. This is the approach the organisation is adopting to achieve the goals that support the strategy.

* Key performance indicators. These are measures of success the organisation uses to plot its performance.

The 'corporate diamond' (see Figure 2) explains the inter-relationships. One organisation, for example, had a vision to be the organisation of choice for its customers and employees. Its mission was to provide the highest quality service. Its values were integrity, service excellence, cooperation and efficiency. It established annual goals to:

* increase customer satisfaction and retention by x per cent

* improve employee satisfaction and retention by x per cent, and

* improve operational efficiency by x per cent.

The organisation developed a strategy for achieving this and some key performance indicators to measure its success. When a strategic LNA was undertaken by the training department, it established several learning and development needs to help employees fulfil these objectives, including:

* a service excellence programme aimed at all employees to increase their customer handling skills

* a leadership development programme for senior and middle managers aimed at improving their skills of motivation and leadership, and

* Six-Sigma training for key personnel to help improve operational efficiency.1

In order to best understand internal business needs, the person undertaking the LNA should ensure s/he gains the opinions of the key players in the organisation - by which I mean the people who shape the future strategy. Typical questions to ask during this process are as follows.

* What training is required?

* Why do you want this training to take place?

* What is your overall aim in undertaking this training?

* What are the expected outcome(s)?

* How does this link to the strategic plan?

* What business issues are you aiming to resolve?

* How does the training support the intended business outcome?

* What is the link to key performance indicators?

* How did you become aware that there is a training need?

* What is an example of the type of problem that is happening now?

* How often does this occur?

* What evidence do you have of this?

* On a scale of 1 to 10, where 1 is low and 10 is high, how important is this training need to the business?

* What would happen if you did not address this need?

* Is the training need short, medium or long term?

SWOT ANALYSIS

Once you have undertaken an analysis of elements in the macro and micro environments that will affect development needs, best practice is to do a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and weaknesses are internal to the organisation and can be used to capture a summary of the internal audit you have undertaken. Opportunities and threats relate to the external environment (macro and micro).

Table 1 shows a SWOT analysis for a GP's surgery. Once the SWOT analysis was completed and agreed by key stakeholders, priorities were decided on and a learning and development plan for the whole practice was produced. This included:

* lunchtime seminars by Social Services

* teamworking sessions with local surgeries

* changes in management training

* training in coronary heart disease (CHD), and

* interpersonal skills development.

COMMERCIAL AWARENESS SKILLS

In order to undertake an effective strategic learning and development analysis, HR professionals need to hone their commercial awareness skills. Before you read any further complete the simple self-assessment tool below to assess your own general level of business awareness. Once you have done that, count the number of 'Yes' and 'No' ticks. If you ticked 'No' eight or more times, then your business intelligence may need to be improved. Look over the questions again to help you asses the areas you would like to strengthen.

Here are some simple activities you can undertake to increase your general commercial awareness.

* Read the business pages of a quality newspaper each day/week.

* Subscribe to a magazine dealing with your industry sector.

* Book yourself on to a business awareness workshop such as finance for nonfinancial managers.

* Look at competitors' websites.

* Buy competitors' products.

* Discuss the competitive environment with your manager.

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* Go out with one of your sales people to visit customers.

* Look at the latest customer research for your organisation.

* Conduct a customer survey.

* Mystery shop your organisation.

* Find out who is considered to have 'best practice' in your industry.

* Attend business conferences.

* Join a local network organisation.

* Gain membership of the professional body for your industry sector.

SUMMARY

In order to establish business learning and development needs, HR professionals need to undertake a review of both the internal and external environment. This will help to identify the driving forces for change and the business imperatives for the future. The PESTEL and SWOT analysis are helpful means of producing this audit. In order to be effective in undertaking strategic organisational LNAs, trainers need to hone their commercial and business awareness skills.

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Reference

1. Six-Sigma is a management philosophy developed by Motorola that emphasizes setting extremely high objectives, collecting data, and analysing results to a fine degree as a way to reduce defects in products and services. The philosophy behind Six Sigma is that if you measure how many defects are in a process, you can figure out how to systematically eliminate them and get as close to perfection as possible. Visit http://whatis.techtarget.com/definition/ O,,sid9_gci763122,00.html to find out more.