Training And Development In Business Management Free Sample

Abstract

Training and development are imperative aspects of organizational performance. This is because the environment in which most businesses function presently is constantly changing and is full of challenges. Most organizations have proved that training and development are crucial for an organization to meet the increasing customer demand, and face the competition and openings that are beyond their reach. Hence training of employees at a personal level depending on their position and skills is seen as a means for gauging the general performance of an organization. Because most companies are currently engaging in foreign trade, a specialized training approach for employees is vital to advance staff abilities, particularly in the field of information technology and marketing. Training and development provides tremendous organizational changes in relation to steady and uncertainty of environmental changes. Studies argue that growth and training programs improve the efficiency and performance of any organization currently in the existance. Organizations gain competitive benefit from development and training. This is achieved through eliminating performance deficiencies, staff retention; reduced accidents, damage and scraps; and meeting future staff needs. There is increased flexibility, stability, and potential for development in an organization.

The focus of this review is to explore the impact of training and development on organizational performance. It explores the importance of training and development and shows how this contributes to organizational performance. This review is based on secondary data which encompass an inclusive literature review. It discusses how learning and development relates to organizational performance, and further explores how employee performances arbitrate a positive relationship between learning and development activities and organizational performance. Through training, employees realize better income and improved working conditions, high self-esteem and increased job fulfilment. In addition, training helps in building employees confidence by appreciating the abilities they have. Thus this paper intends to confirm that there is a positive relationship between organizational performance and training. It moreover discusses the effectiveness of how learning and development work as a change agent in managing change within the organization, and the impact that training and development would have on the bottom line. It finally explores the significance of training and development in the process of selection within the organization. The research methodology employed in this paper is primarily qualitative. An analysis of findings is drawn from the discussion and conclusion arrived, which is that training and development has a significant impact on the overall performance of an organization.

Introduction

Randhawa, ( 2007.p114) define training as a process of learning that entails the acquirement of expertise, improvement of skills, ideas, rules, or modification of behaviours and attitudes to improve employee performance. Training is an event that results in professional performance. Moreover, training refers to a temporary process of sharpening the skills and knowledge of staff to enable them to carry out the responsibilities assigned to them. Once a worker is selected, positioned and introduced in a business association, he should be offered with training services to enable him to carry out his responsibilities with competence. Development refers to a permanent learning process employing a planned and logical procedure through which administrative staffs learn theoretical and conceptual knowledge for the universal purpose. It also refers to learning openings tailored to assist the workforce to grow. It offers common knowledge and approach which are important to high-rank employees and is not specifically skill-oriented. Efforts towards growth mostly rely on individual ambition and drive.

The main objective of the training is to assist the organization to realize its goals by adding value to its employees. Training is concerned with investing in human resources to facilitate them improve their performance and empower them to maximally utilize their talents. The specific aims of training include: to expand the abilities of the workforce and enhance their performance; assist individuals to develop within the company so that the prospect human resource wants can be met inside the organization; and to reduce the duration of time needed for staff commencing on fresh jobs on promotion, appointment, or transfers, and guarantee that they are totally proficient as fast and cost-effectively as feasible. Every training and growth program should include inputs which facilitate participants to acquire skills, learn abstract concepts and assist in acquiring vision to focus on the future.

Schneier (1994. p26) confirms that training plays an important role in the attainment of an organizations objective by bringing the interests of the organization and that of employee together. Currently, training is the most crucial factor in the world of business due to the fact that training raises the effectiveness and the efficiency of both workers and the organization. The performance of employees relies on several factors. However, the most crucial factor is training. This is because training is significant in improving the skills of the workforce. The employees who posses more work experience have improved performance due to increased skills and abilities gained from the work experience. Additionally, training affects investment returns. The performance of a business relies on staff performance due to the fact that the human capital of a business plays a crucial role in the expansion and performance of a company. Therefore, to enhance the performance of the staff and the organization, training is provided to the organizational workforce. Thus the objective of this paper is to confirm that there is a positive relationship between training and staff performance.

Training and growth increases the performance of employees. Studies confirm that staff performance is the crucial factor and the foundation that raises the general performance of an organization. Staff performance relies on several factors which include management, job fulfilment and knowledge. However, there is a connection between performance and training. This confirms that staff performance is crucial for the performance of the business, and training and growth is beneficial for the workers to enhance its performance. Therefore the aim of this paper is to portray the effect of training and growth on staff performance (Rothwell, Gerity & Gaertner, 2004.p45).

Studies confirm that training helps in developing managerial ability. Thus organizations should not focus on controlling the increasing expenditures on training because, by training and growth, the organization achieves more effectiveness and efficiency. This substantiates that training enhances the effectiveness and efficiency of employees and the organization as a whole. Currently, organizations realize that training is crucial for staff development, and the staff growth promotes self-fulfilling abilities and talents of the staff, reduces operational expenses, and confines organizational accountabilities and varying objectives and goals.

Employee training enhances customer care and outcomes and increases professionalism within the staff. Additionally, training improves effectiveness, thus resulting in efficiency in resource utilization within the organization. Starting training programs within the organization improves employee relations, and this, in turn, enhances team-co-operation and organization and performance. Training moreover minimizes the rate of staff turnover and enhances employee retention. Additionally, training is linked with advancements in planning and job procedures, leading to increased effectiveness and quality maintenance within the organization. Through training, employees realize better income and improved working conditions, high self-esteem and increased job fulfilment. In addition, training helps in building employees confidence by appreciating the abilities they have. Thus this paper is intended to confirm that there is a positive relationship between organizational performance and training (Lusthaus, 1999.p68).

When an organization is newly started, personnel and employee training are highly crucial because they form the organizational foundation. Additionally, existing organizations that initiate a fresh product constantly requires environmental training because clients may be aware of the organization but may be unfamiliar with the new product. Thus companies have realized that training and development are essential for business performance and that training is a continuous process. Training on personality development is additionally crucial for individual development to portray the organizational competence of their firm to the community. This also helps employees to carry out their internal and civil roles with integrity in order to preserve their honourable positions.

Statement of the problem and research justification

Different training entails practical, theory and situational approach for staff to get acquainted with their places of work. If every employee sustains and develops his skills gained through training, then efficiency in organizational performance is certain. This promotes changes and development, expectedly market approval and profit maximization would be the positive impact of that particular training (Bohlander, 2010.p365). Training on team building raises the organizational solidarity that can improve employee relations and reduce conflict among the staff in the workplace. This creates a good environment for workers and ultimately leads to improved organizational performance.

Normally the basic revolution of an employee for training and growth calls for adoptive conduct and changes of an individual’s organization to improve efficiency. Workers can increase their self-respect and value at the time of such training. Employees must develop and learn new abilities and use the newly acquired knowledge in improving their job performance. The general effect of employee training is organizational growth. Inclusion of training influences the organizational prestige and pride that guarantees prolonged existence of the organization in the industry. Additionally, training can drive the company to achieve more than it anticipates.

Aim

The aim of this study is to investigate the impact learning and development programs for employees have on organizational performance and how such processes can be utilized in order to create a better and more effective workforce.

Research objectives

There are several objectives to this study:

The first objective is to investigate whether learning and development be positively related to organizational performance. This is done in order to determine the viability of current practices and how they impact the operations of a company. The second objective entails an investigation as to whether employee performance actually has an impact on the operational capacity and capability of an organization through a positive relationship between learning and development activities. This is done in order to determine just how valuable learning and developmental activities are in creating an effective workforce and how this results in a more efficient and effective company. The third objective questions the viability of learning and development activities as effective “change agents” in managing changes within an organization.

From this objective, the consequences of change and how it is managed within an organization will be examined to see whether it can create positive organizational effects and limit the inherent problems that crop up when various changes are implemented within an organization. The fourth objective of this study questions the impact of training and development on a company’s bottom line. This objective examines the cost-effectiveness of training and development and whether it is viable and above all, cost-effective addition to a company’s operational structure. The last objective of this study questions whether training and development can be a so-called “cure” for weak selection processes within organizations. This objective attempts to discover whether employees can be trained and developed in such a way that they are able to overcome their initial limitations and become valuable resources for the company.

Research Design

According to Sekaran (2006, p. 1), a survey/questionnaire technique is used when the researcher is principally interested in descriptive, explanatory or exploratory appraisal, as is the case in this study (Sekaran 2006, p.1). The justification for choosing a questionnaire approach for this particular study is grounded on the fact that participants will have the ability to respond to the data collection tool by way of self-report. Thus, this project will utilize a self-administered questionnaire schedule for the purposes of data collection. An analysis of related literature will also be used to compare the study findings in order to develop a succinct method of analysis regarding current practices utilized by Ernst & Young and Siemens involving learning and development programs for their employees.

Significance of the Study

The significance of this study lies in its potential to show the importance of training and development programs in improving the operational performance within organizations and how such processes are indispensable due to the proven correlation between talented employees and the positive development of a company. It is important to note that as multinational corporations continue to expand into new markets, it has become increasingly apparent that effectively integrating managerial practices found in one business culture to another often creates a mixed result which at times reduces the operational effectiveness of a pioneering branch within a new location. Since globalization and multiculturalism have become synonymous aspects of the global market place companies, need to respond to the diverse consumer and cultural demographics to which they sell their products and services to stay relevant. Not only that, companies need to be able to address the very real concern of a potential brain drain as a direct result of local recruitment practices that would in effect steal valuable and talented employees way from the company.

Literature Review

Relationship between learning, development and organizational performance

Learning can be defined as the act of obtaining skills, knowledge, opinions and altitude while development entails implementing what is already acquired (Huber 1991, p.88). Learning as a multidimensional construct is a process of transforming skills and knowledge into the desired change in an organization. Empirical studies have revealed that learning and development are key concepts that affect organizational performance positively (Huber 1991, p.88). Learning and development in a business promote innovation, and thus they are positively related to organizational performance. Imperatively, myriad organizations look forward to devising new strategies that will enable them to achieve a competitive advantage. Youndt et al. (1996, p. 836) note that recent changes occurring within business environment compel them to promote learning and development in order to have a competitive edge since most of the traditional and conventional strategies often become obsolete (Vandenberg, Richardson & Eastman 1999, pp.313). Moreover, employing these concepts helps them to overcome impending threats while new skills improve future performance in an organization.

Numerous scholars attest that learning is part of development in an organization. In fact, Akgun et al. (2007, p. 501) propose that through learning, innovative capabilities in a firm are enhanced, a factor that elevates competitiveness and performance. Research conducted by Bates and Khasawneh (2005, p 99) has shown that the only way to implement new ideas, services, processes and products is by incorporating the concepts in a firm. In line with this, evidence has shown that learning and development affect performance in an organization both directly and indirectly. From a conceptual framework, the use of integrative models of learning in organizations has proved to stimulate growth and development of new ideas that in turn affects the performance (Bracker & Cohen 1992, p. 2). For instance, generative learning enhances change of culture, belief, values, policies, goals and strategies by use of feedbacks. In this case, it fosters analysis of past actions in order to propagate transformational change. Moreover, this type of learning challenges the current status of an organization with the aim of improving performance (Huber 1991, p.88).

In line with this, Vandenberg, Richardson and Eastman (1999, pp.313) write that adaptive learning is also a crucial model of learning since it stimulates establishment of development strategies geared to help the firm to cope with the immediate circumstance. Notably, there are abrupt changes occurring in firms and can affect the performance, especially if they emerged unexpectedly. These changes include recession, inflation and other obvious threats (Akgun et al. 2007, p. 502). Adaptive learning and development help to maintain the focal features and maintain the organizational status quo. Moreover, this makes it easy for an organization to restrict itself to identifying and detecting errors that can affect its overall performance. In most instances, organizations are prompted to develop rudimentary associations within its context to ensure short-term effects on the outcomes (Bates & Khasawneh 2005, p 101). Both generative and adaptive learning models complement each other to enable an organization to identify new markets, products, services and customers. Studies have shown that most businesses adopt these models of learning to ensure flexibility and adaptability, factors that enhance performance (Huber 1991, p.88).

Bates and Khasawneh (2005, p 102) point out that innovation in an organization is essential in enhancing good performance and that it comes about due to promoting learning and development. From a scholarly perspective, Ferris et al. (1999, p. 385) acknowledge that innovation comes about due to environmental changes. These changes trigger the development of new ideas through learning. Therefore, it is definite that learning and development are the key recipients geared toward enhancing creativity, pro-activeness and risk-taking. When we talk of innovation, we consider developmental changes experienced in management, marketing and entrepreneurship strategies. Having this in mind, Vandenberg, Richardson and Eastman (1999, pp.319) record that learning boosts applications, creativity and profitability that are crucial in determining organizational performance.

From the identified benefits, it is certain that learning and development in an organization is no longer a choice but a basic need. In fact, Youndt et al. (1996, p. 837) lament that it is impossible for any organization to ignore learning and development processes since they are regarded as key in enhancing capability and effectiveness in any organizational operation. Moreover, long term survival of an organization, its competitiveness and the potential to achieve high performance is highly dependent on learning and development programs. Notably, realizing the significance of these concepts has attributed to a great deal of determining the future performance of an organization. Ferris et al. (1999, p. 386) prove that there is a prominence relationship between these concepts and organizational performance in the sense that organizations that incorporate them inconsistently demonstrate negative trends in their outputs. That notwithstanding, researchers admit that unless these constructs are applied in line with organizational objectives, there might not be any relationship and hence integrated interaction is vital to ensure that desired outcome is realized (Bates & Khasawneh 2005, p 99).

Recent studies have expounded that performance management in an organization does not come an easy way, and this calls for one to incorporate these activities (Vandenberg, Richardson & Eastman 1999, pp.323). Essentially, learning and development helps to optimize coordination and management of human resources, making it easy to heighten competitive pressures (Huber 1991, p.88). From a general consensus conducted in myriad firms, evidence has illustrated that these two constructs are the major prerequisites for a triumphant performance. Findings derived from a study conducted by Bracker and Cohen (1992, p. 4) revealed that learning and development increases job satisfaction, a factor that attributes toward maximum production.

Learning and development activities in relation to organizational performance

Apparently, employees’ performance can be used to adjudicate a positive relationship between learning, development and organizational performance. Akgun et al. (2007, p. 506) advocate that employees’ performance is influence by numerous factors. For instance, harmony is crucial in learning activities in an organization. This enhances the collective approach and coordination of vital task. For this to happen, employees should have competent skills, values and knowledge that will enable them to adhere to strategic rules, policies and goals in an organization (Huber 1991, p.89). It has been observed that numerous organizations where there is cooperation among workers often experience productivity and high performance. Needless to say, job satisfaction boosts the morale of workers, and the impacts are determined by analyzing their performance. Ferris et al. (1999, p. 387) present a study illustrating that work output in the organization that has useful tools such as learning and development experience high performance. Youndt et al. (1996, p. 838) concur with this idea where he acknowledges that organizations that have recorded low employees’ performance are considered to lack development and learning program.

Huber (1991, p.90) elucidates that employees’ performance can be promoted by encouraging learning and development. This boosts the quality of services delivered, a factor that advances the organizational reputation. Lunenburg (2010, p.1) notes that whenever employees enrol in learning and development programs, they become flexible, responsible and are able to adapt to diverse changes in the organization (Bueno & Ordoñez 2004, p. 531). These programs also complement their indigenous skills and knowledge hence boosts their workforce. Therefore, it is anticipated that the increased performance of workers in an organization is a clear indicator that learning and development have positive effects on overall performance. Ferris et al. (1999, p. 391) comment that numerous organizations aimed at improving the overall performance by making use of these processes.

According to Lunenburg (2010, p.3), learning and development processes should be given considerable attention since they largely demonstrate or determine the relationship between employees and organizational performance. This is due to the fact that there are cultural assumptions that interfere with employees’ performance (Bates & Khasawneh 2005, p 109). Since human management is a crucial activity; this should be deliberated through learning. Though a hard approach of determining the relationship between performance, learning and development one should note that human resource output incorporates acquired skills to bring about a positive attribute in an organization (Vandenberg, Richardson & Eastman (1999, pp.361). Studies have shown that a positive relationship between the two variables is influenced by the organization commitment toward implementing learning and development. To emphasize this, Bates and Khasawneh (2005, p 109) assert that these variables; learning, development and performance in an organization are closely linked. In this case, either of the variables can be used to determine the relationship between the other two components. Employees’ performance is directly proportional to the outputs derived from learning and development (Raduan, Naresh &Ong 2009, p.2).

Impacts of training and learning on the bottom line

Studies have shown that there are numerous ways in which training and learning in an organization impacts the bottom line. Zwick (2006, p.26) notes that training and learning in an organization helps to cascade the entire strategies used to learn an organization. In this case, without training and learning, it becomes very difficult to implement and develop new strategies in an organization. Consequently, Youndt et al. (1996, p. 841) elucidate that the performance and end results in an organization are subject to skills and knowledge gained through training. Arguably, it is definite that the two processes help to identify critical issues that are vital in organizations. Whenever employees learn new strategies, they are able to exercise explicit alignment to achieve objectives and relevant goals in an organization (Bassi & McMurrer 1998, p.40). As a result, stakeholders in any business become strategy-driven, a factor that increases the benefits derived in the overall activities.

In line with this, training in the current century has been regarded as a crucial tool for enhancing business activities. To some extent, the kind of training given to employees in a business helps to predict the outcomes. Once trained, Zwick (2006, p.27) highlights that employees are expected to depict progress in helping the organization make attractive returns in its investments. Moreover, learning helps the, to achieve both long-term and short term objectives with ease. Nevertheless, studies have shown that most organizations decline to offer learning and training services to employees since they take much time before positive results can be realized (Vandenberg, Richardson & Eastman, 1999, pp.386). In this case, these activities are often ignored, and time that could have been spared is used as upfront to increase organizational performance. A critical evaluation has revealed that organizations that offer training and learning services to employees have high success rate than those who ignore it. Therefore, one can deduce that these practices have a positive cost-benefit ratio irrespective of the expenses incurred (Bassi & McMurrer 1998, p.41).

Research has revealed that learning is an investment that is directly supported through training. Akgun et al. (2007, p. 511) present an assumption that through learning and training processes, myriad individuals get to understand and analyze various structures within the organization. Furthermore, they get to comply with the authority, values, culture, and customs, decision-making and staffing. There are other added values that are experienced by workers once they undergo training. For instance, Zwick (2006, p.28) notes that employees benefit from career development, succession planning, performance management, budgeting and informed thinking. According to Bracker and Cohen (1992, p. 13), these activities aids individuals to reinforce desired output and set boundaries without the need of being supervised.

From a scholarly approach, Vandenberg, Richardson and Eastman (1999, pp.389) analyze that some of the leading organizations are at the forefront in investigating and utilizing diverse modalities to train and enhance the learning of their employees. These organizations ensure that employees get the appropriate knowledge and skills at the right time, manner, place and cost (Bates & Khasawneh 2005, p 102). Some of the notable modalities include classrooms and training stations. During the learning and training sessions, workers get an opportunity to practice role-play, blended learning and technology applications. Recently, the advancement of technology has enhanced distance learning where employees train and learn at through e-learning modalities (Jemenez-Jemenez & Sanz-valle 2010, p. 411). Having driven the skills and knowledge through diverse channels helps the organization to match workers skills with anticipated benefits.

Training and learning in contemporary organizations help to capitalize on employees’ ability and prospective through shared accountability. Zwick (2006, p.28) argues that competent organizations are those that aim at tapping into the potential and ability of employees. This is done through self-directed learning and training programs. In the long run, employs get an opportunity to identify their personal needs hence create their own learning plans. Moreover, having identified their strength and weaknesses, they are able to seek available opportunities to presuppose relevant knowledge and skills that will help them cope with the external and internal environment in the workplace (Huber 1991, p.97).

From a careful review of literature, every organization should experience the Transferability of acquaintance and skills back to the organization (Bassi & McMurrer 1998, p.41). This is one of the key factors that determine whether training programs are relevant in a business. Timing of training activities and impacting of relevant content to workers boost their appropriateness and quality of their skill. This also helps them to maintain and acquire new skills and knowledge (Tharenou, Alan & Moore 2007, 257). This is a sure guarantee of the organization’s future success. From a theoretical perspective, it is worthy to note that learning and training should be exercise regularly and designed to perform specific functions aligned to the needs of an organization. Zwick (2006, p.29)concurs with this idea as he argues that the continuous learning process acts as a drive to positive change in behaviour, habits and culture in an organization.

Learning and development as a change agent in managing change within the organization

Leaning and development acts as a change agent in an organization in numerous ways. What you have to understand is that organizational development and management are considered to be necessary and viable methods of enhancing a workforce. Therefore, the change agent is vital in enhancing readiness to meet future changes. Akgun et al. (2007, p. 507) note that systematic development and learning strategies aims to bring about the desired change in organizational culture. Moreover, the change is experienced in workers altitudes, beliefs, opinions, values and organizational structure (Bracker & Cohen 1992, p. 12). Chaos and challenges due to disruptive technology, competition and shrinking market are inevitable in business. This calls for a solid framework to impact strategies determined to drive the organization toward acquiring desired results (Huber 1991, p.92).

There are perennial events that occur in an organization and influence its performance either positively or negatively. Youndt et al. (1996, p. 839) point out those successful organizations employ concerted collaboration within and outside the firm in order to discover the appropriate change strategies. An effective change agent helps to stabilize the structure while maintaining or improving organizational performance. The only appropriate built-in mechanism to employ in such a case is none other learning and development processes (Huber 1991, p.93). These components help to boost the immunity of a firm as it struggles to renew its inclusive principles. The identified change agent acts as a catalyst that enables the application of techniques and theories from numerous disciplines. This aids in appropriate and collective decision-making while coaching workers to synchronize their mind in the desired perspective (Akgun et al. (2007, p. 510).

Myriad organizations have got systems that are vital in executing processes for positive outputs. Therefore, learning and development help to conduct a holistic interplay for all the systems through incremental and effective strategies. Bartel (1994, p. 421) notes that this change agent has a transformational effect in the sense that it put into practice effectual organizational adjustments. For instance, it helps employees to identify viable opportunities and apply resources for production processes. Whenever there is a change, workers are able to identify and develop their full potential. Youndt et al. (1996, p. 839) write that a change in organizations is inevitable, and hence once it occurs, employees get an opportunity to develop new experiences. In this case, the constructs bring about effectiveness in the diversified strategies geared to achieve goals (Bueno & Ordoñez 2004, p. 532).

Research has proven that exposing employees and stakeholder to learning and developmental processes will eventually help them to make informed and rational decisions (Raduan, Naresh &Ong 2009, p.2). For this reason, they are able to create a favourable environment within and outside the workplace amid impending threats. More specifically, learning influences how people in an organization relate with each other (Huber 1991, p.88). This easily attributed to the adoption of a common culture through consistent interaction. The change agent also enables workers to become more functional even in diverse technical fields such as accounting, finance and production (Tharenou, Alan & Moore 2007, p. 254).

One of the prime objectives of learning and training is to improve the overall organizations’ capacity, thereby enabling them to cope with internal and external relationships and functions. Bartel (1994, p. 423) laments that this can not be possible with the absence of interpersonal and teamwork processes. Once workers enrol in classrooms or learning and developmental programs, they develop groups that are essential for enhancing teamwork. In most case, they bond depending on their area of expertise. This makes communication effective where information is disseminated with ease and appropriate responses taken within a short period (Raduan, Naresh &Ong 2009, p.6). Moreover, skills, knowledge and values that result from experience gained help to deal with diverse challenges in organizations. Moreover, there is an aspect of change within the leadership arena. According to Bracker and Cohen 1992, p. 12,) learning and development inculcate change in leadership styles, a factor that helps to curb destructive conflicts that arise on a daily basis. Moreover, these constructs also constitute an increase in the level of trust, cooperation and responsibility among members in organizations.

Economic scholars argue that learning and development foster organizational renewal. In this case, it enables members to develop set of tools, action plan, altitudes and behaviours geared to maintaining a positive culture and performance in an organization (Ferris et al. 1999, p. 385). Besides this, there are crucial activities within an organization that are crucial in determining its progress. For instance, management, marketing, production risk analysis and evaluation are some of the vital activities that can not be carried out without competent skills. These activities bring about effective change once they are executed appropriately. However, this is not possible if any organization opts to ignore the effects of a catalyst or change agent (Akgun et al. 2007, p. 501).

Youndt et al. (1996, p. 840) elucidate that it is important to understand the nature of organizations in order to examine the impacts of a change agent. Failure to do this will eventually lead to poor planning of learning and development processes. Consequently, these construct might not impact any positive change in an organization (Lunenburg 2010, p.4). In order to understand and incorporate the necessary changes in an organization, it is imperative to consider numerous factors. For instance, the purpose of an organization helps one to inculcate changes that are geared toward accomplishing the objectives, goals and mission statement. In line with this, Bartel (1994, p. 423) states that understanding the organization structure prompts one to identify strategies of amending or improving internal structures. Moreover, this helps to evaluate where interior divisions are adequate to achieve the purpose of an organization.

Tharenou, Alan and Moore (2007, p.254) acknowledge that change in relationships within an organization is necessary at some point. Nevertheless, to bring about the change one needs to understand the relationship between units, tasks, requirements, resources and people within the firm (Ferris et al. 1999, p. 385). Another important factor to consider is that rewards or punishments administered in the event of results obtained during the production process. Understanding the rewards helps one to determine whether they motivate workers and in what way they do affect the performance. Consequently, members learn and develop personal strategies of avoiding punishment while increasing rewards (Huber 1991, p.99). Through learning and development, members get to identify useful mechanisms which to adopt to enhance survival of the organization. These mechanisms include disaster control, planning and budgeting.

Training and development and the weak selection process within an organization

Advanced studies have illustrated that training and development can be used to cure weak selection process within organizations. A careful review of literature conducted by (Bartel 1994, p. 421) to examine the benefits of training after selecting employees has revealed that this process is crucial in managing human resources. As a matter of fact, training does not only improve financial outcomes and performance but also influence performance intensity by human resource. In line with this, development in this context entails the irreversible improvement of knowledge and skills within the organization’s workforce ((Bartel 1994, p. 423). Just like training, development in the workplace has become increasingly important in boosting the performance of employees who enrol to work without appropriate skills.

In line with this, research has revealed that numerous organizations lack competent strategies for recruiting workers for employment. Consequently, they end up using weak selection criteria to recruit employees, a factor that calls for the need to establish training and development programs to boost their skills. Additionally, most organizations use a single strategy such as intelligence quotient criterion to select potential workers. Bueno and Ordoñez (2004, p. 531) acknowledge that single selection method is subject to numerous errors where training and development act as a buffer to overcome resultant weaknesses. Bassi and McMurrer (1998, p.42) assert that one of the notable benefits of overcoming weak selection through training and development is that they upgrade skills hence bring about positive change.

According to Lunenburg (2010, p.5), training is an essential tool that is used in an organization to equip employees with work-oriented skills. Most employees recruited to work in an organization experience shortage of skills despite the fact that they passed the recruitment test. Moreover, most of them gain certain skills through traditional training, and this makes their abilities not to comply with contemporary working conditions. It is deceitful for an organization to recruit workers on the merit of their academic credentials (Jemenez-Jemenez & Sanz-valle 2010, p. 414). This is due to the facts that, majority of them get to forget concepts learnt in schools and hence experience stagnation in their personal development. Furthermore, skills learnt for a long time gets obsolete, especially in a situation where they are not put into practice frequently.

Akgun et al. (2007, p. 509) write that some employees might possess basic skills but do not have adequate experience. In line with this, some organizations desperately recruit workers who are willing to work for them whereas those with competent skills opt to occupy high positions in other organization (Bassi & McMurrer 1998, p.42). Out of desperation, such organization are compelled to establish training and development programs which will help to sharpen worker’s skills, impact appropriate values and foster specialization (Bartel 1994, p. 423). In the event of recruiting workers to work in an organization, some of them lack the self-will to execute numerous activities due to individual differences. Training helps to liberate new employees from unworthy cultural assumptions and motivate them to participate in various activities (Bassi & McMurrer 1998, p.42). Organizations often face great pressure trying to change workers values, opinions and beliefs. This has largely been attributed by selecting workers top work on the firm without putting in place the ethical considerations (Bassi & McMurrer 1998, p.42). Definitely, training contributes towards holistic personal development and satisfaction within the working environment.

Bueno and Ordoñez (2004, p. 532) point out that there is no genuine selection criterion for recruiting employees in an organization. This is due to the fact that the notable strategies used do not consider the fact that human beings have got different abilities despite the similarities in their assessment results. Bartel (1994, p. 423) highlights that there are hidden abilities that can not be identified through the use of selection standards. For instance, there are aspects such as behaviour, ethics, mentality, morals and determinations that can not be evaluated through some standards (Akgun et al. 2007, p. 501). This fact proves that all modes of recruitment are weak, and hence intervention measures should be made to overcome impending bias. Unlike recruitment that is restricted to specific attributes, training and development processes are diverse, making it possible to address personal issues. Eventually, these processes increase worker’s confidence, esteem, self-control, understanding, motivation and interpersonal skills (Bassi & McMurrer 1998, p.41).

From a careful analysis of literature, most organizations select employees, basing on their fields of specialization. In this case, there are numerous posts such as leadership, management, operators and technicians (Raduan, Naresh & Ong 2009, p.9). Nevertheless, due to diverse changes in organizations, there is a need for an individual to have multiple skills in order to execute services in more than three posts. Therefore, training and developments enhance a multidimensional ability to perform diverse duties, a factor that has a lot of competitive advantages for organizational performance. Bueno and Ordoñez (2004, p. 533) admit that what makes people valuable and effective in an organization is their altitude which can be shaped positively through training. There are numerous challenges faced by organizations trying to assimilate workers with diverse mindsets. Luck of emotional maturity, morals, and confidence needs great training development extending far beyond concepts learnt in the classroom (Tharenou, Alan & Moore 2007, 259).

An empirical review of literature conducted by Bartel (1994, p. 424) revealed that the performance of an employee is as a result of his ability and motivation. Personal aptitude can only be elevated by training and developing available resources by the organization (Raduan, Naresh &Ong 2009, p.2). Organizations should develop the desires commitment and motivation to train and enhance development 0f workers. This will help them to cover up their weaknesses, especially in cases where recruitment carried out did not match with their skills. Bartel (1994, p. 425) notes that certain organizations are desperate for human resources, and this makes them obtain anyone who gets their way. This can be devastating and challenging in terms of performance management. Therefore, minor deficiencies and errors can be eradicated through training. Other than weak selection methods, there are other factors that contribute to poor performance (Raduan, Naresh &Ong 2009, p.2). Therefore, before employees embark on training and development processes, there is a need to diagnose these factors. Possible problems affecting performance include difficult task, low aptitude and lack of consistent improvement in an organization (Bueno & Ordoñez 2004, p. 533).

Methods in Improving Training and Development Programs within Companies

It must be noted that with the continued expansion of various companies into new frontier markets comes the potential for the company to face a variety of challenges to its current business model (Bishop 2011, p. 38). For example, some studies note that when companies expand into new markets, it is often the case that they do not do so alone due to a variety of rival corporations also seeking new opportunities within the same markets (Schwartz 2011, pp. 13-16). As a result, this creates the potential for any expanding company to lose many of its talented expatriate employees to local rivals (Schwartz 2011, pp. 13-16). Another factor that should be taken into consideration is the fact that expanding into new markets often entails managers and other employees having to deal with a variety of distinctly different business cultures and styles which may significantly differ from what they are normally used to (Brown 2010, p. 60). This would, of course, hamper operational efficiency due to the initial inability for company managers to effectively guide and instruct local employees due to a “gap” in business culture understanding (Brown 2010, p. 60).

Other such studies indicate that research and development into new ways of improving a company’s talent pool is one of the practices most often seen in technology-intensive enterprises (Weier 2011, pp. 94-95). This is due to the fact that technology has as of late been under a constantly accelerating level development and as a result has enabled new players to enter into markets whereas in the past distinct barriers to proper entry would have been present (Weier 2011, pp. 94-95). As such, failure to sufficiently innovate and develop human resources along with new technological trends and products can be thought of as a failure on the part of the managerial practices at a company since being able to anticipate trends and use them to either reach greater market penetration or keep the company relevant to consumers is a necessity in today’s technology-intensive market economy. First and foremost it must be noted that there are four characteristics that are in demand within a technology-oriented enterprise, namely: high market responsiveness, fast developments, low cost, and finally high levels of creativity, innovation and efficiency (Harris 2011, p. 44).

What must be understood though is that such characteristics are dependent upon the type of technical teams that are the backbone of the company wherein through the utilization of a variety of management practices a seamless integration of vertical and horizontal means of collaboration need to be implemented in order to create a stable organizational structure for proper operations and product development (Harris 2011, p. 44). This is where the concept of talent management enters the picture. Talent management can be described as the process by which a company develops an employee’s skills throughout their time within the company in order to take on a variety of job roles as well as to manage their progress up the corporate ladder through a variety of leadership roles (Keller 2009, p. 64).

This process also involves a reduction in employee “churn rates” which involves the retention of talent within the company in order to reduce costs associated with training new employees and ensuring that talented individuals do not go to potential rivals within the same industry (Keller 2009, p. 64). What you have to understand is that improving and retaining talent within any company is crucial for the success of a business due to way in which talented individuals are drivers for high performance and improved operational processes within a company. Oldroyd & Morris (2012) points out that it is not the quantity but rather the quality of a company’s workers that drives success no matter the type of business model or the popularity of a product (Oldroyd & Morris 2009, p. 23). It is based on this that various business development specialists such as Oldroyd & Morris (2012) indicate that it is crucial for any company that wishes to expand into different markets that their hiring and talent management processes are in line with long term views in relation to retaining employee rather than short term goals of merely keeping a position filled (Oldroyd & Morris 2009, p. 23).

By allowing a company’s hiring practices and talent management processes to be complacent, this can lead to serious detrimental effects on operational performance and result in increased costs related to having to fill positions over and over again as well as retrain the necessary individuals to fill them (Ruiz 2006, p. 1). With the expansion of Ernst & Young and Siemens into new markets comes the potential for various problems to crop up in reducing employee churn rates and ensuring standardization of performance across all levels of the company throughout its various locations. Present-day studies involving the expansion of technology-intensive companies into new locations lack a sufficient emphasis on the necessity of effective talent management strategies which this study will seek to rectify through the identification of perceived problems in current practices and the creation of recommendations to implement in order to create better corporate talent management practices across diverse international locations, in this case involving Ernst & Young and Siemens (Ruiz 2006, p. 1).

Employee Retention and Performance

When it comes to employee retention and performance, job satisfaction is the deciding factor behind such principles of corporate human resource development and as such should be examined from a multilevel perspective in order to ensure employees continue to perform adequately and stay longer with a company (Ananthan and Sudheendra 2011, pp. 120-125). There are many ways in which this can be accomplished, ranging from mentoring, continuous job training development and other such factors which contribute towards increased job satisfaction. Yet, it must be questioned which particular process is the most suitable for corporations and which is the most preferred by employees (Ananthan and Sudheendra 2011, pp. 120-125). As such, this section will conduct an investigation into the aforementioned processes which contribute to job satisfaction in order to determine which is the most effective in talent management practices. Before doing it is important to examine current industry knowledge involving the concept of motivation as well as negative present-day management practices in order to get a better idea of what is it that drives an employee to continue to stay at a particular company and to have an adequate level of performance.

Motivation

The first interesting point from this section on motivation is the various tools utilized to encourage employees to steadfastly work towards a goal or feel more compelled to work harder. This can come in the form of reward programs, company policies or varying degrees of empowerment that makes a job a little more “valuable” to an employee so to speak (Bowes 2008, p. 13). This is an important factor to take into consideration for companies since such programs increase employee performance levels. One example of this seen in modern-day firms is the employee bonus program which rewards hard workers and those who fulfil certain standards of attendance (Bowes 2008, p. 13). Another interesting point brought up by Pail (2012) is the assumptions on what drives an employee to perform better (Paill 2012, pp. 140-157).

This comes in the form of varying models which emphasize that most individuals are goal direct, are driven towards intrinsic rewards and need such rewards in order to work better. Such models of behaviour are important facilitators in understanding employee behaviours and, as such, are important in the creation of new policies and strategies in boosting employee performance (Paill 2012, pp. 140-157). For example, when using such models of behaviour a company may employ a rewards program for efficiency and productivity in order to encourage all employees to work harder as a result (Paill 2012, pp. 140-157). Other studies have shown how motivation initiates, directs and sustains an employee’s performance to the job they are accomplishing (Kim 2012, pp. 257-279). When examining this particular aspect, it becomes obvious that all employees need some form of motivating factor in order to work harder; without this, there is no incentive to improve one’s performance. For example, if a company does not have any means of motivating its employees to work harder, it is unlikely that their performance will improve and thus is an ineffective method of talent management (Kim 2012, pp. 257-279).

Management Practices

The first point of interest in this particular section are aspects related to the “hidden costs” of doing business. The reason behind this is the fact that businesses do not operate within a vacuum and have to deal with intense competitive environment forces on an almost daily basis (Patel & Conklin 2012, pp. 205-235). As such in order to meet these challenges companies often have to retain employees by offering certain benefits while at the same time institute costly training practices in order to improve performance, these factors result in added costs for the company. For example, if a company wishes to expand into a new field of business to stay competitive, it would need to train some of its current employees (Patel & Conklin 2012, pp. 205-235). The second point of interest within this section is the use of power and resources in order to encourage unfair labour practices (Yamamoto 2011, pp. 3550-3564).

The fact is that some management styles unfairly use the situations of employees in order to derive every single ounce of performance out of them while at the same time paying them a mere pittance. Such practices are beneficial for the bottom-line of the company but are considered unethical since it is a form of abuse (Yamamoto 2011, pp. 3550-3564). One example of this can be seen in Foxconn (one of Apple’s major suppliers) and how they supposedly abuse their employees in China in order to get them to work more. The final point of interest in this section are instances where serious problems are overlooked in favour of having work continue as usual (Yamamoto 2011, pp. 3550-3564). This can come in the form of environmentally damaging practices or employee abuse. The reason this is important is due to the fact overlooking such factors is highly unethical and would reflect badly on the company if discovered.

For example, the recent scandal of bribery in Mexico involving Wal-Mart definitely reflects badly on the company (Ryan, 2012, pp. 43-46). What you have to understand is that all the negative factors indicated within this section are indicative of company management practices that actually result in adverse effects on a company’s talent pool (Ryan, 2012, pp. 43-46). For example, practices which involving making an employee work harder than they should employ ethically dubious methods of operation, as well as other similar factors, are actually detrimental to talent management practices since they either create a situation where employees are more likely to leave the company, or the company would develop employees that are distinctly unethical in their own method of working (Ryan, 2012, pp. 43-46). It is based on this that any examination of a company regarding its talent management practices should involve the manner in which they treat their workers and the nature of the ethical codes of conduct of the company. Ethically sound companies are able to retain workers more effective and develop better talent pools since such practices encourage employees to stay with the company due to the overall positive regard for the company’s practices.

Examining Methods of Increasing Job Satisfaction

Mentoring

Mentoring in the case of job satisfaction involves guiding an employee via either a team leader or an adjunct employee that is willing to “take them under their wing” so speak in order to help adjust to the various aspects of the job, teach them how to do it well and guide them as they advance (Sange & Srivasatava 2012, pp. 37-50). The advantage of this particular method is that it eliminates the dissatisfaction employees have with a job by enabling them to see “the bigger picture” and have them develop a development plan from which they can ascertain what they want out of their current job (Sange & Srivasatava 2012, pp. 37-50). It must be noted though that while this method is effective, it hinges on the fact that the mentor will actually have time to address and guide the concerns of the person that he/she is mentoring (Chiller & Crisp 2012, pp. 232-242). In instances where there is sporadic mentorship, what often occurs is that employees fall back into old habits and job dissatisfaction occurs as a direct result. What must be understood is that mentorship which is a benefit is not as effective as a process/program instilled by a company that creates the necessary self-motivated interested within an employee and as such should not be considered 100% effective. It must also be noted that due to the size of certain organizations mentoring is at times not feasible and as such is limited because of this (Chiller & Crisp 2012, pp. 232-242).

Continuous Training Development Programs

When it comes to continuous training development programs, it is interesting to note that researcher such as Fernández-Aráoz, Groysberg & Nohria (2011, pp. 76-83), indicate that by continuing to develop employees in order for them to accomplish multiple different tasks actually results in a greater degree of job satisfaction since it takes away factors related to repetitious actions that actually cause job dissatisfaction (Fernández-Aráoz, Groysberg & Nohria 2011, pp. 76-83). From the perspective of Fernández-Aráoz, Groysberg & Nohria (2011, pp. 76-83), an employee actually loses satisfaction with their job over time unless some degree of variability is included in order to make the job more interesting.

For example, various studies in psychology that have attempted to use economic theories as a means of explaining certain types of human behaviour state that a job can be construed as being similar to the concept of marginal utility wherein the more you consume a particular product, the more likely you will consume less of it later on (Grissom 2012, pp. 400-418). The same can be said for doing the same job over and over again wherein it will eventually reach a point where the marginal utility derived from doing it will be negative, thus resulting in job dissatisfaction. In order to avoid such an occurrence, it is recommended that continuous training development programs which allow employees to assume different job roles, as well as sufficiently, progress in their career are an optimum method for increasing job satisfaction since this enables them to “reset’ their marginal utility so to speak as they are placed into new roles (Grissom 2012, pp. 400-418). This creates continued interest, the desire to learn and improve, which in the end results in high degrees of job.

Methodology

Research Design

The present study will utilize a primarily qualitative research design to explore the impact of learning and development programs for employees have on organizational performance and how such processes can be utilized in order to create a better and more effective workforce. Furthermore, the researcher will also rely on such qualitative methods as questionnaires in order to examine the overall effectiveness and opinion of employees regarding the current practices involving learning and development within their respective organizations. Sekaran (2006) observed most qualitative studies are either descriptive or experimental.

The study will utilize a descriptive correlational approach because participants will be measured once. According to Sekaran, a questionnaire technique is used when the researcher is principally interested in descriptive, explanatory or exploratory appraisal, as is the case in this study. The justification for choosing a questionnaire approach for this particular study is grounded on the fact that participants will have the ability to respond to the data collection tool by way of self-report. Thus, this project will utilize a self-administered questionnaire schedule for purposes of data collection. An analysis of related literature will be used to compare the study findings with other research on the overall impact of learning and development programs for employees have on organizational performance and how such processes can be utilized in order to create a better and more effective workforce.

Instrumentation

As mentioned earlier, aside from learning and development data, this study will utilize a set of questionnaires in order to examine the perspective of various employees at Ernst & Young and Siemens regarding the various methods of talent management utilized within their organization. This can consist on how it affects their ability to work, whether such processes creates more efficient and effective teams, does it boost their inherent motivation, does it factor into their decision to stay longer with the company, do such programs actually improve the way a company functions etc. It is based on this that the research questionnaire will be geared towards members of the aforementioned companies and will focus on issues that primarily affect organizational performance and employee development. Another factor that should be taken into consideration is the necessity to choose people who are more aware of the impact of learning and development programs and who take a more active part in this process. This can consist of HR personnel, managers, employees specializing in talent management etc. Cluster sampling will be particularly helpful for the purpose of this study. This approach will enable the researcher to find the respondents quickly and above all, safely.

Data Collection Process

Anderson (2004) notes that research that is performed in a rigorous manner can lead to more effective practices than decisions based mainly on intuition, personal preferences, or common sense. It is based on this that the researcher will utilize the views garnered through the questionnaires that will be distributed along with learning and development data in order to develop a sufficient platform from which effective and above all accurate conclusions can be developed. The data collection process will actually be quite straightforward; several weeks prior to leaving for various locations within London, the researcher will utilize the internet in order to contact Siemens as well as Ernst and Young.

The researcher will compose an introduction letter in order to inform the organization of the intent of the researcher and whether it would be possible to conduct a series of interviews based on the attached questionnaire in order to ascertain the impact of learning and development programs for employees on organizational performance. By asking permission prior to the data collection procedure, this ensures that the researcher will not waste time in having to contact the necessary organizations upon arriving and can immediately proceed in collecting the needed data. The questionnaires will be distributed individually to ensure its alignment with the aforementioned anonymity of the study results. It will also be necessary to assure the participants of the safe storage of information before the interview begins to encourage them to give genuine answers. It was determined by the researcher that responses will be more favourable if the questionnaire is given privately. This approach will mitigate accommodation costs, thus making the project more cost-effective.

Evaluating the Questionnaire Responses

Two methods may be used to score the test, raw score and relative. Both will be used for comparison in the study. The raw score method is a simple sum of the responses within each scale. This involves merely examining which responses seem similar to each other or which are widely divergent. The relative scoring method compares scales for relative contribution to the overall score. The relative proportion for each scale is found by dividing the individual mean score for the scale by the combined means for all scales. Thematic analysis will also be used to identify themes. Patton (2002) describes this type of analysis as inductive analysis and states that most qualitative analysis is inductive in the early phases when the researcher is trying to identify categories, patterns, and themes. As such, it is expected that by utilizing the process of reading and re-reading the data, emerging themes within the collected data sets can be identified. Fereda (2004) point out that thematic analysis can help the researcher to demonstrate rigour. Having other individuals review the transcripts will enable different individuals to form themes from the data (Freda 2004, p. 203).

Findings and Analysis

Survey results

The data collection methods applied in the study acted as the main platform for dictating the viability of the findings. The data collection methods were developed in tandem with the nature of research orientation to enhance better harmony and progress. The study applied both the primary and the secondary data to not only assimilate the results but establish well-founded considerations for the achieved results.

Based on an examination of the relevant findings from the study, it was seen that training and development was a crucial process for the organization in order to become lean and perform efficiently. From the results of the study alone, it was seen that 98% of the total respondents unanimously agreed that training and development not only enhanced performance but also acted as a change agent in effectively managing change within an organization. This backs up the initial assumptions of this study regarding the correlation between training and improved company performance.

Moving forward, it has to be noted that a close correlation seems to be evident between management, training and development as well as the subsequent performance of employees within a company. The findings of the study reveal that an organization’s management team formed the key factor in enabling a company to implement the necessary training systems in order to properly accomplish their duties and establish high levels of performance within their respective companies. As indicated earlier, the study sought to reach to obtain much information from employers and employees as they formed a major platform in determining the effectiveness of training and development in an organization. Though all the respondents, as indicated, above are essential, this study gave special reference to the employees as they were directly involved with the execution of tasks both inside and outside an organization. Therefore, as indicated in the objectives, the study sought to determine the role of management in training and development as well as the application of policies and practices of a company.

Benefit	Number of Responses	Proportion (%)
Enhanced relationship	36	4.8
Brought change	129	17.1
Enhanced performance	189	25.1
Boosted output	153	20.3
Brought customer satisfaction	165	21.9
Enhanced socialization	39	5.2
Others	42	5.6

It is quite clear from the above illustration that enhanced -performance is considered as a key benefit that most of the companies in the U.K. undertaking training and development perceive as the most important as reflected by the answers of the respondents. This is followed by the fact that training boosts performance that culminates to customer satisfaction through enhanced service provision, which is considered by 21.9% of the respondents. Boosted output and change follow closely with 20.3% and 17.1% of the respondents, respectively. On the lower side, the unspecified benefits with 5.6% of the respondents are considered a greater benefit with enhanced relationship and socialization with 4.8% and 5.2% of the respondent, respectively.

What you have to understand is that it is actually quite difficult and complex to succinctly establish a correlation between training and its effect on employee development. There are far too many variances to take into consideration due to the inherent complexity of the issue. It was from this consideration that this study concentrated on the observable outcomes of the policies and practices. The end result was that managers interviewed within the study were quick to point out that if employees were provided with the proper tools, they in effect could do their jobs better and more efficiently. It was also evident from the findings on the impact of training and development that training limited resistance to work performance and boosted confidence among employees. About 70% indicated that some work processes required higher skills which were critical in boosting their abilities to perform effectively.

Such a facto was similarly noted in the study of by Kurt Lewin who expounded on the fact that organizational training and development of staff was just another part of organizational change for technology-intensive companies wherein developing staff who could “flow” with changes in the company’s business environment was just as important if not the most important factor when it comes creating a successful operational structure. It was also evident from a cross-section of the respondents that even though it was the role of an organization’s management team to facilitate the establishment of the correct training environment, it was necessary that employees put greater effort to ensure that an entire training process is holistic as they were important in the implementation of an organization’s policies. It was clear that organizational training and development needed to involve performance evaluation since this aided min identifying key areas of weaknesses and how they can be improved. Most respondents were of the view that the lack of effective training was due to the inability of management to evaluate employee performance, a consideration blamed on overwhelming market demand. They agreed that training and development after an evaluation was crucial in revealing key potential that has not been tapped. Besides, it equips an organization with a greater opportunity to organize employee training for greater efficiency in the highly competitive market.

Analysis

This research was performed through the use of a Linkert 5 point scale in order to examine the various pieces of information that were provided by the respondents of the study. Such a method has been noted as an effective means of examining subjects general predisposition towards a particular orientation and as such can be considered an invaluable method of examination when combined with the general interviews that were also utilized within the study. It must be noted though that when examining any sets of data, it is important to determine the dependent and independent variables. In this particular case, the training demands of the workforce was chosen as the independent variable while the dependent variable was the various opinions of various managers and employees within the company regarding the overall use and effectiveness of employee training and development sessions.

Within the study, employee satisfaction regarding the overall method of training and their belief in the use of the training was also examined. This was in direct correlation to their general perception regarding the current operational performance of the company Vis-à-vis the level of training they received for their job. It is expected that through this section, the correlation between the quality of training and a company’s performance can be seen.

Rating	Total Number of respondents
5	76
4	79
3	34
2	17
1	45

Based on an examination of the data presented above, it can be seen that varying numbers of respondents within the study had different opinions regarding the correlation between training and operational performance. What the study did reveal, though was that a large percentage of the respondents involved in the study believed that there was a direct correlation between training and development and the operational performance of the company. Variables that were included in this study include the effectiveness of different levels of communication, overall organizational design, cooperation between workers and upper management as well as the ability of managers to actually apply the methods of training required by the company.

The study of Branine (2005, p. 459) adds to the data presented above by showing that the ability of an organization to progress within their given market is inherently dependent on the ability of workers within the organization itself to work as a team resulting in their ability to meet specific company goals and objectives. It is worth noting that these variables as they came out in the interviews and questionnaires, required inclusive harmony that not only took considerations of the directly visible outcome of the human resource roles but curved their intrinsic views of the same considerations to them. In this respect, these variables were highly effective in ensuring that the necessary cohesion between the observable results and the inner perception of the consumers and the workers. Based on the results of the study it can be seen that in order for management to derive the best “value” from training and development the most effective way of doing so would be through team-based operations. What you have to understand is that organizations the utilize teams are able to operate at a higher capacity due to the concept of shared responsibilities resulting in a better method of lesson internalization resulting in higher levels of commitment and innovation (Tung-Chun 2001, p. 440)

Discussions

Mechanisms for training and development

Organization management icon Peter Senge famous models reflect the importance of training that boosts organizational performance and knowledge management. Selby-Lucas, Swart and Duncan (2003, p. 573) indicate that learning and development creates a mechanism that seeks to continuously assess, reflect, and establish methods of improvement in organizations. From the findings, it is clear that learning has gained greater acceptability institutions’ managements continue to adopt it for greater performance, organizational change and improved employee relationships. Aaberg et al. (2009, p. 19) highlight that organizations adopt training and development to continuously improving knowledge and innovation among workers.

Findings from various studies on the same notes that the process of training and development requires all stakeholders especially the top, middle-level management and employees at the lower levels to develop a keen understanding of its importance in an organization. This will enable them to evaluate an organizations performance levels and reflect on various strategies critical for drawing methods for improvement. According to various responses from findings, the reflection can be comparative or drawn from creativity to create new orientation in work performance. Heinrich (2000, p. 234) indicates that reflection and evaluations are very idealistic in that both practices are critical application in complex systems to ensure that room for improvement is created for all achievements, whether positive or negative. Systems approach model echoes that reflection and evaluation incorporate the needed performance improvement and emphasizes on change (Aaberg et al. 2009, p. 19).

Systems thinking characterize training and development as important processes through the use of various factors to assess and measure organizational performances. Besides, personal mastery and mental models point out that individual commitment is very critical towards progressive learning and development (Aaberg et al. 2009, p. 19). As noted in the study, learning and development in an organization need to emphasize on the need for personal mastery. This could because training in an organization is holistic and to be a sum of all stakeholders learning. It is imperative to note that management does not fully influence personal mastery, but it creates a culture that works towards influencing learning and development.

Besides, training is a process that requires sharing organizational visions and working in teams. This is critical in that it makes a learning organization to have a shared objective at all levels of application. Smith-Crowe, Burke and Landis (2003, p. 863) indicate that learning and development in an organization are developed when common visions have been developed as this easily nurture behaviours, values, and norms towards the need for improvement. Training and development of a workforce is also built on the belief that workers and employees learn better and faster in teams because they get the sense of security and identity with their colleagues compared to their senior management. The systems theory strongly supports this particular consideration as it notes that collaboration develops the need for learning. This reflects Peter Senge’s position that workers who have stronger ties with their colleagues are able to learn and develop their skills (Molina and Callahan 2009, p. 400).

The role of training and development change management

Change in organizations through training and development of a workforce is perhaps one of the realities that cannot be avoided in the fast dynamic world. However, questions on how effective training ha been used to effect change bin organizations remain to be answered. While this question formed the major basement of the study, it was evident from scholarly sources such as that by Goel, Rana and Rastogi (2010, p. 104) that the role of management in ensuring it trains its workforce to bring out the needed force to generate new ideas and bring workers aboard for better performances. At this point, the argument brings out the role of change agents and how they are trained and developed in establishing the mechanisms and strategies in an organization. Many organizations, especially those that cannot train its members, have greatly relied on external change agents to influence the progress of their organizations.

However, Molina and Callahan (2009, p. 400) and Selby-Lucas, Swart and Duncan (2003, p. 573) appear to disapprove the practice that involves the use of external change agents and calls for the introduction of new models of operations either to address a given problem or to create a roadmap or for higher profitability. As noted from the literature review and the study, external agents as the name suggests are outside forces, and their proposition should be rejected by the existing organizational culture. Training and development should be considered as crucial in imparting new skills to the existing human resources. This will be critical and will act as a foundation for forming internal change agents. Internal change agents, unlike the external change agents, have been very important in effecting changes as their propositions are easily accepted since employees easily identify with them. Kurt Lewin’s freezing and refreezing model highlights the very critical outline and depth that change application via the use of internal change agents need to adopt (Smith et al. 2003. P.31).

In the review of Kurt’s change management theory, Branine (2005, p. 459) explains that training creates a new understanding that dawns the members on their role in improving their organization as opposed to the consideration that it is only an employment unit. Therefore, a holistic force becomes evident as all departments float with new proposals either at the personal or as a team for improvement. Bryman (2008, p. 161) uses a metaphor to liken a ship sailing afloat towards its destination to an organization. In it, he indicates that the ship remains subject to major and minor unexpected disturbances that must be addressed for it to effectively reach its destination. From an organizational training perspective, it is clear that training and development are considered as the major tool that the management holds to indirectly to facilitate addressing thee disturbances. Particularly, the metaphor points at the proactive and diverse nature of the people in the management towards addressing the emergent disturbances.

Agreeably, the opportunity that training and development of human resources provide becomes an expanded platform that organizations use to generate more alternatives for addressing challenges. The metaphor echoes the ideas expressed by Smith et al. (2003. P.31) which indicate that training and development create the sense of continuous change as the ‘ship’ must be monitored at every instance to hasten its speed towards the destiny and improve the quality of products to colonize the market. Notably, the study reflected the fact that training impacts on an organizations’ culture in terms of effecting change. While this has been strongly debated and interpreted differently by different scholars, it is worth underscoring that training plays a critical role in changing an organization’s culture towards gaining skill, knowledge and enhancing relationships towards the achievement of main objectives. This position is also expressed by Romero et al. (2007, p. 311) who view training as an empowering tool which does not only boost the performance of workers but also facilitate the culture of involvement, consultation and integration in decision making.

Schniederjans, Schniederjans and Schniederjans (2009, p. 887) posit that training and development become incorporated when knowledge management is employed in an organization, and these influences change. Agreeably, and as reflected by the study, training and development is indeed a factor of enrichment for an organizational culture by building the needed autonomy that builds the demand for higher objectivity. Mary Hatch’s model of cultural dynamics contains very fundamental concepts of organizational culture, learning and development towards attainment of organizational success. The culture of an organization has comprised of key subcultures that run deep within the organization’s network. Therefore, training and development facilitates the development of change by introducing new beliefs, trends and models of communication work towards enhancing the overall value of the employees. Rodriguez-Ulloa and Paucar-Caceres (2005, p. 320) indicate that changing an organizational culture at any particular time might be very hard, but lauds Hatch’s model by noting embracing learning develops the ability of an organization to create change and its orientation with minimal resistance.

Respondents from the study were of the view that changing the culture of an organization presents a major setback to training and development. This bears much weight in the sense that many managers have not embraced the need to develop their staff after employing them. From the literature review, it was clear that there is a need to introduce new propositions to the human resources through training and development sessions by the human resources management to invoke a new approach to cultural outsets. Effecting change calls for an organization’s management to challenge employees on the need to embrace learning by providing the necessary platform for such changes. The use of teams and teamwork as a cultural organization factor should be used to achieve workforce development. Employees are known to easily adhere to teamwork ideas after realizing the related short and long term benefits. It is clear that training and development are essential in building a better organizational culture. However, this has been disputed by certain authors such as Singh and Sharma (2011, p. 120) and Cegarra-Navarro and Arcas-Lario (2011, p. 635) who indicate that while training is critical in creating a stronger working force, it can also limit the overall returns. In a more classical style, they argue that training is costly and may result in a workforce shifting to other departments or organizations that can pay well for their acquired skills.

Indeed, after training, most employees and managers expect rewards and salaries to move up irrespective of the organization status. Antonio et al. (2010, P. 115) are of the view that this may present a major challenge and could perhaps be the reason for the limited training of workers in organizations. The above argument links with the response from various respondents that training and development creates a high-level operating standard that creates competition with itself. Many organizations that do not wish to invest in the critical process of training and development seeks an equal force and outsources already trained workforce from other areas. The argument above, however true it seems to bear two major aspects of deficiencies. One such problem its failure to fully recognize the critical role played by training in developed employees towards improving profitability. Besides, it does not respect the main aim of training and development, which is to create a much needed competitive advantage over others in the market. Improving workers salaries and safeguarding their tenure after a training and development practice is part of the motivation for the highly valuable and skilled employees.

Training and organizational culture

It was noted through an examination of the relevant literature that of the main problems within a company was its organizational culture. The reason behind this is quite simple, as indicated by cultural theory the culture within a particular organization impacts the way in which managers train employees and as a result, defines the focus on their work and their ability to meet the specific organizational objective. It is based on this that various studies that have examined the organizational culture within a company have stated that in order to achieve efficient and effective operations it is important to implement positive learning cultures within a company since this encourages employees to learn, improve and do their job well.

An examination of the data from the study conducted by the researcher showed that they were particularly emphatic on the need for a culture that is based on the need for training and development for progress in processes that aid organizations in governing utilization, dissemination and creation of knowledge development. Further examination of this particular aspect through the literature review shows that this particular model of training helps employees by developing a feedback system that encourages training for the sake of the improvement and governing of knowledge. By doing so, this encourages people within the organization to move forward as a team due to the creation of what can only be defined as a “joint sense of identity” due to the way in which this particular model of training places a direct emphasis on joint action towards a particular goal. It must also be noted that this particular model of training enables employees to become more receptive rather than resistant to changes due to the concept of shared goals.

Transfer of knowledge through training

When going over the results of the study, it was seen that one of the most significant impacts of the process of training was the transfer of knowledge. As indicated by Çelep and Çetin (2005, p. 115), within their study, it was seen that training was an important component in the transfer of knowledge since through training the assimilation and application of skills were far more enhances as compared to the rudimentary adoption seen in cases where people were expected to incorporate the skills while on the job. It was also noted by Çelep and Çetin (2005, p. 115) that the effective transfer of knowledge through training actually resulted in a far higher degree of profitability for the company due to the higher ratios of performance displayed by the employees. It must be noted though that studies such as those by Evanschitzky et al. (2007, p. 265) indicate that one of the inherent problems in organizations at present is that they neglect to take into consideration the behavioural impact training has on employees.

As explained by Evanschitzky et al. (2007, p. 265) training can cause an employee to behave in a distinctly different manner especially when the transfer of knowledge occurs and as such this should be taken into consideration by organizations since such behaviours can definitely impact the overall productivity of the company. It must then be questioned that can come about should workers not be given proper training and inefficient methods of the transfer of knowledge occur. In such cases, the proliferation of incompetency, wasteful processes, and considerable consumer ire often results in the downfall of the company. This and the other aspects shown within the literature review reveal that through training an employee becomes better and more analytic in what they do result in better and improved methods of operation which result in company success through higher productivity rates and greater degrees of customer satisfaction.

Training and development impact on employee motivation

Before proceeding it must be noted that the process of training and development is not just a means of enabling an employee to do a job or to transfer knowledge, rather it is also a means by which they are given the confidence to actually perform well in their given task. For example, in the work of Ewest (2010, p. 137) it can be seen that employees who underwent proper methods of training and development within a sufficient positive organizational culture, actually became more motivated to work resulting in more creative ideas and a better perspective on how they can work harder to improve the company as a whole.

Through the utilization of Maslow’s theory of human needs, it was noted in the study of Gao, Li and Clarke (2008, p. 10) that through effective means of training and development employees were actually able to obtain greater levels of self-actualization in the form of respect, financial security and a better feeling of self-worth. These combine into a more positive feeling in doing their job, which, as a result, improves their overall level of performance. Other studies that have examined this such as those by Goel, Rana and Rastogi (2010, p. 104) state that another way in which training and development impacts employees is through the creation of a feeling of assimilation and shared goals wherein through the concept of working together as all employees become more motivated since it makes them feel like they are working towards something of significance and great worth.

Future directions

The considerations that an organization forms to train and develop its staff for sustainability is one of the greatest advances since it determines the ability of that organization to ability to remain productive and relevant to both stakeholders and the market. As such, training and development is critical in facilitating top performance and organizational profitability. As they reviewed the literature, the current disconnect between organizational change and training and development calls for developing a clear link.

In summary, there is need to come up with an answer to the question that seeks to answer the question on whether or not employee performance arbitrate a positive relationship between learning and development activities and organizational performance. Several considerations have been highlighted in the paper, and which appreciates that training and development in management are critical not only in bringing change and curing for weak selection process within the organization, but also effective in boosting employees’ performance.

Conclusions and Recommendations

It is quite interesting to note that according to Akdere (2003, p. 416) training is “practice and drill” wherein employees are exposed to the “educational” and then the subsequent “practical” applications of what they are learning. Albahussain (2012, p. 105) also defines training as a method of education that is more often than not instructor-led and whose content is subsequently based on a form of intervention whose goal is oftentimes to implement a particular desired change in behaviour. Dobson and Tosh (2008, p. 69) attempt to build upon this by explaining that training is a planned and systematic method of development whose main goal is to transform or develop knowledge, skills and attitudes within employees in order to assist them through learning experiences to achieve what Dobson and Tosh (2008, p. 69) define as an “efficient and effective” level of performance in an activity or subsequent job.

What you have to understand is that training itself is a process which is implemented in order to enable a particular individual to utilize a certain set of skills within a particular situation. Development aimed training provides employees with knowledge and skills to perform their job more effectively (Garavan, Barnicle and Heraty 2003, p. 22). In a sense training, can be utilized as a means by which a company helps their employees understand what they have to do in order to obtain distinct corporate objectives as well as enables them to effectively and succinctly design, develop and implement plans of actions within the learning climate of that particular organization Lai (2012, p. 247) suggested that before the era of globalization the focus of the training was on individual employees and training methods commonly relied on teaching. You have to understand though that as time goes on various aspects related to training activities tends to become more complex, and as a result, learning-centric activities tend to become integrated with those that are teacher/instructor-led in order to better train employees.

Another factor that should be taken into consideration is that due to the high rate of globalization and economic expansion which characterizes the 20^th century, more and more companies have changed in their size, scope and operational structure thus necessitate new and more sophisticated approaches towards training and development in order to meet the challenges brought on by such changes. McDowall and Fletcher (2004, p. 25) observed that in recent years many organizations recognized that in order to stay competitive in the rapidly changing environment of globalization they must utilize the knowledge and skills of their employees. Based on this, activities changed from a distinct training oriented approach to that of a learning approach. Such a change occurred due to current variances within the global economy which were originally manufacturing bases to one that is serviced based wherein the inherent skills, behaviours and overall competency of employees is valued over the ability of an individual to merely “work hard”. It is based on this that employers have been orienting themselves in what can only be defined as a “top-down” led approach towards training and instructing employees.

Maris Zernand-Vilson and Elenurm (2010, p.97) discusses that the ideology of individual learning occurs in all situations, whether planned or unplanned and not only in traditional but also in informal training patterns. From a certain perspective, it can be stated that the process of learning is far less “strict” as compared to that of coaching or mentoring. According to Walsh and Fisher (2005, p.32), Kolb introduced the concept of the learning cycle. The Kolb learning cycle consists of 4 distinct stages which consist of the following: stage one involves the learner starting off with a distinct experience which can be planned or accidental depending on whether the process occurs on the job or through a training session. Stage two consists of the employee observing and reflecting on his/her experiences that they had internalized during the first stage of the Kolb learning cycle. The third stage, on the other hand, can be considered a period from which the reflection is internalized, and a plan is developed in order to incorporate the reflection into its necessary commensurate task. Lastly, stage four consists of testing the principles and concepts that had been learnt and internalized through a process.

This process involves either repetition or trying them out in a variety of new situations resulting in the renewal of the cycle all over again. The responsibility of the fulfilment of the developmental training given in organizations takes place through the Kolb Learning Cycle (Walsh and Fisher 2005, p. 30). It must be noted though that in order to deliver the appropriate type of training needs to achieve the best results, it is often necessary to do so through a systematic approach since this results in a “levelling” system that enables a gradual transition thus resulting in better-understood processes which result in employees being able to do their jobs properly. The basic systematic Model of Training suggested by Walsh and Fisher (2005, p. 28) underlines the training cycle. Upon closer examination of the relevant text, it can be seen that the systematic training mode is considered to be one of the best and most significant models in employee training. The systematic training model can be defined as training undertaken on a planned basis as a result of applying a logical series of steps (Rohmetra and Easter-by Smith 2004, p. 72). The outcomes of training and these stages of the systematic model is a continuous process.

Off the job training is usually utilized in order to help orient employees to the various tasks and assignments that they are expected to do. In this particular case, this often involves group sessions wherein they are taught by an instructor regarding the various nuances of the job they are expected to do. When examining the concept of “on the job training,” it can be seen that it is primarily used when there is a subsequent need to rapidly mobilize a workforce due to expansion or sheer necessity due to the way in which technology and processes keep on rapidly changing and updating. Garavan, Barnicle and Heraty (2003, p. 22) observed that loopholes in development are caused by lack of preparation for the training sessions on the part of trainers, trainers agreed to train on ad hoc basis without predetermination of content or process, goals and objectives of the training were not developed, most of the times the chosen trainers lack the skills and ability to train but are technical experts within the area and most of the times formal training is not given to the trainers.

Based on the work of Dobson and Tosh (2008, p. 66), the most commonly used methods of training within companies today consists of coaching, mentoring and computer-based training. According to Dobson and Tosh (2008, p. 66), current changes in learning and training methods have been observed training programs by and for line managers have been observed as a current trend to explore areas like employee skills, technological management, economic influence and talent management of the employees. It must also be noted that as of late a distinct increase has been noted in the development of a variety of new training programs involving managers in aspects related to coaching, mentoring and CBT.

Coaching is an intervention where one person assists another to achieve their potential over an extended period (Albahussain 2012, P. 102). From the perspective of Albahussain (2012, p. 102), coaching can be considered as one of the essential factors behind employee development. In his work, Albahussain discussed that the process of training could be considered a way in which a manger helps to solve problems within the work place involving task management through direct discussions and guided activities. By doing so, this enables the creation of the personal action plans by employees resulting in a better and far more efficient way in which they can complete their assigned tasks. An examination of relevant literature on employee development reveals that training through coaching is considered as a means of developing a two-way relationship between a coach and an employee. According to McDowall and Fletcher (2004, p.11), coaching is a major concept of developmental training.

McDowall and Fletcher (2004, p.11) explained that when it comes to coaching it is often necessary for a distinct kind of positivism and various types of environmental factors within the workplace for it to actually work. McDowall and Fletcher elaborate on this by explaining that it was often the case that in situations wherein almost “dictatorial” control and directive management was utilized employees actually performed less amicably as compared to situations where management styles were less suppressive and focused more on positive encouragement rather than negative reinforcement. It is based on this that it can be stated that various businesses, organizations and financial institutions need to focus on the internal development of business culture and climate that is conducive towards proper coaching and actually encourages their managers to focus on the concept of themselves as coaches as well as their subsequent development of a variety of learning activities.

What you have to understand is that when problems/ mistakes occur during operation procedures, it is important to implement practices that place a greater emphasis on learning from such mistakes rather than outright punishing the offenders. The reason behind this is quite simple, by fostering a tactic of learning rather than forceful intimidation this encourages the development of the right kind of environment wherein employees and managers alike to encourage open communication and development which creates a far more cooperative organization structure since it makes employees feel like they are part of a family. Coaching by managers is reliable in the service sector. It is an important activity because, in the service sector, the main requirement for the work to be done is developing trust and rapport with the subordinate (Rohmetra and Easter-by Smith 2004, p. 74). They further discussed that one-to-one personalized learning (coaching) from managers is an effective technique that can transfer skills and knowledge to team members. 88 per cent of 100 organizations surveyed are using coaching by managers, and 74 per cent of organizations are planning to increase this practice (Rohmetra and Easter-by Smith 2004, p. 75).

Development is optimally attained through mentoring. This is a process which helps a person to handle significant transitions in responsibility or status (Walsh, K. & Fisher 2005, p.29). Lots of literature in management depicts mentoring as a classical way towards organizational development. In this form of training a relationship develops between a senior and junior employee. The process of mentoring delivers the organization’s goal and mission statements to the junior employees with a clear understanding of improving the employee’s fit within the organization. Mentoring focuses more on the employee’s attitude development. This form of training is useful at the management and the front level. In the mentoring process, the responsibility of learning is taken by the individual who is involved in the process. The mentor explains the procedures and insights and makes the learner understand the responsibility towards the set objectives; development of strategies for learning and the evaluating outcomes. Thus, this agreement between mentor and learner forms the strong bond between them.

Personal reflection

After completing this entire research paper, I have to come to realize that training and development come hand in hand with employee retention and performance. The reason behind this is quite simple, employees who are bored with their jobs and consider it a form of drudgery are less likely to be passionate over what they do, would most like underperform and have a higher tendency to just leave the company for what they perceive as a better opportunity elsewhere. When it comes to employee retention and performance, job satisfaction is the deciding factor behind such principles of corporate human resource development and as such should be examined from a multilevel perspective in order to ensure employees continue to perform adequately and stay longer with the company. There are many ways in which this can be accomplished, ranging from new orientation, mentoring, continuous job training development and other such factors which contribute towards increased job satisfaction.

Yet, it must be questioned which particular process is the most suitable for corporations and which is the most preferred by employees. This paper has thus examined various aspects related to the impact of specific types of training and development programs and how they are generally perceived by employees. It is based on this that I can say with confidence that it can be utilized as a means by which companies can in effect implement new methods of employee training and retention thus resulting in better performance metrics for the company. What most companies fail to understand is that it is not just the inherent processes that are within a company that makes it greater, rather it is the very employees who strive and work for the company which enable it to become a success within its respective market. The sooner companies realize this, the better they will be able to reap the benefits of effective employee training.

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Appendices

Appendix 1: training and development chart

Appendix 2: Questionnaire

Dear Participants,

Thank you for your participation in this research study! Please follow the instructions as they are indicated below so as to expedite the process of completing this questionnaire.

Please answer the following questions as honestly as you can in order to ensure accurate research results. All responses will be anonymous.

Procedures

Should you agree to participate in this study; the following will be expected of you:

1. Sign the consent form indicating that you are willing to participate in this study and that you are allowing the researcher to utilize the information you give as part of the data analysis.
2. Give clear, concise and above all honest answers on the questionnaire as well as to the individual interviewing you.
3. Fill out all the segments of the questionnaire
4. Indicate your demographic data on questionnaire
5. Be interviewed by the researcher after finishing the questionnaire and give honest responses

Assurance of Anonymity

All information that will be obtained via this method of data gathering will be kept strictly confidential with all research participants being assured of the anonymity of their responses. None of the responses will be released with any indication that they were given by a particular individual. The results will be quantified into basic statistics to ensure that no personally identifiable information can be identified. Information gathered from respondents of the survey will be destroyed after a period of 10 years to further ensure that no personal information will be leaked in any way.

Voluntary Nature of the Study

Your participation in this study is strictly voluntary. Your decision whether or not to participate will not affect your current or future relations with anyone involved in the study. You may withdraw from the study at any time without any penalty, even if you initially decide to participate.

Risk from Undertaking the Study

While there are no outright risks in participating in a study of this nature there are some long term risks that should be taken into consideration. There exists the possibility that participants in the study may face victimization or undue criticism due to the views they present which may or may not appeal to the “image” that various governments wish to portray themselves as. In order to prevent such problems from occurring all the data will be sealed within a locked cabinet and will not be presented without ensuring that all possible methods of identification have been removed beforehand.

Contacts and Questions

The researcher conducting this study is (First Name Last Name). The researcher’s adviser is XXX XXXX, Ph.D. You may ask any questions you have now. If you have questions later, you may contact us.

Contact info for researcher:

Contact info for advisor:

You will receive a copy of this form from the researcher.

Statement of Consent

I have read the above information. I have asked questions and received answers. I consent to participate in the study.

Printed Name of Participant: _________________________________________

Signature: _________________________________ Date: _____________

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Participant Pseudonym: __________________________

Start of Questionnaire

In your opinion are learning and development programs important for a company?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Do you believe that learning and development programs influence job satisfaction?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Based on your experience, have learning and development programs actually contributed to your performance at work?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Do strategies such as increases in salaries and longer break ours factor into better performance for employees?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Do you believe that learning and development programs would help to increase the operational performance of the company?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Based on your experience as an employee at your company, do you believe that creating better learning and development programs would help to create a better company?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Does your current organization place an emphasis on learning and development programs?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Have there been successful outcomes from the implementation of learning and development programs without your company?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Is operational performance within a company tied to the standards of learning and development through its HR department and talent managers?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. trongly Disagree

Do you think that your company will increase the amount and level of learning and development programs for employees?

1. Strongly Agree
2. Agree
3. Not Sure
4. Disagree
5. Strongly Disagree

Thank you for completing the questionnaire! Please stay a while; the facilitator of this session would like to ask a few pertinent questions regarding the current exercise and your opinions, Thank you!

Appendix 3: Questionnaire

1. What effect do you think the training has on an organizations development program and employee performance?
2. Can you attribute organizational performance to learning and development?
3. How does employee performance arbitrate a positive relationship between learning and development activities and organizational performance?
4. Can learning and development work as a change agent in managing change within the organization effectively?
5. Do you find adopting training as a change strategy suitable for your company? Why?
6. How much impact do you think training of staff has on the success of your business?
7. What are the most important accomplishments you have achieved through training and development exercises?
8. What do you think are the skills that workers in your organization need in order to enhance performance levels?

Appendix 4: Brief discussion of three questions in the questionnaires

What effect do you think the training has on an organizations development program and employee performance?

This question will seek to bring out the views of managers from different companies in India on the impacts of training on employee performance. The question is based on the assumption that all the managers identified in the sample are aware of the importance of training and development and its impacts on the performance of their respective organizations.

Can learning and development work as a change agent in managing change within the organization effectively?

This question will be very critical in the study in that it will seek to generate the perception of the employees and a sense establishing change mechanisms. It will be a critical test in linking the understanding of the measures being assimilated and their perceived affects. It will be a critical indicator of motivation levels for employees.

Can you attribute organizational performance to learning and development?

This question will be directed towards the management during their interview with the researcher and will seek to bring out the role of training on organizational performance as viewed from the management point of view. It will serve as a pointer towards cohesion of methods employed to address the effects and further bring out the relation between the management and employees.

P&G And Unilever Open Innovation Case Study

Abstract

Open innovation is considered to be an idea which companies can follow to bring together both internal and external ideas and generate ways of bringing new and better changes in the organizations by accessing internal and external path while enhancing their existing technologies. The main concept following open innovation is that in this era of largely distributed knowledge, firms cannot take the risk of depending solely on the research of the single individual, thus in such cases it buy inventions such as patents and license processes from other companies. In the recent times, organizations have realized the significant of open innovation. They have become aware of the fact that all acknowledeged ideas can not be implemented within every company, these ideas are implemented upon the basis of the production and management of the company. Consequently, services as well as product manufacturing companies have now shifted their efforts to open innovation. This report is a detailed comparison of open innovation efforts carried out in the leading organizations of the product manufacturing companies i.e. P&G and Unilever, and also provides information based upon the opportunities and challenges of open innovation countenance by the two companies. The research approach applied in this research study is qualitative. The findings of this study provides recommendations for other companies in the product manufacturing industry regarding implementation of open innovation.

Introduction

Background to Context

In today’s fast moving world, the competition is fierce. In the wild market economy of the present times, it is trickier and hard for an organization to differentiate itself. To tackle with these issues, experts suggest that there is only one way out, which is to do something that the customers have not seen before, in short “innovate”. Most organizations fail to look in a new direction for the reason that they keep all their attention centered in one direction in which their business is focused. Such firms remain stuck in their typical method of operation. They make every effort to make the existing model operate in an improved way but donor pay attention to discover a better way of doing things. Many organizations are built for unremitting enhancement, rather than for discontinuous innovation (Chesbrough 2003).

Change is a process of moving from one condition or state to another. Nevertheless, change is not necessarily innovation. An organization which discovers a primarily a new way to approach and serve its buyers has in short attained innovation.

Innovation is the accomplishment of the new processes or products. Innovation suggests the course of thinking of imaginative ideas and turning them into real form, thus eventually executing and employing them. Innovation does not only includes generating new products, but it also includes employing new business procedures, new techniques of performing tasks, major coalitions, implementing new strategies and expanding towards new markets (Chesbrough 2003).

Unreserved resourcefulness devoid of any discipline or course of innovation is at best distracting and at worst detrimental to the company. Innovation implies taking the most capable ideas and trying them for actual. Not all will happen as expected; several will be unsuccessful. Regardless of certain failures, majority of the population within an organization is truly always in search of innovative and entrepreneurial ways of fulfilling their goals (Ebersberger 2010).

Essentially innovation has two types –closed innovation and open innovation. The Closed Innovation functions as a catalyst for innovation process, taking into account that most of the greatest inventions, either in the product or services space had its initial stages in the vertically integrated model of closed Innovation (Chesbrough 2003).

However, numerous factors have resulted in the wearing a way of closed innovation. Firstly, the mobility and availability of well-educated individuals has become greater than before over the years. Consequently, great amount of knowledge is present outside the research departments of huge organizations. Knowledge and expertise are taken out of the firm when the staff members switch their jobs which lead to among organizations. In the present era, fine and capable ideas as well as technologies are getting a chance to be more enhanced outside the companies’ territories due to the rise in venture capital, for example in the form entrepreneurial companies. Companies through establishing new departments or acquiring services through licensing agreements can actually create opportunities in their setup to generate ideas and technologies which are not possible in their routine. Lastly, other organizations in the supply chain, for example suppliers, take part in the innovation process (Chesbrough 2003).

Therefore, businesses have started to seek out additional means to add to the competence and efficacy of their innovation procedures. For example, it helps to search for new ideas and processes that exist outside the firm. Another advantage through innovation is that excels the collaboration with parties involved in the value chain, which helps in creating value for the customers. Moreover, it could also allow companies to sell their knowledge and technology which is found to be unfit for their own strategy (Open Innovation.eu 2006).

Hence, the comprehensive definition of open innovation can be given as: to enhance the development of new technologies by the integration of internal and external ideas and on the other hand exploiting in-house and external networks within the business markets (Chesbrough 2003). This implies that in every organization a change is necessary, as it helps to improve people’s perceptions and company’s environment. It also involves other entities when producing new products and implementing new technologies.

Keeping in mind its ever-increasing importance and use, open innovation is being applied by a large number of companies and helping them gain competitive advantage in the market. Companies irrespective of whether they are service or product oriented need to innovate their products as well as processes to sustain themselves in the market.

Company Profile of Procter & Gamble

Procter & Gamble (P&G) was established in 1837 and is an American multinational corporation based in Ohio Cincinnati which has its main business lines in the consumer products. It manufactures a wide variety of consumer goods. Procter and Gamble Hygiene and Health Care Ltd. was formed in the year 1985 under the name Procter and Gamble.The organization is one of the best providers of health care and hygiene goods in the world market which is operating in more than 80 countries and employs more than 140,000 individuals throughout its global chain. Procter & Gamble spends a high amount of money in their innovation processes particularly on their Research and Development department of the business and puts the 4 percent of the global sales in R&D, which has allowed the company to acquire almost 24,000 patents worldwide, and every year it received on average 3,800 patents of new designs and products.

Innovation has facilitated the company to boost its growth; in the year1999 P&G initiated an innovative strategy known as Organization (Dodgson et al. 2006). The Company’s Organization Strategy is a building block of the Connect and Develop (C&D) plan that P&G established (Chesbrough 2003, Christensen 1997). The rationale of this program was encouraging innovation by creating P&G’s internal communication processes more focused and interlinked with the external processes (Bons and Daams 2010). As an integral part of this strategy the company adopted an approach which allowed it to bring in external ideas and knowledge within the organization through generating internal seed funds and acquiring innovation entrepreneurial firms and generating (Dodgson et al. 2006). With this approach the company is able to boost innovation within its organization by forming close ties with external partners and working closely with them to improve and develop patents which surely gave the company a competitive advantage (Dodgson et al. 2006). Before the introduction of this program, less than 10% of the innovation Procter& Gamble had were employed in its products (Sakkab 2002).

Company Profile of Unilever

Unilever is a product manufacturing company, which has lately, came forward out as an organization, which is at all the times ready to embrace new ways of reaching out solutions unprejudiced of the fact from where these solutions are being originated. It is imperative to note here that most of the solutions to the firm’s problems are offered by Unilever’s those suppliers, where the company is managing strong innovation relationships and supplier collaborations. Creating and sustaining good relations with suppliers founded on the basis of trust require time and effort; however this is something that Unilever takes critically. Its alliance with the University of Liverpool Centre for Materials Discovery is an illustration of the fact that Unilever also managed to establish various academic research partnerships other than the collaborations with suppliers; it also shares mutual facilities, which are a vital element of the open innovation strategy of the Unilever. The Unilever and Liverpool together form a suitable team; Liverpool has a safe lasting strategic investment and the company has now attained a molecular design capability, which will allow it to develop innovative functional molecules and a provide it with a facility to screen more ingredients and find out the most suitable plan in a shorter time frame (Innovation Europe 2010).

The capability of Unilever to influence IP into and out of Unilever is a big potency, and realizing this, both open innovation and patents are two of Unilever R&D’s critical efficient skills (Innovation Europe 2010).

In managing Unilever capabilities in the region of joint innovation, it is vital to be skilled at making the suitable connections. The company has started by utilizing the compilation of internal talents and skills that cover an exceptional range of product categories plus by defining which collaboration innovation tools work best for them (Graul et al. 2006).

Unilever is the market leader in almost each and every one of the core-product activities. The aim of Unilever is to become the market leader with the help of acquiring national organizations, by expending and investing in a green field areas of every region, or by bringing in from external resources, which is attainable, advantageous and cost effective (Unilever 2011).

In the recent times the Company has acquired approximately 2000 distinctive brands internationally. This is the up-front outcome of the company’s history of preeminent strategies. Over the last few decades the company has acquired many local as well as national companies, each one having its own national brands. These acquisitions continued for a long period of time. In the late 1990’s, Unilever came up with an innovative strategy to increase the speed of the company growth; it’s known as Path to Growth. The most preeminent feature of this strategy involves additionally refocusing on its major brands. This strategy helped to minimize its number of brands from approximately 1600 down to 400 major brands (Unilever 2011).

Research Objective

The core objective of the research is to compare and analyze two organizations in the product manufacturing industry i.e. Unilever and Procter & Gamble (P&G) with regard to open innovation, demonstrate the results, and with the help of the findings evaluate the tools they used and the challenges faced by them.

Research Aim

The research aim is to compare open innovation process at Unilever and Procter & Gamble, their efforts to achieve competitive advantage in the service market by the use of open innovation and the benefits gained by them from the process. The research illustrates the findings from both companies, assesses the challenges confronted in implementing open innovation and the tools used for the purpose. The epoch has now changed the world into a place of widely distributed knowledge and technology. In such a situation companies are not in the favor of taking the risk of depending upon the company’s own knowledge, technology and research. In order to uphold themselves and stay novel in the market they should rather purchase or license procedures or inventions such as government grants and copyrights from other organizations. The research is a comprehensive study on open innovation at the leading companies in the product manufacturing industry.

Research Questions

The research questions laid out for this research study are to highlight the research aim and objectives emphasized for this particular study, and these research questions will assist in identifying different constituents of open innovation selected for this study:

1. In what ways open innovation contribute to innovation and business performance?
2. What tools are being used to implement open innovation at Unilever and P&G?
3. What were the challenges faced by the two companies in implementing open innovation efforts?

Scope

The scope of the research is specific as it analyses open innovation in the leading product manufacturing companies. It evaluates both the companies’ effort to implement open innovation and achieve renewal, sustainability and competitive advantage against its rivals in the market and rise ahead, the tools used and the challenges encountered by them. The research provides a detailed theoretical and conceptual framework for such study. However; it also set out that the interpretation of the findings presented in this report is dependent upon the researcher’s own understanding of the research topic and its presentation in such a way that the objective of the study is achieved in the best possible manner.

Significance of Research

The study carried out in this report contrasts two companies that use open innovation but in different approaches. The research provides in depth assessment of the impact of innovation on product manufacturing companies. This research is of great value to the product manufacturing organizations, which can help in identifying the tools and strategies used by the leading companies with regard to open innovation, and helps other companies in the same industry in directing their strategies consequently to exploit the elements of open innovation. On the other side, the study carried out in this report helps the researcher to learn about important theories that provide reasons and ways for implementing open innovation also allows him to develop and practice research skills that would surely help him in future throughout his professional career.

Literature Review

Introduction

In the recent era, open innovation has turned out to be the most imperative factors for continuous expansion and economic progress that initiates at a solitary organization level, and goes up to the regional and then to the national level, posing an influence upon the country competitiveness in worldwide economy (Fredberg et al. 2008). The importance of open innovation has become increasingly known and realized in the duration of the last two decades by the companies of all the sectors of the economy. Pure Research & Development is any longer believe to be ample for economic expansion of any organization, as new ideas only enhances earnings and employment, but on the other hand, new ideas when commercialized into practice –which is called innovation – also enables social and economic influence, and for this major fact innovation is considered highly imperative. Open innovation that is a prevailing model for maximizing economy and expansion has changed the approach to innovation in leading organizations.

There has been a significant increase in product and service organizations shifting towards innovation to gain sustainability, renewal and achieve competitive advantage in the market. With the times continuously changing the idea of closed innovation gradually eroded away. At the same time as some businesses that were unable to adapt were faced by significant losses, some have been innovative in the sense they innovate and have shifted to Open Innovation. Therefore, knowledge and know-how that were once carefully guarded within the boundaries of the department of R&D, was now becoming more and more accessible to other firms (Leonard-Barton 1995, Gassmann 2006). Consequently, it became progressively easier for an organization to take advantage from the skills of another by poaching in specific key staff members of the challenger. Increasing number of high quality suppliers that bigger organizations now rely on is also a factor contributing in the erosion of closed innovation. As a result, organizations had to adapt. It was important for them to become skilled tapping outside technologies and also learn how to capture the worth of technologies that were leaving. This marked the start of Open Innovation (Fredberg et al. 2008).

Theoretical Framework

A substantial quantity of coverage has been given to the latest phenomenon of ‘open innovation’ within the academic literature and outside. (Trott and Hartmann 2009). In order to develop a better understand of shift to open innovation and its need for organizations, various theories have been suggested. These theories provide a deeper knowledge of open innovation in product and service organizations. Some of the theories pertinent to this research study are explained below:

Chesbrough Open Innovation Model

Henry Chesbrough introduced an “Open Innovation” model in 2003 which was much commended and set a model for innovation management and the joint enterprise. At that time, it was an intrepid and far-reaching notion and it challenged the traditional approach on innovation.

Open innovation is an idea based on the supposition that companies possess the ability and hence should employ external ideas along with the firm’s internal ideas, and exploit in-house and external roads to the business markets, at the same time when these organizations are seeking to enhance their technology. The development consists of internal and external estimations into architectures and systems, for which the needs are characterized by business model. The business model uses equally the external as well as internal initiatives to create significance, while explaining internal operational procedures to sustain some portion of that significance (Chesbrough, The Era of Open Innovation 2003, West 2006 and Simcoe 2006, ).

On the basis of his research on companies practicing open innovation, Chesbrough deduced that industrial R&D was experiencing a “paradigm shift” from the closed to the open model.

Open innovation can be considered as a collection of practices for which will earn the company profits from improvement and also a cognitive model for the conception, acceptance and exploration on these activities. For instance, for the period of more than 50 years ago government funding agencies and non-profit foundations have financed scientific research, playing the part, which Chesbrough (2003) named the “innovation benefactor”. “If exercising innovation is changing for the reason that new forms of innovation are economically feasible then this offers opportunities for researching and describing these new practices. The open innovation paradigm offer propositions for how such innovation should work” (Chesbrough, The Era of Open Innovation 2003 and Davis 2006).

The main messages of this model are:

• Shift the organization even further away from the linear process, which has subjugated much of the 20th century firms’ approach.
• Utilize the ‘open’ iterative process, become more multi-dimensional in collaboration, and assimilate the customer more centrally into the ‘web’ of collaborators.
• Invention from the R&D bench resulted in market ‘push’ and an effort to rationalize corporate thinking by forcing it on the market and onto the customers.
• Concentrate on consumers unfulfilled, unspoken or necessary needs by making customers the centre in the web of co-creators and co-creation activities (Chesbrough 2003).

Henry Chesbrough introduced a novel phenomenon of open innovation, which is much different from the conventional closed innovation model. Chesbrough described that this closed model started to alter in the 1990s when companies such as Cisco systems vied very vigorously with the research- endowed businesses like Lucent Technologies (Chesbrough, The Era of Open Innovation 2003).

Trott and Hartmann (2009) in their research suggested how Chesbrough has given a counterfeit dichotomy by giving an argument that open innovation is the only inimitable existing alternative to a closed innovation model. Instead of being held intimately inside the firm, following the idea of open innovation research results are able to cross the company’s boundaries. Other businesses which are capable of making use of a technology can license it is generating a win –win condition. Likewise an organization can license the technologies manufactured by other companies.

Von Hippel Democratized Innovation

Von Hippel (2005) has observed that lead users at most times create and modify products for themselves and frequently liberally disclose what they have done. He also observed that most users may be interested in taking on to the solutions that lead users have developed. Altogether, these findings enable the basis for user-centered innovation models that may entirely change manufacturer-based innovation models in specific scenarios and counterpart them in other situations. User centered innovation is gradually growing its worth as computing and communication technologies expands. In his theory, Hippel discussed the ongoing democratization of innovation and patterns of user-centered innovation that are rising.

Innovation is swiftly moving towards democratization. Consumers, fully utilizing enhancements in computer and communications technology, increasingly can create their own new products and services. These innovating consumers—which can be an individual as well as firms—sometimes freely reveal their innovations to others, generating user-innovation communities and a highly rational commons. Much discussion is made on user-centered innovation paradigm in “Democratizing Innovation “ by Eric von Hippel. He clarifies why and when consumers deem it gainful to create new products and services for themselves, and why it frequently pays consumers to share their innovations generously for the use of everyone (Hippel 2005 and Kirschbaum 2005).

The software and information items—most remarkably in the free of charge and open-source software movement- as well as in bodily items are an example of the shift to democratized innovation. (Hippel 2005).

Von Hippel (2005) further suggests that in order to attain sustainability, organizations must now revamp their innovation processes and that they must methodically look for innovations made by the consumers. Businesses were specifically discussed by Hippel—the custom semiconductor industry is one similar instance—which has learned to help user-innovators by supplying them with means to create novel and innovative products. The objective of a democratized user-centered innovation system, according to von Hippel, is well worth struggling for (Hippel 2005).

Open innovation Model and the Role of Knowledge Brokers

Milton Correia de Sousa (2008) was the first one who gave the idea of knowledge brokers as a source of making way for innovation in the companies. Sousa observed in the report that the movement from internal R&D to external join and develop unlocks the door for organizations –whether they are large or small –to go ahead of their core competencies to stay competitive in an increasingly multifaceted, unpredictable and changing environment. Milton has explained the phenomenon and the process and concluded that open innovation is necessary for firms to attain comparative advantage. Open innovation enhances adaptability, and at the same provides various direct benefits to the organization (Sousa 2008).

It is understandable that successful innovation under intricacy, implausibility and variation can only be attained with the help of collaborative approaches that incorporate knowledge inside and exterior the company. Across the globe, firms are now utilizing this model of innovation gradually, and at the same time when this model has become a necessity for small enterprises, which usually are deficient in knowledge of some sort to entirely complete the innovation process, bigger firms are also shifting from their long-established R&D strategy to a joint connect and develop (C&D) process (Sousa 2008).

However, open innovation is never free from risk. It is necessary for the organizations to understand the skills, potentialities, and knowledge that are different in the market. So that they could evidently recognize what is need to be outsourced using processes to bring new ideas (Penin, Caroline and Burger-Helmchen 2011).

It is also imperative to minimize knowledge leak risks by devising suitable protection strategies.

Knowledge brokers have a significant part in open innovation processes. They are aware of the part that individuals can play in brining close the solution seekers and provides which effectively promotes collaborative efforts (Maula, et al. 2006). The appearance of knowledge broker as SPI, in a small country, comparatively far away from the main global decision centers makes obvious the fact that knowledge is invasive. Two outcomes from this are:

• Successful innovation speedily becomes outmoded and therefore, need a constant and sustainable flow of innovation to remain competitive.
• Knowledge can be accessed from anywhere, but if and only you have the correct connections and links to knowledge sources, and the right technical, technological as well as organizational tools. As a result, knowledge brokers can emerge wherever (Sousa 2008).

Keeping these corollary in mind, Sousa says that one can safely establish that knowledge brokers are here to stay and will have, at all the times, an ever-increasing vital part in accelerating innovation through global and interconnected networks of individuals and knowledge. Brokering knowledge for innovation has turned out as the main factor for innovation activity, which could work with itself.

Conceptual Framework

Most of the previous researches and studies regarding open innovation are focused primarily on the firm level of big corporations. However with the changing times, the scope of innovation has been altered enormously. Now, enterprises cannot afford to carry out their innovation processes on their own, owing to the labor mobility, copious venture capitalists and broadly dispersed knowledge across several public and private firms. With growing disintegration, outsourcing, modularization these days the management of open innovation in small organization is becoming equally important. This study fills the gap in the literature of open innovation by giving a comparative evaluation of open innovation processes carried out by two companies in manufacturing industry.

Elements of Open Innovation

For an organization to become capable of implementing open innovation practices, they need to focus on their processes management.

The significance of partnership capabilities has become vivid in open innovation literature. In addition, the formation of an atmosphere for innovation and visionary leadership is deemed to be criteria for the execution of innovative processes. At last, the presence of the right systems, tools and processes seems to be a vital facilitator of open innovation initiatives.

Relational elements are essential in association management studies. Cullen et al and Kauser and Shaw explain the necessity of loyalty and trust among cooperating partners (Kauser and Shaw 2004). Furthermore the institutionalization and repute of working partners as explained by Mora-Valentin et al. and Ireland et al. have an impact on the implementation of cooperation. Organizations, which have the name of being a fine partner, may see themselves in a good situation while seeking new partners. Nevertheless, knowledge management studies also attend to partnership concerns. Absorptive capacity is more centered on the company itself than on the partnership; however it assists a company in making the best of partnerships. This encompasses the integration of the knowledge of the partner but is led by the choice of the partner who has the accurate knowledge. Moreover choosing the right partner, it is also essential for firms to choose the correct form of cooperation for each initiative. This selection should rely on the strategy and abilities of the companies and the objectives of the particular initiative. Firms therefore require some partnership capabilities that will augment their innovative performance (Kauser and Shaw 2004).

One more aspect essential for the success of open innovation is the creation of the surroundings for innovation. This kind of atmosphere can motivate employees to work hard for better performance and encourage them to be innovative and entrepreneurial. In open innovation activities the concentration is not merely on being innovative internally but also when exploiting external paths to market (Chesbrough 2003). The staff should be capable of spotting external knowledge paths for their ideas, which require a definite entrepreneurial spirit. Hence, the formation of an environment for innovation must also include the establishment of an entrepreneurial culture.

Other than partnership capabilities and an atmosphere for innovation, the open innovation activity must be facilitated. This assistance encompasses internal processes, structures, systems and tools set up to make the implementation of open innovation activities possible. Quality and process management researches provide deeper details of various elements, which aid in enhancing the quality and effectiveness of processes. Building up the accurate procedures can have an influence upon the performance of open innovation endeavours.

Types of innovation

Innovation is divided into numerous types depending upon the chosen criteria. According to well-known researcher named Schumpeter, innovation can be categorized into five different kinds including, innovation of new products, introducing new ways of production, adopting latest supply sources, the exploitation of new markets and last but not the least introducing new methods of systemizing the business. Furthermore, Innovation is categorized under two main types known as product innovation and second is process innovation. In product innovation, the alterations are made in the product or service to offer an innovative new thing (Fagerberg and Nelson 2005). Tidd et al. (2005) describes that process innovations are given as “changes in the methods with which such new products/services are manufactured and supplied” (Savitskaya 2009). Even though this division is extensively accepted it is not supposed to guide us to disregard other central factors of innovation. For instance, in the last few decades majority of the prominent innovations have been taken place in organizational ways such as, the reformation of production and supply, or as explained by Schumpeter that these organizational innovations are comprised of arrangements within the companies and eventually assist in restructuring of the entire industry (Fagerberg and Nelson 2005).

Two other forms of innovation include incremental innovation and radical innovation. Both of them facilitate the company to bring continuous improvement. According to Tidd.et.al,

“The basis for this categorization “the degree of novelty”. Bigger fraction of financial profits is reached with the help of incremental innovations and enhancements, since the costs of such innovations are noticeably lower” (Banks 2007).

In addition, process innovation helps the organization in reformation, cost reduction and optimization. Bower and Christensen introduced an entirely new term of innovation known as disruptive innovation, which contradicts sustaining innovation that means a firm making a reaction to the progress alterations in their business industry (Hockerts and Morsing 2008).

Christensen also signified that the most imperative factor to sustain progression within the organization is to manage and bring innovative modifications within their markets. Such innovative modifications are referred as disruptive innovation or in other words disruptive technology. Disruptive technology is described as a technological innovation that creates an entirely innovative market with the introduction of a latest kind of product or service that will make all the previous technology based products or services out of date (Savitskaya 2009).

Whether a company is taking into account incremental or radical innovations, it is vital to closely assess the critical need for the product and its prospective return on innovation. Innovating more than requires can at times be damaging in that it increases cost and time to market, with little desired output. It has been defined as neutralization, where a product can be just sufficiently good to make it into the marketplace and grab market share from the rivals.

IP, Patenting and Appropriation

All companies making use of open innovation must tackle with the requirement to protect company’s cerebral capital (Fredberg et al. 2008).

One of the presumptions of open innovation is that there should be a massive quantity of ideas gathered from outside of the company and the firm should be an efficient purchaser as well as the seller of IP. Von Hippel and von Krogh (2003) have stated, “free revealing can regularly be the best naturalistic way for innovators to increase the profits using their innovation and that free revealing must be used beyond software” (Hippel and Krogh 2003). The following are the workable causes why innovators wish to without restraint disclose information rather than holding it secret or licensing. First is when others find out your company’s innovative secret. Second is when the revenues gained by patenting are minor. And third is when the influence of complimentary information is beneficial.

The trend behind free revealing is that it is private-collective model of innovation. According to Von Hippel and Von Krogh the society is provided with the best of whole of this idea, which hints that public goods are gathered by using private funds (Hippel and Krogh 2003).

Joachim, Henkel (2006) demonstrates in his theory that company’s qualitative and quantitative research produces entrenched innovations. He states that organizations are accustomed with this dilemma and it utilizes various techniques to secure their knowledge and information. They disclose 50 percent of the regulations they form, depending upon how essential the external help will be during operation developments, as more assistances discloses more regulations. Small-scale companies with a small amount of internal sources therefore reveal more. The writer also states that companies implement selective revealing to minimize rivalry loss. It remains constant with the implementation of growth maximization behavior (Fredberg et al. 2008). “Jauhiainen (2005) declare that the issue on whether to be defensive or to outwardly use innovative knowledge is two folded” (Fredberg et al. 2008).

Jauhiainen (2005) has used the term “appropriability regime to explain about exploitation of information assets and sustain competitive edge”. The strengths and weaknesses of any firm in the defending manner might turn into both encouraging or harmful, relying upon the circumstances of the organization.

Limitations of Open Innovation

Until now, open innovation has appeared to be an attention-grabbing phenomenon. Although various writers refer to the extensive history of combined development of innovations, just a small number of companies have really used it in the shape that we are talking about it in this era. One more problem faced is that even if the company is able to do that, a major issue is to manage within to utilize the innovative ideas and knowledge.

To a growing amount, companies use outside sources in their innovational activities, but still there is a requirement for comprehending the evaluation process in an enhanced manner. Only a minute number of analysts believe that to continue with the local evaluation bias more research is needed. One more central question is to find out how the procedures for open innovation models and customer development can be interlinked with the already existing systems within the company’s R&D structures. The NIH syndrome also known as Not Invented Here Syndrome, is described as a susceptibility of recognized project groups to deliberate that they know all the required information in this field of interest, therefore they are rejecting to accept ideas from the groups, which can create hurdles for the companies that are willing implement open innovation practices.

Open Innovation Performance

Open innovation poses a positive impact on the innovation performance of an organization as Fey and Birkinshaw (2005) stated that openness to innovative ideas is the sole most vital forecaster of R&D performance (Rosing 2011). Laursen and Salter (2006) in a prior evaluation of corporate search strategies, discovered that knowledge sources such as company’s individual R&D, suppliers and customers are the most frequently used by manufacturing firms. The unswerving exploitation of universities as resources of ideas remain restricted to a minute proportion of businesses, found either in a limited number of sectors and amongst those who utilize other information resources most expansively, and along with those who have well-built own R&D capacities. Laursen and Salter (2004) discovered that innovation performance increases equally with the breadth and depth of external search; i.e. with the assortment of external knowledge sources employed, and their extent of usage.

The impact of open innovation on innovation performance is further thought to be relying on the strength of technological inputs and opportunities obtainable in the surroundings, and the easiness with which these sources can be utilized into. As such the level of complexity in industrial knowledge bases, exploration costs and the likelihood of over-searching influence the relationship between search and performance.

Granstrand et al. and Fey and Birkinshaw explained that sourcing implies the acquisition of information or solutions on a marketplace basis. The sourcing company is first and foremost concerned with the yield of the contract, not the learning processes taking place in the course of the development work (Ahuja 2001).

The contract partner, sequentially, whether it is a research organization or a seller, is liberated in making use of the experiences achieved if not also the IPRs developed to work for other client firms. This may have an impact of boosting the innovativeness of a bigger population of firms.

The growing popularity of open search and sourcing strategies in companies in general and the reduction of IPR regimes join to open ways for external technology commercialization (Grandson and Gassman 2006). It can be in the form of licensing, development of new enterprises. Through licensing, the originating firm remains in control of the technology in question, but can utilize the already available complementary capabilities of other firms. Licensing therefore combines organizational resources at their margins. By establishing new enterprises as vehicles for commercialization the company may utilize external sources of funding to reduce its own risk, while remaining in possession of an option for later full re-internalization.

Not much investigation has been done on external technology commercialization phenomenon, even though anecdotal case evidence as well as larger sample case evidence point to the fact that it is becoming a broader trend and has an impact on open innovation performance.

Collaboration is the expansion of knowledge by relationships with particular partner organizations, and includes mutual trade of knowledge. Industrial organizations can work together with universities or research establishments or with suppliers and customers or form associations or joint projects with other industrial companies having complementary knowledge.

For the reason that collaboration encompasses intense communication and coverage of own knowledge, it also needs trust. Helper et al. (2000) explained that characteristically, there is a requirement for mechanisms to control opportunism and the development of mutual understandings regarding what is to be accomplished (Fagerberg and Nelson 2005). Much of this can be realized as relation specific, irrevocable investments. It will, depending on the level of intensity and accomplishment in the communication, produce joint learning and adaptation processes. On the other hand, it also involves the possibility of each partner attaining less from the inflows of knowledge as compared to what is shared outwards. Also, it will frequently need the allocation of considerable resources in the shape of personnel. Hence, collaboration is most probably a more selective aspect of open innovation as compared to search, and can be prone to lock-in (Fagerberg and Nelson 2005).

Benefits and Opportunities offered by Open Innovation

The organization of developed R&D has experienced significant transformation since the mid of 1980, principally in the United States. However, instead of establishing a completely new process, this reforming has revitalized essential elements of the industrial research processes. In particular, most of the features of Open Innovation Approach to Research and Development management are noticeable in this earlier period (Mowery 2009). The early levels of open innovation by now take place in many organizations. In fact, almost any firm can point to instances of innovation activities that are different from the closed model in ways that would be termed as open innovation. However, the level varies from an insignificant few percent of the overall innovation effort inwardly focused companies to the remarkable stage of almost 50 percent that P&G has reached. Regardless of where the organization is now on this spectrum, the main thing to understand is that open innovation is the prospect, so it’s vital to start making some kind of open innovation part of the overall strategy (Lindegaard and Kawasaki 2010). The commonly accepted primary advantages of open innovation are to:

• Speed the growth of new products and services and consequently augment revenues and market share.
• Cut down time to market for new products and services and speed up profits.
• Decrease direct expenditure on R&D.
• Enhance the accomplishment rate of new products and services.

Challenges faced by companies, which are at early stages of open innovation:

Of course open innovation also presents challenges, particularly for seeking and existing managers and leaders who are habituated to work in a closed setting (Lindegaard and Kawasaki 2010). These following three primary matters must be answered prior to shifting to open innovation strategy:

How will open innovation influence the firm’s business model?

In an open innovation environment, the organization may end up in working with anyone-even its rivals. How will this affect the business model and change your competitive landscape?

How the organizational chart will be altered to adjust to open innovation?

What sort of associations does the company want to engage in? What general vision and mission will the company share with its associates? Systems, processes, values and culture throughout the organization will have to be changed. Individuals who have spent their careers remaining internally focused now need to focus externally also.

How does this influence the role of manager as a leader of the organization?

Most of the companies have not mastered the skill to innovate across diverse business sectors internally, let alone doing so with exterior partners. Consequently, most managers and leaders do not comprehend open innovation at a beginning stage. They must understand the effect of this movement-its opportunities and risks-and become skilled to adapt to leadership style which optimizes trust, inspiration and performance (Lindegaard and Kawasaki 2010).

Innovation Marketplaces: A major source for open innovation

Now, as open innovation is becoming prevalent, the call for innovation market places that can act as intermediaries to which organizations can quickly connect increases. A few of these intermediaries will act as niche markets, while others will be more all-purpose. Several will established by firms to meet their particular requirements, and some will be set up by third parties to position their companies as an interface between organizations looking out for solutions and the smart people-or firms with solutions (Lindegaard and Kawasaki 2010).

InnoCentive is a third party innovation marketplace which functions with a prize-based open innovation model. InnoCentive unites various companies, educational organizations, the public sector, and non-profit association with a wide-reaching set of connections of approximately more than 16,000 specialists and experts and problem-solvers in 175 nations across the globe. A pharmaceutical giant Eli Lilly as an in-house innovation incubator initially established InnoCentive. An autonomous company since 2005, InnoCentive at first had success within the pharmaceutical market place; however it is currently active in various other sectors, including consumer packaged goods, where organizations like P&G have had success by making use of InnoCentive.

InnoCentive model functions like this: A company (a seeker) offers a challenge to solvers across the globe who can win cash prizes for providing solution to the problem. Approximately, more than a third of the solvers have doctorates. Issues have been provided in engineering, computer sciences math, chemistry and business sector etc. InnoCentive takes a posting fee and a finder’s fee if the solution is provided and has solved the problem (Lindegaard and Kawasaki 2010).

Hypothesis Setting

HI: Open Innovation practices increase innovation performance

Various studies have shown results according to which open innovation practices pose a strong impact on innovation performance of an organization. These results suggest that broad-based approaches give in the strongest effects, and that the collective of open innovation strategies seem to be more essential than individual practices. The manufacturing industry is going into a new age of “open innovation”; an age of focused corporate strategies with the help of which investments in intramural R&D are enhanced or even replaced by extensive utilization of exterior knowledge sourcing and external paths to commercialization. Moreover, organizations whose innovation process has been professed as tightly closed are gradually opening up their innovation processes to enhance their performance. Regardless of the extensive consideration that has been given to open innovation, there is little methodical proof on open innovation practices or on the influence on company’s performance. A wide-ranging, holistic approach to open innovation is expected to give greater returns than a profound attention on a particular aspect. Combining the results together, what seem to be most essential are the overall strategies rather than the particularized dimensions of open innovation.

If external individuals and firms look at a company, they may have novel trends to bring changes within the organization. They will apply procedures and ideas that might not have been implemented by the people working within the company, because of the reason that they are only emphasizing upon the business vision. Companies adapting Open Innovation practices should be able to support both innovation approaches based on the objective of the company.

H2: The high cultural long-standing orientation of the company’s causes intense “Not Invented Here” syndrome and in turn reduces the tendency to consume outbound open innovation

The studies and researches have proved the fact that “Not Invented Here” syndrome is supposed to be the most important obstruction to outbound open innovation. According to the hypothesis cultural peculiarities impose a obstacle towards outbound open innovation in companies creating protective attitudes towards the external utilization of knowledge (expressed through Not Invented Here syndrome).

H3: Open Innovation helps to minimize the time period for innovation activity

Open innovation develops the company’s business system to outline its research investments. “This cuts down the time period to sell for more radical innovation thus making the pursuit of radical innovations more sustainable. This reduces the overall time spent on a portfolio of innovation” (Chesborough 2003).

Summary

The literature review presented in this section of the paper provides the source for the conceptual framework for the analysis of the findings of the nearby study. In this chapter various relevant theories and factors are discussed related to the open innovation elements, limitations and effects and manufacturing companies, and consequently, the advantages accomplished due to the open innovation models. These theories form basis for greater understanding of the open innovation processes. Three hypotheses have been proposed to be tested in order to evaluate different factors determining open innovation systems with respect to the performance of the companies.

Research Methodology

Introduction

Research methodology is a manner adopted to solve problems. It is more highlighted as an art of figuring out ways to conduct research scientifically. However, it is necessary that the researcher is aware of the techniques. Every problem needs to be solved through a different technique and methodology; this requires the researcher to have proper knowledge about the dimensions and research methods. This section of the study highlights the methods and techniques used to evaluate the data accumulated for the research. The purpose of research is to find out the unveiled truth or make a new discovery through theoretical and hypothesis support. The approach selected for analyzing the data in the current study is qualitative and secondary in nature, in order to attain reasonable conclusions described by its logical limitations. The chapter also provides an analysis of the tools used for the collection of secondary data.

Purpose of Research and Areas to be investigated

The rationale of the present study is to compare open innovation in two companies of the industrial sector with respect to tools applied and challenges encountered. The results of this report should be explained in such a manner that the theories covered in the literature review are focused adequately to establish views on the research hypotheses prompting various aspects that adds up to the success of open innovation in industrial sector.

Research Problem

The open innovation system has been targeted in the current study, which has already been discussed in the theoretical background in the literature review chapter. As a result, the study has its concentration upon providing an inclusive view on the elements of specific open innovation techniques applied and its effects in the performance of the companies.

Adopted Research Methodology

Qualitative research is employed to explore and comprehend people’s beliefs, experiences, attitudes, behavior and interactions (Key 1997). This type of research produces non-numerical data. Various techniques such as focus groups and in-depth interviews are usually applied for qualitative research fieldwork to record a variety of experiences, or in researches regarding how a company is functioning, revealing views and experiences of test respondents.

Qualitative research results are not stated as percentages, are not subjected to statistical analysis and the findings cannot be applied to general population.

For the purpose of the present study, the case study approach as qualitative research methodology has been adopted and implemented. Case study research may involve only one cases or several cases often two to four. The investigator carrying out a case study makes an effort to evaluate the variables with respect to the topic under study (Tellis 1997).

The reason behind the selection of the given methodology is that with that qualitative research helps explore topics in more profundity and detail as compared to quantitative research. Also, qualitative research has been proven to be economical than quantitative research, since there is no need of recruiting a large number of respondents or apply extensive techniques. It provides flexibility in locations and timing as well. Case study is used here because the field of the study is a single case and not a case of large population. This case study addresses a bounded system, which is featured in a natural condition, in order to realize the system’s own habit (McNabb 2008).

The case study approach of qualitative research methodology is chosen because it is estimated to offer a distinct picture of findings, and a single person can perform it, either longitudinally or in a more restricted time span.

Inductive Research

Inductive and deductive researches are the two methods of developing logic which are applied to make a conclusion on the basis of data which is supposed to be accurate. It comprised of attempts to give general principles starting with various particular examples. Rather than starting with laws and principles and giving conclusions, most researches gather related experience and try to create general rules from it. Where the subject of the research is too diversified in nature then inductive method is brought into use. After the identification of the problem, research audience is targeted and observed through several means. On the basis of observation and analysis patterns of behaviour are pointed out and conclusion is derived. Many of the researches begin with inductive method. Identification of the problem is a rather difficult step in inductive research process. The identification leads to series of detailed studies known as programmatic research. The hypothesis created out of inductive research is just theory based and is not supported in numerical terminology (Saunders and Lewis 2003)

For the present study, inductive approach to the study is adopted, which is most suited for quantitative research. In the specific inductive mode of research, the case study approach will examine the minutiae and meanings of knowledge and would not require a prior hypothesis. Rather, attempts have been made to find significant patterns and themes in the data. To create clear connections among the research aims and the conclusions gathered from the raw data and to ascertain that these connections are both visible as well as defensible, inductive research is applied (Thomas 2003). Keeping in mind the nature of the research it is useful as the scope of the sample selected is restricted and the results that are obtained from the sources can be easily categorized from the performance of both the companies’ i.e P&G and Unilever.

Data Collection

Information for the current study is gathered from numerous secondary sources, which are deliberated in this sector of the research study.

Secondary Data

This study is making an extensive use of secondary data. The purpose of using secondary data is to cut the research cost and use the data, which is already available. For the current research the secondary information is collected from journals, documents and any other form of unstructured data. The secondary data collection strategy is applied which involves unofficial documents, official documents, objects, etc. from various websites, studies on open innovation and documents from the company websites which provide insight of the usage extent of open innovation in the selected companies.

According to Steppingstones (2004), “The data acquired from secondary sources is useful for carrying out a comparison of the data collected in the study. The secondary data assists in making data collection more specific because with the help of secondary data, it is easier to recognize the gaps and deficiencies and what further information should to be collected.” Moreover it has been confirmed to be economical as no interview and questionnaires have been carried out and save time and efforts as compared to the primary data collection. The secondary research process is accomplished quickly mostly within two to three weeks. The best aspect of secondary data is that it lets the researcher to start with the research without setting the base from scratch.

Sampling

As the present study is a qualitative research, an appropriate sample size should be chosen to adequately answer the research questions. Since, the present study is targeted at comparing open innovation at two organizations in the same industry, Unilever and P&G have been selected. Moreover, as qualitative research methodology has been adopted for this study it was important to take a smaller sample size. The selection of the companies is made on the basis of their position in the industrial sector. On one side of the story is the P&G which is leader of the consumer goods industry and has all its focus concentrated on open innovation, sharing information, advanced efficacies, first mover and cost reduction benefit that implies fast in gaining novel ideas from outset to the shelf. On the other hand, Unilever is primarily concentrated upon strong brand identification, expansion of its product lines through innovation department, and development of coalitions and therefore making extensive use of the concept of open innovation. Both the companies are benefited from worldwide expansion in the forthcoming markets and from cost reductions.

Basis for Analysis

For the present study, qualitative case study research methodology is adopted and in the analysis of case studies, traditional statistical analyses cannot be applied (Kohn 1997). Hence, descriptive analysis is used to systematize and methodically evaluate large amounts of information. Descriptive analysis will be used to present findings from the secondary research. The findings from the secondary data accessed are supposed to be entirely suitable and completely adequate to be able to give conclusions and provide answers the research questions and address the research problem. The findings from the selected companies i.e. P&G and Unilever will then be evaluated on the basis of the open innovation framework presented in Chapter Two of the research. The research has remained open to new opportunities and insights, while assessing and analyzing the data.

The triangulation of data to make the findings and research results more powerful is permitted by the case study method. Furthermore, in descriptive analysis, data triangulation strategy would be used. “The data triangulation involves the use of different sources of data/information” (Guion 2002). The technique is used in order to enhance the end results and perceptions of formation of users of this study. Triangulation here will be used to involve several studies and information from other secondary sources of the information at different time periods (Guion 2002). In an associated manner, this qualitative research will be employing investigator triangulation and regarding the concepts and descriptions generated by other researches and studies on the given subject as well as the findings from the company databases as well. The findings from both the companies i.e. Unilever and Procter & Gamble regarding open innovation would be compared to produce general principles that could be applied in the companies of industrial sector.

Research Methodology Limitations

The research methodology implemented for the particular research study is considered to be the most appropriate one based on the researcher’s own understanding of the research topic; however, there are certain limitations that are also realized and highlighted in the following for better understanding of the users of this report.

1. There is a chance that the information collected is not timely. Outdated information offers insignificant worth little value chiefly for companies challenging each other in this rapid changing markets. For this care has been taken when depending upon secondary data that might have been investigated well in the earlier period and the reliability of the sources used is examined prior to using the information for the findings.
2. The secondary data relevant to the research topic is only available in insufficient quantities. As such all possible efforts have been made to fill the gap with the help of including literature and theories from easily accessible and current secondary information and study of findings is then explained to relate them to existing data.
3. The results cannot be generalized to the specific audience or the general public at large. Here the researcher’s aptitude to provide a convincing and appealing outline of the case, with suitable examples and relations to broader concerns, is used to work under this limitation.
4. Limited funds are available for the research; therefore, all possible attempts were made to keep the costs of research to minimum.
5. It is harder to determine the validity and dependability of linguistic data.The richness of the data depends on the quantity of detail and contextualization. As such minute number of crucial issues are scrutinized in this research study.

Findings and Analysis

This chapter critically examines and evaluates the data gathered through findings that are acquired from the research study in order to evaluate the connection between a manufacturing organization’s open innovation and the benefits gained by them as well as the challenges encountered in implementing the open innovation efforts that is taken from the current study.

The chapter further lays down, an evaluation between the literature review and the research study that will be assisted by assessing the results of the findings, for the purpose of understanding the open innovation in product manufacturing companies and its dynamics.

Open Innovation at Procter & Gamble

P&G is an organization that mainly focuses on consumer enterprise. P&G is working in almost 80 nations and has over 140,000 employees. Procter & Gamble focuses the most on innovation process by spending its major time on the research and development (R&D) department. The company invests its 4 percent of total (global) sales in R&D. P&G has 24,000 patents globally and obtains 3,800 exclusive rights on average every year.

To boost growth with the help of innovation, in 1999 P&G introduced a new strategy known as Organization (Dodgson et al. 2006). This scheme is a building block of the Connect and Develop model that P&G develops (Chesbrough 2003). The rationale of this plan was motivating the process of innovation by focusing on internal strengths and disjointed communications more externally focused and interconnected (Bons and Daams 2010). The scheme was built with an aim of finding out fresh complementary technologies from outside of the company and to concentrate on the licensing to increase the return on invest of the company (Dodgson et al. 2006).

At a trading technologies expo “Innovation 2000” P&G brought all its open innovation ideas together. The company invited all the external suppliers. The technologies expo was a great success because it was able to generate approximately 2,200 innovative concepts for novel and most up-to-date products (Dodgson et al. 2006).

Considering other techniques from the above-mentioned techniques, Procter & Gamble also exchange the entrepreneurial firms and tried to make domestic seed resources (Dodgson et al. 2006).

The C&D project help with the making, transfer and exploitation of knowledge across organizational territories. These applications utilizes data searching, simulation, mining, rapid prototyping, and modeling. In a way, as if there is an innovative idea then it must be utilized (Dodgson et al. 2006).

Data searching and mining

Procter & Gamble’s Connects and Development strategy is used to connect the internal and external sources which employees the technologies (Dodgson et al. 2006).

Workers of P&G can get in touch with each other across the globe by the supposed “InnovationNet” (this is an internal website). This function, InnovationNet performs with the records of the person’s requirements. This entails that users with similar beliefs are connected to one another (Dodgson et al. 2006). Besides exchanging information between nations, the basic focus of P&G is to enable the communication facilities available to everyone within and among communities involved (Brown and Duguid 2000).

A system needs to be developed by the researchers that must be based on the Internet to share the statistics and information for the company’s internal and external resources. For instance, there must be communication with the external sources or by providing link to the external database (Sakkab 2002). In addition, P&G set up the Technology Entrepreneurs network, which is a team of 70 individuals who help in linking Procter & Gamble to exterior innovation prospective (Dodgson et al. 2006).

Simulation and modeling

“Ultimate Supply System” was introduced by Procter & Gamble in 1995. It was setup in order to create link between the suppliers and by augmenting the magnitude of the supply chain. It was achieved by the sequence of information, products and goods, and economic activities among two or more industrial firms. The aim is “to considerably enhance sales, decrease costs, increase cash flow and, eventually, to supply the right goods at the appropriate time at the right price to the customers” (Wegryn and Siprelle, undated; as cited in Dodgson et al. 2006).

Moreover, P&G has a domestic operations research group, which is responsible for inventing the supply chain arrangement by optimization and recreation techniques. This research group is recognized as Global Analytics. This group is responsible for the scheduling cycles and the schedules of the manufacturing process. It also provides results for capacity utilization, which works in close collaboration with supply chain (Dodgson et al. 2006).

Virtual and rapid prototyping

Computer system is implemented in P&G to analyze the archetypes of goods within the implicit circumstances, which is suggested with single building equipment, the effect of the production line adjustments. These commodities are removed for earlier period needs and virtual prototyping gives the chance to expect and go successfully to give a response to the what-if question. P&G also has a group with the name of CreatelInnovate, which makes innovative packages to establish brand identity. On the other hand, with the computer aided design the company is able to see the prototypes for testing purposes. For CreatelInnovate, brainstorming is a primary task. If some useful ideas invoke a good feeling in the minds, the model should be constructed in a couple of days. This model is then considered for the whole of the process. Groups across the globe observe the virtual model and can provide constructive and/or off-putting comments. Later, at times a small video will be arranged of the company’s product and mail it to a specific number of consumers. Majority of the trial products fail, but few of the ideas work exceptionally. The complete process may take only days and not months. Later on, a wide-ranging market evaluation should always be carried out (Dodgson et al. 2006).

Licensing

To earn additional profit P&G licenses its technologies and access to corresponding technologies. Procter & Gamble gets licenses for all of their technological products in the beginning and it gets patent agreement for five consecutive years. Governmental grants and various other patents are also engaged within the company’s operations.

Open innovation at Unilever

Unilever is a product manufacturing company, which has lately, came forward as an organization that is at all the times ready to embrace new ways of reaching out resolutions logical of the fact from where these resolutions are being derived. It is imperative to note here that most of the solutions to the firm’s problems are offered by Unilever’s those suppliers, where the company is managing strong innovation relationships and supplier collaborations. Creating and sustaining good relations with suppliers founded on the basis of trust require time and effort; however this is something that Unilever takes critically. Its alliance with the University of Liverpool Centre for Materials Discovery is an illustration of the fact that Unilever also managed to establish various academic research partnerships other than the collaborations with suppliers; it also shares mutual facilities, which are a vital element of the open innovation strategy of the Unilever. The Unilever and Liverpool together form a suitable team; Liverpool has a safe lasting strategic investment and the company has now attained a molecular design capability, which will allow it to develop innovative functional molecules and a provide it with a facility to screen more ingredients and find out the most suitable plan in a shorter time frame (Innovation Europe 2010).

The capability of Unilever to influence IP into and out of Unilever is a big potency, and realizing this, both open innovation and patents are two of Unilever R&D’s critical efficient skills.

Unilever has changed from corporate business enterprise into a vital open innovation tool and means with the creation of Unilever Corporate Ventures in the year 2001. Externally it has been noticed that various Unilever brands are running as competitors against each other advertising ideas (Innovation Europe 2010).

In managing Unilever capabilities in the region of joint innovation, it is vital to be skilled at making the suitable connections. The company has started by utilizing the compilation of internal talents and skills that cover an exceptional range of product categories plus by defining which collaboration innovation tools work best for them. Given below are the top 10 open innovation tools and techniques utilized by Unilever.

Open Innovation portfolio management and metrics

Open innovation associated with the internal alignment appears apprehensible. Nonetheless, open innovation patterns must remain unaltered and they must concentrate on the company’s corporate strategy, and it must influence on an urgent action to affect the Open innovation with the assistance of robust metrics. Most organizations companies set metrics against the figure or proportion of projects made possible through open innovation. Without any delay, Unilever became conscious of the need to create ways to make this numeral 100%, and looked forward to set metrics on the basis of value (Innovation Europe 2010).

Unilever scouting community

The Company also spends in the area of scouring and has established a scouting community. Their foremost responsibility is to make sure they don’t have the solution within the Unilever territory; before they pursue the idea of approaching a small number of chosen scouting partners which they feel can envelop the greater part of their needs and challenges. The Company’s scouts possess affluence and extensiveness of experience complemented by a healthy scouting toolkit which Unilever has made over the years.

Academic Research Partnerships

Other than the relationships and associations with suppliers, the company also has a large number of academic research partnerships as well. “The Company’s alliance with the University of Liverpool Centre for Materials Discovery is an illustration of the fact that Unilever also managed to establish various academic research partnerships other than the collaborations with suppliers; it also shares mutual facilities, which are a vital element of the open innovation strategy of the Unilever” (Unilever 2011). They both constitute a perfect team. Liverpool has a safe lasting strategic investment and the company has now attained a molecular design capability, which will allow it to develop innovative functional molecules and provide it with a facility to screen more ingredients and find out the most suitable plan in a shorter time frame (Innovation Europe 2010).

Intellectual Property

The alliance with Liverpool helps in bringing to light one more central feature of the Unilever toolkit for open innovation, which is intellectual property. One outcome of the Liverpool partnership is that the Company has a really profound knowledge of the chemistry, and so is at a much better position to make stronger the value of the IP. The capacity of Unilever to influence IP into and out of Unilever is a strong point, and realizing this, both open innovation and patents are two of Unilever R&D’s important efficient abilities (Unilever 2011).

Unilever Corporate Ventures

The creation of Unilever Corporate Ventures transformed corporate venturing into a vital open innovation tool and means of the company in the year 2001. Prior unsatisfactory collaborative venturing proved to be lessons for Unilever in nurturing new businesses. They taught them that the abilities they had in expanding billion euro brands, of which the Company at present has 13, are poles apart from what is considered necessary to bring into being and incubate new businesses (Graul et al. 2006).

Ever since its establishment, which took place in 2007,Salon Spa International is generating strong financial profits. In particular, firm connection exists between the spa business and the Unilever’s Skin Category, facilitating both the organizations with a chance to conduct research and testing services with new skincare technologies, moreover, to build and create worthful customers’ insight (Unilever 2008).

Collaborative Ventures

A good example of Unilever’s collaborative venturing is Pepsi Lipton Tea Partnership (PLTP), which was developed in 1991. This has helped the Unilever brand with the best opportunity to enclose itself to introduce itself with ready-to-drink tea industry. It has also helped to provide business channels with Pepsi. The Lipton Tea was able to introduce itself in the United States industry, which increased its growth and there was a rapid development in 2003 and 2008. (Unilever 2011).

Crowd-sourcing

On the outside, consumers must have lately witnessed several Unilever brands competing against each other for advertising ideas. The founder of Unilever, William Hesketh Lever, is considered to be the one who put forward the concept of crowd-sourcing method during his hunt for new talent in the village of Port Sunlight (Graul et al. 2006).

Entrepreneurial mindset

Lever, the founder of the Unilever Company was an entrepreneur in its true sense and the entrepreneurial way of thinking is a critical component in the open innovation toolkit. Moreover, to promoting this internally, the Company approaches various other entrepreneurs with whom it carry out live projects. The Axe Bullet Body spray is merely one case of where Unilever aligned with an entrepreneur, the outcome being an unusual approach that saw the product launched in half the time it would usually have used to get into to market (Innovation Europe 2010).

Benefits of Open Innovation

Benefits of Open Innovation offered to Procter & Gamble

Open innovation, when in its true sense, was applied at Procter & Gamble generated noticeable benefits for the Company. Approximately 35% of the firm’s new products consist of components that are taken from the sources outside of P&G, which are about 15% in the year 2000. The inventiveness in the commodity was discovered 45% which were came upon from outside. With the help of connect and develop—in conjunction with the enhancements in other aspects of innovation concerned with the product cost, design, and marketing—the company’s Research & Development productivity has augmented by almost 60 percent (Graul et al. 2006). The success rate of Procter & Gamble’s open innovation practices has been doubled, at the same time as the cost of innovation has reduced.

Investment funds on the Research and Development sales have greatly reduced which were down to 3.4% in 2005 from a spending of 4.8% in 2000. The last two years, the company introduced 100 new items, for which the implementation occurs from the outside sources of the company. Over a period of 5 years from 2000 to 2005 the company’s stock after hitting their lows nearly double and the values of the brans that the company has crossed US$22bn (Graul et al. 2006), due to the introduction of the Connect and Develop model the company is able to maximize its innovations. This was possible by grouping with the external allies by making better use the patents that P&G already have (Dodgson et al. 2006). Before this model was introduced, very small amount even lower than 10% of technologies was utilized for the products (Sakkab 2002).

The stress on open innovation at P&G did not only provide the advantage of 50 percent decrease in concept-to-launch time with partial cost of innovative plans for the project, nevertheless it has attained above 35 percent of innovations and has achieved with huge amount of revenues

(Huston and Sakkab 2006). Networks and collaborations generate an environment of the firm, which produce value that no solitary firm can construct on its own.

The C&D was successful to achieve the targeted growth in the innovation levels expected by the organization in the year 2005, which was possible through external alliances. In order to further develop take C&D and gain superior value by C&D teamwork, P&G in the last quarter of 2010 set two new targets to be achieved: First to increase the Connect and Develop program in Procter &Gamble’s innovation practices to three times more with offering 3 billion dollars for the Company’s yearly sales revenues with the help of open innovation. P&G earned $56.7 billion revenue in the year 2005 and the company’s assets totaled to $20.3billion. However, on the other hand according to Procter and Gamble’s annual report of year 2011, “Research and development expenditure was $1.9 billion in the same year and the company employed about 7500 R&D individuals” (P&G 2011). Second is to become known as the Collaborator of Choice for innovation partnerships by persistently attaining effective relationships.

Projects enabled through Connect &Develop constantly served with better effectiveness, promptness, significance and market influence. The annual report shows that “Less than 50% of P&G innovation at present sourced externally. 70% greater than average NPV from Connect & Develop enabled projects in 2009. (Out of 112 initiates representing 77% of NOS). Forty percent of Connect & Develop partners have several deals with the Company. Approximately $3 billion in annual sales at collaborator firms driven by P&G-shared innovation” (P&G 2011).

Connect & Develop alliances have provided innovation practices in almost all departments of the organization, including excellent product innovations. Some of P&G’s well-known product innovations include Oil of Olay skin cream and Oil of Olay Eye Roller that has become highly eminent eye product within a few months (P&G 2011).

The number of patents P&G issued on yearly basis has decreased during 1996-2005 (Figure 3). Yet, on the other hand, the company’s revenue has appeared to be augmented during the decade and the company is still acquiring nearly 4500 government grants yearly. The effect of its outside innovation set of connections and the company’s policy of licensing in and gaining latest goods and selling those products as a P&G brands is provided in numbers; even if the amount of grants that are issued declines, profits rise, particularly those following strategic. For Procter & Gamble licensing is an element of their innovation association and is a provider in market for purchasing and selling technologies.

The figure above shows the patent analyses for P&G which is not very flattering considering the fact that the number of issued patents has decreased in the years; however observation of the all intangible assets shows that P&G is working keeping in mind the future of the company. In the year 2005, Procter & Gamble carried the highest amount of intangible assets as compared to its competitors, and out of 49 assets almost 40 percent of them were intangible. Keeping in mind that the goodwill is acquired by maintaining the proportion above 80 percent (P&G 2005). The Connect & Develop model of P&G has facilitated the company to manage attain licenses and attain the competitive edge for many products from other companies that specifies its high amount of intangible assets (Viskari 2007).

At present, the company holds approximately 20 billion dollar different brands, and has consumed almost 2.2 billion dollars upon innovation in the year 2010. The financial annual report of year 2010 demonstrates that currently the external partners have carried out fifty percent of the P&G’s innovation, whereas it was 15 percent since the last six years. In 2008, Procter and Gamble has made earnings of $83.5 billion. At the same time, the company’s Research and Development budget raised to 2.32 billion dollars, as compared to 1.92 billion dollars in the last year. In spite of this, most importantly the relative amount of revenues of R&D lessened to 3.4% from 4.8 percent (P&G 2011).

Benefits of Open innovation offered to Unilever

Benefits of Open innovation at Unilever can be clearly seen in its products. Some of which are following:

• The company was able to manufacture an upside-down roll-on deodorant, which makes use of 18% less plastic in each pack, which in turn has reduced the cost.
• Pureit, a home water purification device that is operated from a battery which gives households the ability to obtain pure and hygienic drinking water at an affordable price.
• Minor and powerful laundry detergents which, for the reason that of their size is so small and concentrated, decreases transportation cost, carbon dioxide and water utilization.
• Comfort Easy Rinse Fabric Conditioner that lessens the capacity of water, needed to wash garments.
• ProActiv margarines that has organic sterols which are medically approved to minimize the amount of cholesterol from the body (Unilever 2011).

Such innovations constitute a significant fraction of the Company’s Long-lasting Living Plan aim is to divide the ecological effect of the manufacturing and application of its products.

The Company has six strategic Research and Development laboratories across the globe. Company’s Research and Development labs are located in various regions such as in United States, India, United Kingdom, China and the Netherlands (Unilever 2011).

Customer Development

Unilever provides exceptional customer care, and is able to attract consumers from leading worldwide companies such as Wal-Mart, Carrefour, Target, Tesco and some wholesale stores like Metro. The company is also attracting customers from mom an pop retailers that are present in more than 170 countries all over the world. The ten leading retail suppliers are uplifting the sales of Unilever to almost 20 percent. Unilever is selling its products to more than 10 million national markets both in developing and prevailing markets (Unilever 2011). Unilever also achieved the Tesco’s Global Supplier of the Year Award in 2010 (Unilever 2011).

Manufacturing

Discussing the manufacturing side, Unilever has 264 manufacturing sites across the globe. From the year 1995, its performance, per tonne of production, owing to open innovation, has improved steadily:

• The release of Carbon dioxide CO2 from energy has reduced by 44 percent
• The usage of water has decreased significantly by 66 percent (Unilever 2011).
• The total waste has fallen by 73 percent
• Unilever’s total recorded rate for accident frequency is taken as per million hours. which is used to gauge the safety level –was recorded at 1.61 in the year 2010.It implies a fall of 15.7 percent as compared to the previous year (Unilever 2011).

Challenges of Open Innovation

Challenges of Open Innovation at Procter & Gamble

Given below are precisely explained some of the most serious issues identified, which in case are not handled accurately might put in risk P&G’s long term accomplishment.

The risks of “outsourcing” innovation

Having the ability to gain access to knowledge exterior to the firm and leveraging in this manner, open innovation appears to be a very rational strategy. However, main risks are positioned behind it; first of all “Lean innovation” may turn out to be breakable innovation and show the tactic to a progressive stoppage of internal competencies to create its personal innovations. This might influence them in the future particularly their most imperative competitive edge, their aptitude to innovate.

Managing the intellectual property and its negotiations in an open environment

The Connect and development (C&D) of P&G will transform into a leading innovation model of the era; this notion is explicitly given by the Company (Huston and Sakkab 2006), however the negative aspect is noticeably regarding the issue of how to make safe the company’s intellectual property. Case is converted to be much more complex following the application of the open innovation model. Some time ago, majority of the innovations were carried out in reserve within the organization, and Procter & Gamble was only required to make a choice whether to grant for the patent for the specific innovative products or not. Hence, in the Connect and Develop program, there is a number licensing facility both in and out for innovation and latest technologies that transfers the protection of the cerebral property into a massive dilemma. The firm must think about the most suitable way to guard their new inventions and hence, patents should be looked at closely (Panduwawala et al. 2009).

One more issue emerging from this matter is regarding the management of more than hundreds of collaborations with small technology suppliers, which have no long-term regular partnership with Procter & Gamble and do not carve up the similar incentives. Enormous expenses of transactions are frequently incurred in the attempt to innovate methodically in an open environment; these are the costs, which may not have taken place if the innovation occurs in a closed setting. (Panduwawala et al. 2009).

Matters regarding selecting and sorting the required innovative ideas

In order to embark upon the complications that are discovered in the C&D concept, the organization finds a way to prefer technologies as accepted and verified (Huston, Sakkab 2006). The strategy while decreasing the opportunities to modify and generate radical innovations is also considered to be helpful for the reason that it is thought to help in decreasing the execution and technological threats since P&G’s Research and Development department arbitrates right in the concluding stage. This filter without doubt constrains the capability of the open innovation approach, forming a restriction on it, and also creates an issue as internal R&D capabilities are less practiced.

Evaluating the “Serial Innovators”

The Pareto Principle affirms, “We should suppose that most of the priceless innovations derive from a much-condensed set of bright individuals. This is for the reason that of the high number of persons involved and the reality that they are not within the organization. For P&G identifying and promoting this important group will become a major problem and an out of the ordinary potential competitive advantage” (Panduwawala et al. 2009).

Connect & Develop financial results

It is not still clarified whether this approach has enabled P&G a significant advantage to its predictable approach of innovation before the year 2000 or not, despite of the fact that sales and profits augmented in an unexpected less time after the execution of C&D. The company’ stock has experienced similar growth in its value which is comparable to the trends observed in the industry stocks. Consequently, the factual effect of C&D is difficult to determine in financial requisites (P&G 2011).

The complicated system and its interactions

The running of this system is transformed into a hard task by itself by Procter & Gamble’s Connect and Develop feature and also various innovational activities, owing to the creation of a complex set of arrangements and connections. P&G has two serious titles; The “Technology Entrepreneurs” and the “Research Fellows” at the center of these connections and the administration of innovation. The Technology Entrepreneurs are those who seek out innovations taking place in the external environment and bringing them within their organization. The next are responsible for the conceptual growth and unremitting enhancement of Connect & Develop, functioning as the fortitude of this complicated structure (Panduwawala et al. 2009).

Challenges of Open Innovation offered to Unilever

The performance of open innovation at Unilever is challenged in the following areas:

Cost Reduction

Unilever is confronted by the biggest challenge of improving efficiency in reducing costs, particularly in its usage of people, and the time to deliver the product to the market (Graul et al. 2006). The company’s expenses and employees’ costs are much higher than Procter & Gamble’s cost. Since P&G takes a hands-on move in e-business and innovation, the company’s position is a reactive one.

Overall Strategy

Even though Unilever appears to have gained expansion worldwide with some achievements, it gives an impression of being lacking an overall worldwide strategy. The strongest point of P&G is to gaining knowledge and giving out information on a global basis whereas it is one of the weakest factors for Unilever.

Strong entry barriers and substantial rivalry

While mergers and acquisitions keep on occurring , the product manufacturing industry is likely turn into more consolidated one, which, alongside with tough entry barriers and large competition between present rivals, will support sustainability for incumbents. Expenditure and accessibility of raw materials can carry on create a danger to smaller companies which are deficient of adequate capital reserves required balance for additional costs.

Expansion into global markets

Expansion into international markets is vital for the future growth of the company. Expansion into the worldwide industry is not novel to the product manufacturing industry. “Low consumption of household products in emerging markets – such as China and India – represents an opportunity for companies to expand their revenues and escape from the stale performance of their home markets” (Graul et al. 2006).

The fastest upcoming markets are the Eastern Europe, the Pacific Region and Latin America. On the other hand, the Asia-Pacific region is foremost as an essential emerging market for the industry, although there are some hurdles in this region, and the most prominent one is the low income.

Discussion

In the light of the above findings, it can be suggested that both companies Procter & Gamble and Unilever are the market leaders and both of the companies have acquired higher profit margins by applying effective open innovation techniques. The research study highlights that Procter & Gamble is industriously involving in various activities that assure a better future of development and expansion. Procter & Gamble has made considerable investments in open innovation, and made use of acquisitions, joint ventures, and alliances for the expansion of their market understanding and approach. On the other hand, Unilever with its renewed efforts for strong line expansion and partnerships with good corporate partners like Pepsi are applying open innovation to progress their business. The Company has aligned its reserves and supplies and is fully dedicated to open innovation processes. It is generating a significant amount of funding for its Research and Development Department, and today Unilever is holding a better position in the market thus improving its present standings.

Open Innovation Methods has augmented market share of Procter & Gamble on base business and at the same time has helped the firm to focus on each business as well as investing in the emerging markets. P&G’s global strategy is also based upon innovation techniques. The company’s open innovation strategy provides innovative R&D techniques to reduce costs and at the same time increase quality and improving go-to-market capabilities. Procter & Gamble has been keenly encouraging partnerships and open innovation in nearly each and every phase of product and process development as well as the launch, which ranges from basic chemistry to packaging. P&G’s open innovation practices are positively affecting the open innovation performances. It is also highlighted in the above research study that P&G has acquired ample sufficient market awareness, embraces innovative database technologies comprising of more than 100 million customers and also exploits a combination of worldwide resource facilities and associations and alliances for promoting local acceptance and an atmosphere, which enables knowledge, transfer. Company’s R&D has enabled continuous initiations of new products, and has made expansions and reformations within their existing lines to accomplish consumer needs.

As stated in the study that NIH syndrome can have negative effects on the open innovation performance. Therefore, Procter & Gamble has uncompromisingly tackled with the NIH (not-invented-here) syndrome; the company has reproduced its prospective sources of insight and solutions. This has made selected resources accessible to the community, but also listens carefully for signals of emerging customer need. P&G is further dealing with this issue successfully and therefore progressing drastically.

In contrast, Unilever is a little behind as compared to Procter & Gamble in applying open innovation techniques. Unilever can increase its open innovation performance by transferring its in-house researchers into outdoor technology investigators; subsequently Unilever’s external technological exploration will be carried out by most of the same researchers who are currently within the company’s R&D labs. This is one way, which can help Unilever in tackling the “NIH syndrome”. The required thing is to develop a culture internally, which is appreciative of external capabilities. Historically research labs were reviewed and assessed on the basis of the number of patents they delivered, which is very internally focused. However, for open innovation, it is best to judge a research lab on the basis of number of patents it finds and manages to get access to.

Summary

The chapter has presented a comprehensive analysis of open innovation in the leaders of the product manufacturing industry i.e. P&G and Unilever. The findings of this study have therefore proved the hypothesis set out in the Conceptual framework. The conclusions and recommendations of the findings are explained in the next chapter.

Conclusions and Recommendations

Conclusions

The objective of the study has been addressed by carrying out a comprehensive study that is descriptive in nature. The purpose of the study has been to investigate open innovation in P&G and Unilever and then suggests which one is better. The results from the present study are summarized in the following.

This analysis has investigated open innovation practices of the leaders of the product manufacturing companies i.e. P&G and Unilever. The descriptive results reveal a number of insights. This section summarizes the main results of the descriptive analysis and ties them into the theoretical discussion mentioned above.

Open innovation has a positive effect

Open innovation practices pose a sound impact both on the capacity for fresh innovation and on the company’s innovation performance. In most cases it is the breadth of these activities – that is the range of interfaces with the environment exterior to the firm – which produces the constructive impacts.

An international, holistic approach to open innovation can generate greater profits as compared to a profound focus on a particular aspect

Combining the findings together, what seems to be most vital are the general strategies as compared to individual dimensions of open innovation.

A robust internal ability is still significant

Two findings indicate in this regard. First, the findings point out that R&D strength is an important factor determining innovation performance. The next finding is related to sourcing. There exists some varied evidence, which suggests that sourcing has constructive effects.

Global vertical collaboration is a critical factor determining high innovation performance

Innovation collaboration alongside the value chain – i.e. vertical collaboration – is much positively connected with greater innovation performance of companies.

In the light of the analysis and conclusion, the following tools can be recommended for the product manufacturing companies, which can assist them in successfully implementing open innovation in their organization.

Sourcing

This involves both dependence on exterior sources for the development of finishing products and processes and purchases of outside knowledge for internal improvement activities. Contribution of external sources is considered as high if product innovations or process innovations are completely developed by exterior sources.

Search

Open innovation strategies and practices related to employment causes a firm to become more absorbent for ideas from outside and taking advantage from allies. Search is the positive constituent of this practice. It is keenly looking for novel information or screening of a firm’s setting for innovative ideas.

Collaboration

The coupled method is an arrangement of the inside out and the outside-in procedure as business boundaries are open in both directions. Collaboration is termed to be a way to gain access corresponding assets and to internalize information spillovers. The collaboration dimension within the open innovation practices captures the variety of different kinds of collaboration partner like consumers, suppliers, rivals in the market, etc.

Protection

For organizations considering the idea of adopting an open innovation strategy, protection IP is a critical activity in attaining positive financial benefits from the inside-out course of action. Protection can be termed as the closed dimension of open innovation since the stringent protection of IP can be regarded as a closed innovation strategy. Nevertheless, registration of IP can also be exploited as a means to commodity proprietary knowledge, in turn allowing more interaction.

Recommendations for Future Study

From the present study, it is clear that open innovation performance of P&G is better than Unilever due to a number of factors and therefore is leading the product manufacturing industry. The present study has kept its focus on the benefits of open innovation to both the companies and tools applied by them in implementing open innovation efforts. A future study can target open innovation in the leading companies of the service industry and the techniques applied by them. This will allow to extend the scope of such study and to discuss comparison of trends of open innovation in service and product industry.

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Appendix A: Financial Highlights (P&G)

Amounts in millions, except per share amounts	2010	2009	2008	2007	2006
Net Sales	$78,938	$76,694	$79,257	$72,441	$64,416
Operating Income	16,021	15,374	15,979	14,485	12,551
Net Earnings	12,736	13,436	12,075	10,340	8,684
Net Earnings Margin from Continuing Operations	13.9%	13.9%	14.2%	13.3%	12.7%
Diluted Net Earnings per Common Share from Continuing Operations	$ 3.53	$ 3.39	$ 3.40	$ 2.84	$ 2.49
Diluted Net Earnings Per Common Share	4.11	4.26	3.64	3.04	2.64
Dividends Per Common Share	1.80	1.64	1.45	1.28	1.15

Source: (P&G 2010).

Appendix B: Consolidated Earnings (P&G)

 Source: (P&G, 2010).

Amounts in millions except per share amounts; Years ended June 30	2010	2009	2008
See accompanying Notes to Consolidated Financial Statements.
NET SALES	$78,938	$76,694	$79,257
Cost of products sold	37,919	38,690	39,261
Selling, general and administrative expense	24,998	22,630	24,017
OPERATING INCOME	16,021	15,374	15,979
Interest expense	946	1,358	1,467
Other non-operating income/(expense), net	(28)	397	373
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	15,047	14,413	14,885
Income taxes on continuing operations	4,101	3,733	3,594
NET EARNINGS FROM CONTINUING OPERATIONS	10,946	10,680	11,291
NET EARNINGS FROM DISCONTINUED OPERATIONS	1,790	2,756	784
NET EARNINGS	$12,736	$13,436	$12,075
BASIC NET EARNINGS PER COMMON SHARE:
Earnings from continuing operations	$ 3.70	$ 3.55	$ 3.61
Earnings from discontinued operations	0.62	0.94	0.25
BASIC NET EARNINGS PER COMMON SHARE	4.32	4.49	3.86
DILUTED NET EARNINGS PER COMMON SHARE:
Earnings from continuing operations	3.53	3.39	3.40
Earnings from discontinued operations	0.58	0.87	0.24
DILUTED NET EARNINGS PER COMMON SHARE	4.11	4.26	3.64
DIVIDENDS PER COMMON SHARE	$ 1.80	$ 1.64	$ 1.45

Appendix C: Companies Financial Data

“Operations Management” Term In Academic Literature

EBSCO Search

This paper is aimed at discussing how such the business notion “operations management” is introduced in the academic literature. The following graph will plot the number of academic sources in which the notion is discussed.

It should be noted that this chart is based on the results of the search queries done in the database called EBSCO. During the search, I focused on the period between 1930 to 2013. It was necessary to identify the number of articles or other scholarly sources incorporating such a term as operations management. I did nine search queries, and each of them was done for a separate decade such as the sixties or seventies. The only exception was the final inquiry when I looked at the number of articles published in 2011, 2012, and 2013. While collected the data, I relied on the abstract search which that the database engine focused only on the abstracts of sources. Therefore, one should take into consideration that there could be a greater number of articles in which operations management could be discussed. This is one of the main issues that should be considered while discussing the frequency of usage.

One should mention that the term operations management is not a new concept. This notion was introduced by Fredrick Taylor at the beginning of the twentieth century and it had profound implications for many manufacturing companies (Khanna 2007, p. 7). However, this concept was not widely used by scholars. For example, according to the results of my search queries, during the period between 1930-1950, there were only twelve articles related to this concept. Nevertheless, the situation began to change dramatically in the following decades. For instance, between 1961 and 1970 the number of sources rose by 8745 percent. This trend continued in the following decades, and there is no evidence suggesting that the interest in this topic will decline since it is still relevant to many professionals.

To a great extent, this tendency can be explained by the increasing attention to various aspects of operations management. At the end of the twentieth century, researchers understood that the productivity of many firms could be improved by elaborating or optimizing their operations management strategies (Bames 2008, p. 3). Additionally, scholars attempted to construct theoretical models of operations management. This is one of the reasons why there were 11949 academic sources published within the period between 2000 and 2010. Currently, this term can be related to a great number of areas such as information technology, supply chain management, customer relations, financial performance, and so forth. On the whole, various aspects of operations management can be discussed by the representatives of various disciplines. Thus, the active participation of many researchers can account for the increasing number of academic sources in which this concept is mentioned. These are the main aspects that should not be overlooked.

This discussion indicates that the term operations management has become extremely popular among many researchers. It is very likely, that in the future, this concept will attract even more attention. Nowadays, business executives understand the importance of operations management for the financial and organizational performance of their companies. One can argue that in the following decades, even more attention will be paid to this concept.

References

Bames, D 2008, Operations Management: An International Perspective, Cengage Learning EMEA, New York.

Khanna, R 2007, Production And Operations Management, PHI Learning Pvt. Ltd, New York.