Developing Intellectual Capital

Rare is the annual report that doesn't somewhere state, "Our employees are our most valuable asset", or something like that. However, you can read every word in most of those annual reports and not find any explanation of how the company intends to preserve, use, and grow its proclaimed most valuable assets, its intellectual (human) capital.

08/01/2000


KEY WORDS

 

  • Education/training

  • Productivity, management, and control

  • Business

  • Companies

  • Quality assurance

Sidebars:
Getting the most from training
Who matters when?
Control engineering in academia

Rare is the annual report that doesn't somewhere state, "Our employees are our most valuable asset", or something like that. However, you can read every word in most of those annual reports and not find any explanation of how the company intends to preserve, use, and grow its proclaimed most valuable assets, its intellectual (human) capital. (See related cover story, in this issue).

Fortune magazines' editorial director, Geoffrey Colvin says, "In the age of infotech, financial capital is no longer the scarce resource in business, as it was for hundreds of years; the scarce resource is now human talent, knowledge, and creativity. Powerful forces are changing business models in ways that radically increase the economic value of employees' most essential human traits: their ability to imagine, judge, and create, and to strengthen human relationships. Yet most companies, with management methods built on what worked in the past, are not prepared to optimize what's important now."

For years the development of intellectual capital was everyone's job and no one's job. Defining and finding training to grow the intellectual capital was pretty much left up to the individual who frequently selected a training course as much on when and where as on what would be learned and how it could be applied to solve real business problems. As Mr. Colvin indicates, companies can no longer afford to leave development of the most valuable asset to chance; they need to actively manage all assets.

Measuring results

Training has always been one of those tough-to-measure intangibles that doesn't fit neatly into typical Return On Investment (ROI) calculations, but an increasing number of companies view that as a hurdle, not an acceptable excuse or roadblock.

One such company is Foxboro (Foxboro, Mass.) where Paul Fasoli, lifetime learning center manager, has been challenged to completely change how Foxboro approaches training for its customers and employees. Mr. Fasoli explains that learning is not an isolated event, but a process that starts long before the actual training course begins and only ends after the student successfully applies what has been learned to solve real control and automation problems. (See Getting the most from training.) Training experts emphasize there are three major participants in the training process; the instructor, the student, and the student's manager (supervisor). Each impacts the effectiveness of the training experience. (See Who matters when?)

Mr. Fasoli emphasizes that managers play a critical role in the learning process and should take responsibility for determining business goals, funding, setting expectations, and providing the necessary support. That support includes creating an atmosphere where returning students share their newly gained knowledge and their peers are anxious to listen and learn.

One proven method of calculating training's ROI is to identify a very real business problem that needs to be solved and get management's agreement on how many dollars would be saved by solving the defined problem. In this way, training expenditures are directly tied to measured results and expectations are well understood.

Education experts agree that using this method works well as long as all other elements of the training process are present. Elements include setting realistic expectations on when improvements begin to appear. It's not realistic to think that a defined business problem, one that has been around long enough to get management's attention, will be solved a few days after the individual returns from training.

One company embracing the need to manage and improve its intellectual capital is Honeywell's (Allied Signal) specialty chemical division. Between 1995 and 1998, all specialty chemical division employees received 40 hours of annual training in the use of a Six Sigma continuous improvement process. The result, productivity improved 4.7% annually and added $2 billion in measured savings to Honeywell's bottom line (See CE , Jan '99, p. 62 and Mar '99, p. 87).

The United States Postal Service (USPS, St. Louis, Mo.) also decided to invest in its intellectual capital by eliminating dependence on outside contractors. After attending GE Fanuc (Charlottesville, Va.) Cimplicity training, Charles Moore, USPS electronic technician says, "With the knowledge gained from the GE Fanuc training, I was able to add new devices...without incurring outside implementation costs."

Another way to manage training ROI is to seek companies who guarantee that attending its training course(s) will improve business results. Incident investigation training from System Improvements (Knoxville, Tenn.) and Foxboro's entire training curriculum come with a "no quibble" money-back guarantee if training received isn't perceived to have helped solve business problems and improve overall business performance.

Timing the training

When the training occurs can be just as important as what the training is all about. Such was the case for Tempel S.A. (Barcelona, Spain). Prior to beginning configuration of its AlterSys (Charlotte, N.C.) control and automation system, Tempel employees attended a three-day, hands-on training session where students shared situations and anticipated needs. This was also where instructors addressed how those situations and needs could be best handled in the control configuration.

John Riera, Tempel's technical manager says, "We were able to see absolutely everything we wanted and needed to address. AlterSys permitted us to take some control over the training content, as opposed to taking notes and learning what the instructor thought would be useful."

Timing the training is important, but a student's attitude can make or break the best instructor's efforts, as Steeplechase Software's (Ann Arbor, Mich.) president, Mike Klein, experienced.

A machine repair technician's company "required" the technician attend a three-day visual-logic controller developer's course at Steeplechase. Apparently, attendance was the only criterion this student's manager required because the first day the student spent most of the morning reading the newspaper. During the afternoon, the instructor began teaching the use of flow charting to define the logical flow of the manufacturing process. The student's interest picked up. On the third day, each student was to complete flow charts, sub-programs, and a graphical interface for a full-working weld cell simulator. The machine repair technician passed with flying colors.

Student success can be contributed to an instructor's willingness to keep trying and somehow "touch" the one button that motivates. That may require having instructors with first-hand practical experience and who understand the product/material they are teaching better than anyone.

Such is the unique situation of instructors at VIA Development Corp. (Marion, Ind.). VIA is owned by Mike and Sherri Bartrom, who also own Computer Age Engineering (CAE), a custom machine builder serving the automotive industry. Employees in CAE's shop use and provide honest, real-time feedback to VIA's development engineers (who double as instructors) on ways to improve VIA's electrical design software application constructed as an add-on to AutoDesk's AutoCAD software. David Gatson of Georgia Pacific sums up VIA's training this way, "That person [VIA instructor] really knows his product. Not only did he know it, but also he knows how to convey that knowledge to students. This product and training will cut our drawing development and maintenance time by at least 50%."

Realistic training

Repetition and reinforcement have long been known as an effective teaching method for learning our ABCs. But today's technologies have reached such a level of sophistication, we often have difficulty separating the real world from the simulated world. An increasing number of industries are using sophisticated simulations to engulf teams and individuals in real-life scenarios that elevate repetition and reinforcement to a new level of learning.

For example, at Boeing's Seattle, Washington facility, various aircraft flight simulators are used to train and re-train flight crews to handle unexpected emergency situations as efficiently and safely as possible. Each Boeing flight-deck simulator is positioned atop sophisticated electro-hydraulic legs, creating the look, feel, and sensation of real flight.

Realistic training simulation was exactly what PCSs' (Saskatoon, Saskatchewan, Canada) nitrogen division had in mind when PCS contracted Kellogg Brown & Root (Houston, Tex.) to install two personal computer-based operator training simulators in its Trinidad, West Indies ammonia production facility, using Cape Software (Houston, Tex.).

One simulator provides refresher training and operator certification for an existing ammonia plant. The second simulator was developed in conjunction with a new ammonia plant using new ammonia production technology. The simulator is used to conduct routine and emergency training to operators and plant supervisors in how to safely start-up, operate, and shut-down the plant; efficiently and safely respond to emergency situations; and, "fine tune" operating and emergency procedures.

On the road again

Frequently, it's more effective to take the instructor and the classroom to the students. Taking the show on the road saves money, permits training more students, allows for tailored course curriculum, and almost always gets management involved in defining tangible training goals.

That's exactly what Florida Power's Crystal River Nuclear power generating station leaders felt they needed. Florida Power's managers believed the knowledge gained in properly repairing a single control valve could pay for the training.

"A control valve that's partially open when it should be closed allows large volumes of super hot [280-300 °F; 138-149 °C] water to pass through it. Loosing super hot water is like pouring megawatts down the drain, and at 75 dollars per megawatt, it can quickly become big money," says Florida Power's nuclear support group project specialist Larry Ganstine.

To correct the situation, Florida Power contracted with Fisher-Rosemount (Marshalltown, Ia.) to tailor a control-valve-training course designed to close the knowledge gap between valve mechanics and instrument technicians. During the course, a valve mechanic and instrument technician were paired, so both understood the impact of valve disassembly, seat lapping, reassembly, actuator installation, and positioner mounting and calibration. The result: teams were better able to find real sources of problems and take appropriate corrective actions.

Changing perceptions

"When you understand that a corporation is more complex than a bundle of assets owned by shareholders, that it involves lots of investments by lots of participants, it changes everything," says Margaret Blair, senior fellow specializing in human capital and corporate governance at Brookings Institute (Washington, D.C.).

Development of intellectual capital is a critical element of achieving long-term business viability and should garner the attention of everyone in the organization, starting with the board of directors. After all isn't the board's charter to ensure everyone, from the ceo down, is best serving shareholder interest? Granted, development of intellectual capital is not a surgically precise process, but it's doable. Just like a board assess financial capital and associated risk to establish a value, so too can the board assess a company's intellectual capital. Essentially that's what Wall Street investors do every day. When companies knowingly begin to value intellectual capital, the management styles, employee retention, stock options, and other benefits begin to change for the good, almost overnight.

Remember, too, what Mr. Colvin said, "In the age of infotech... the scarce resource is now human talent, know-ledge, and creativity.... Yet most companies...are not prepared to optimize what's important now."

Companies that find themselves in an endless recruiting, interviewing, hiring, and training cycle need to stop, look, and listen. Intellectual capital that's capable of providing a company with "out of the box" thinking is truly the company's most valuable asset. Slighting the training process is not a good use of those assets, and only serves to make the next employer that much happier and stronger.




Getting the most from training

Training should be a process, not an event. To get the most from training, managers and individuals should begin well before attending the actual training course.

Before attending the course, individuals should work with their managers to obtain answers to the following questions.

What business or organizational goals will the training address?

What will I be expected to do with the material I learn when I return?

What is the priority or importance of this training to me and to my company?

A week or two before attending the course, managers and individuals should share their answers with the course instructor to ensure everyone understands the mission.

While attending the training, individuals should:

Relate material to the defined goals and objectives;

Discuss their progress and any concerns with the instructor; and

Develop action plans to use what they learn as quickly as possible on their return to the job.

Upon return from the training, individuals and managers should:

Review the training content and quality;

Apply what was learned;

Consult with the instructor, when needed, to reinforce course material use and understanding; and

Share new skills/knowledge with co-workers.

Getting the most from every training course requires participation and commitment from the manager, the instructor, and the individual. Anything less increases the risk of disappointment for everyone.

Who matters when?

Persons having the greatest impact on transfer of knowledge shifts before, during, and after training, according to Mary Broad & John Newstrom's 1992 book "Transfer of Training" from Perseus Books Publishing.

Test your knowledge of who's most important to the learning process at what time by ranking the nine-role/time relationships with #1 as most important and #9 as least important.

___ Instructor before.

___ Student before.

___ Manager before.

___ Instructor during.

___ Student during.

___ Manager during.

___ Instructor after.

___ Student after.

___ Manager after.

Find the answers in the Products & Software section of this issue.

Control engineering in academia

Control engineering courses and research programs for both graduate and undergraduate students are available at major universities everywhere, but generally as part of other technical disciplines such as chemical, electrical, and computer engineering. Selected programs are listed below. Web sites for these and other control engineering departments around the world can be found at the Control Engineering Virtual Library.

University of California at Santa Barbara (Santa Barbara, Calif.) Center for Control Engineering and Computation
Facilitates interdepartmental cooperation in control engineering and computation at UCSB. Initiates and coordinates research projects applicable to industrial, environmental, transportation, and defense systems. Caltech (Pasadena, Calif.) Control and Dynamical Systems Department
Educates students in mathematical methods of control and dynamical systems theory and their applications to engineering problems.

Case Western Reserve University (Cleveland, O.) Department of Electrical Systems, Computer Engineering and Science
Provides students with basic concepts, analytical tools, and engineering methods, which are useful in analyzing and designing complex systems. Problems relating to modeling, decision-making, control, and optimization are studied.

University of Connecticut (Storrs, Conn.) Control Station Laboratory
Offers research, training, and technology transfer in automatic process control, including hands-on training for engineers, scientists and technicians.

University of Delaware (Newark, Del.) Process Control and Monitoring Consortium
Addresses research needs in the critical technology areas of computer-integrated process operations from the levels of data mining through real-time planning and optimization.

University of Maryland (College Park, Md.)—The Institute for Systems Research
Develops, applies, and teaches advanced methodologies of design and analysis to solve complex, hierarchical, heterogeneous, and dynamic problems of engineering technology and systems for industry and government.

Oklahoma State University (Stillwater , Okla.) Control Systems College of Engineering, Architecture and Technology
Provides a strong foundation in engineering and mathematics and uses computer software and hardware extensively to address and solve new problems in a variety of disciplines, from aeronautical to electrical and chemical engineering, to biology, sociology and physiology and economics.

Purdue University (West Lafayette, Ind.) Integrated Sensing, System Identification and Control Laboratory, Department of Chemical Engineering
Develops tools that support the integration of various types of information into a coherent (real-time) model that can be used to accurately predict a system's behavior. Particular emphasis is given to the manufacturing side (e.g., process optimization, control, and scheduling).



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