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0106 HR Magazine: Employee Development at Holder Construction

By Robert J. Grossman   1/1/2006
 

HR Magazine, January 2006Vol. 51, No. 1

Two companies tackle vital employee development in very different ways that suit their business needs. 

Unlike the leaders of many Silicon Valley start-ups who dream of being acquired by a big player so they can cash out, Richard Mott, CEO of Kyphon Inc., believes his company can emerge as a giant in its own right. In fact, Mott and his board see almost limitless opportunities for growth for the Sunnyvale, Calif., company—but only if it can put workers with the right skills into the right jobs.

That may be easier said than done. Kyphon’s skill needs are both specialized and broad. For example, the company has long relied on salespeople (called spine consultants) who are so well trained on its patented device for correcting painful spinal conditions that they can, in turn, teach surgeons what the product is—and how to use it in the operating room.

In addition to training employees on these specialized skills, Kyphon also needs to develop workers with a vast array of more commonly found skills—such as operations, accounting and HR. The company has rapidly outgrown its infrastructure and without such skills in place, further growth will be hampered. As a result, employee learning in a number of areas is vital for the organization’s continued growth and success.

Farther north, in San Francisco, Patricia Lee-Hoffman faces a similar challenge. Lee-Hoffman is a founding principal of Triage Consulting Group, a company that helps hospitals identify and recover outstanding medical insurance payments. New employees learn the company’s custom process and techniques for identifying such funds, then travel extensively around the country to put the practice in use at client sites.

The challenge for Triage: Workers can’t walk in the door knowing the company’s specialized, but learnable, system. They must be taught—and quickly. The rigorous travel schedule (employees are on travel three weeks out of four) often leads to burnout and job churning, and annual attrition is 22 percent.

In this environment, time is the enemy, and getting workers up to speed quickly on the company’s system is vital to business success. Triage tackles this through continuous training; new associates are taken out of the field about one week per month to receive ongoing instruction.

Similarities certainly exist between Triage and Kyphon. (See “Similarities Abound”.) Both companies face an equally pressing need to train and develop employees, and both companies tackle that need effectively. (Kyphon fills 44 percent of its management positions through internal management promotions. In 2005, Triage filled all vacancies from within.)

Yet both organizations train and develop workers in ways that are different, and that are tailored to their specific business models and concerns.

KYPHON

Three years ago, when Rich Mott took the reins at Kyphon, the company—now six years old—had morphed from a fledgling start-up fueled on dreams and enthusiasm into a publicly traded company poised to become a global player. But management had not caught up, had not upgraded its administrative structure or clearly articulated its culture and values.

“We succeeded up to that point in spite of ourselves,” says Art Ferdinand, manager of R&D, who has been with Kyphon from the beginning. “The company had no mission, vision or strategic plan.”

Among Mott’s first priorities was implementing a strategy and articulating a vision that would attract and develop the leadership talent Kyphon required—and encourage those leaders to stay with the company for the long haul.

But when Mott looked to his chief HR officer for help, he ran into a problem: He didn’t have one. “We had a hard driving sales force, but no foundation, no executive structure—HR included—that could take us to the next step,” he recalls.

With world-class companies like Hewlett-Packard (HP) and General Electric as models, Mott established the position of vice president of HR and hired former HP executive Steve Ham to fill the role. Ham had broad experience in HR and specialized expertise in training and development, and he had demonstrated a wide range of executive competencies as chief operating officer for the now-defunct women’s American Basketball League.

Ham was a key element in Mott’s strategy, one in which HR would play a central role. “When you’re in a business like ours, the HR dynamic is incredibly important,” Mott says. “Education—training and teaching others—are key elements of our culture. It’s a consistent theme. If our organization doesn’t continue to evolve and develop, it will fail.”

Anything Goes (Almost)

Under Mott and Ham, Kyphon’s flexible, open-ended approach to employee development has become a highlight of the culture. The company values virtually any type of learning. From scientific training to lifestyle management, employees are encouraged to pursue knowledge in any format that suits them, in-house or outside, formal or informal. Support for learning extends to families of employees through a dependent education reimbursement program. This year, Kyphon will spend $4,075 per employee on training, up from $3,200 last year.

Erika Palmer, manager of R&D, who is a scientist by training, has been a beneficiary of this “do whatever it takes” philosophy. She has been encouraged to take outside management courses as well as internal ones. “There’s responsibility on the employee to seek out opportunities, but support is also there from management in helping you find what you need,” she says.

“The culture encourages personal development,” agrees Maria Jenkerson, supervisor of operations. “If I need courses in finance, budget management or anything else that would help prepare me, they’d let me do it. I do the same for my direct reports.”

In addition, training opportunities are proving to be a powerful recruitment and retention incentive. “Given our growth path, individuals who want to advance can see promotions within a year,” says Ben Murdock, director of sales operations. Murdock began as a marketing intern in June 2000 right out of Bates College in Maine. He has moved up the ladder steadily, working in the field as a sales trainee, salesman and sales manager before assuming the director role.

“You get opportunities quickly, much faster than with other companies in our industry,” he says. “Because we’re growing so fast, our hiring profile is one where we’re willing to take people with drive, passion and develop them.”

More than three-quarters of Kyphon’s sales managers came up through the ranks, and, with a sales force that is expected to grow to 300 this year, more opportunities are certain.

Consolidating and Upgrading

When Ham arrived, HR was a bit player in talent development. Line managers developed their direct reports on an ad hoc basis, deciding when to send them to outside training programs or conferences. Sales, which hired almost half of the employees, was the exception: Its training was focused, tightly controlled and effective at producing spine consultants who could educate and sell to surgeons, Kyphon’s primary customers.

Under Ham, HR assumed responsibility for all Kyphon training, sales included. He instituted a companywide talent review and succession planning exercise, asking the vice presidents to assess their staffs and identify gaps where training or education would be beneficial looking out on one- and three-year horizons.

“Now every area has identified its high-potential [employees],” he says. “People were put in buckets—those who are ready for promotion now, those who need some time and those who do not appear to have the potential.”

Also, early on Ham created the position of director of employee development. To fill that spot, he recruited Steve Gerhart, who had been running an employee development program for McKesson Corp., a Fortune 15 health care and information technology company.

Gerhart found the caliber of the sales training “fabulous,” a veritable “how to” case study. Easing any anxiety over a potential turf battle, he announced his intention to build on sales’ successes by extending aspects of the training to the entire company.

What made the sales training so special? Personalized and continuous, it favored an integrated approach—mentoring, classroom instruction and fieldwork. Spine consultants, all hired with medical device or pharmaceutical sales backgrounds, are given reading materials and are tested on those materials to ensure that they all have the same knowledge base. Once they pass the test, they receive two weeks of intensive classroom training in sales, product training and spinal conditions—such as injuries, diseases and the like. Then they travel in the field with a supervisor for a few weeks and finally are assigned to their territories.

Monthly, a manager travels their territory to mentor them, offering feedback. At various intervals, they return from the field for classroom training in management or advanced sales.

Gerhart was impressed by the spine consultants’ passion. He wondered if there were ways to replicate for other employees what the spine consultants experienced daily in the field.

“Kyphon’s mission is more tangible for us,” explains Brad Paddock, vice president of sales. “We see the patients, often interact with them in the recovery room. We see them in debilitating pain, unable to move. One hour later, they’re pain free. I’ve been in the recovery room where a patient has cried and said, ‘I can’t believe it; you’ve given me my life back!’ ”

Integrated Training

True to his word, Gerhart, an able consensus builder, consolidated and innovated. He began by making the comprehensive sales, product and science orientation available to all staff. He found ways to bring patients on-site so administrative staff can experience the same miracles that spine consultants see in the field. He has placed all in-house training under the umbrella of “Kyphon University.”

Courses, which usually last one day or less, are open to everyone. “People are more likely to attend if a program is in-house and [they] can complete it in an hour or so,” says Christina Catuanao, director of manufacturing.

Among the offerings in what promises to be an expanding curriculum: interviewing, situational leadership and emotional intelligence. In addition, Gerhart has continued to encourage managers to build personal education and development plans with their reports, supporting tutoring, coaching, travel to conferences, outside seminars and the like.

Catuanao, for example, encourages all of the 70 workers she supervises to include courses in their development plans. “Some do; others choose not to. The important thing is that they know the opportunities are out there.”

Jenkerson, for one, seized the training opportunities given to her, with excellent results. Within her first year at the company, she took supervisor and project management courses offered by the American Management Association in San Francisco. She has also taken

courses in interviewing and emotional intelligence through Kyphon University. “Who would think that in less than two years, I’d be supervising operations?” she asks. “I’m a great example of development.”

TRIAGE CONSULTING GROUP

In contrast to Kyphon, which hopes to build loyalty and long-term commitments, Triage’s employee life cycle is considerably shorter. Most employees view it as a good place to be for a while, but not for the long haul.

“Our business model is based on churning, hiring large numbers at the entry level and replacing them when they leave three or four years later,” explains Jeff Coolican, a manager.

The 200-person company has a relatively flat structure: six principals at the top, 23 managers reporting to them, 52 “senior associates” (fully trained consultants) below them, and more than 100 associates at the entry level.

Of all new associates, 70 percent make it to senior associate; those who leave tend to pull out a year or two after reaching that level.

Why do they leave? “People go off to do cool things like graduate school or medical school,” says Dan Phippen, a manager.

For the Triage business model to work, the company has to get entry-level associates up to speed rapidly, then retain them long enough to justify the investment before they move on. An additional challenge is identifying and training select senior associates for manager slots and eventually preparing them to become principals.

Getting Worker Bees in the Field

Beginning associates come in with a blank slate. They need to master quantitative skills and gain working knowledge of health care issues.

“There isn’t anything that Triage does that anyone has any idea about when they come out of college,” says senior associate Kristi Davis. “I had no idea about co-pays; the medical jargon was a mystery.”

New associates also need training on how to cope with difficult interpersonal situations. When they go into the field, they find money that their clients overlooked—a situation that can breed resentment from the staff at client companies. Coping with that resentment can be a recurring issue, say associates.

To help new associates develop the skills they need, Triage conducts regular group training sessions. Each month or so, new hires are assigned to cohorts of 10 to 12 for orientation. During the next 21 months, they return together to complete 15 formal training modules. Initially the modules focus on the nuts and bolts of being a consultant. Later, there’s more on project management skills. The format is interactive, featuring PowerPoint presentations, case studies and teamwork.

“We’ve got the same experience level but work at different sites,” Davis says. “It makes us comfortable when we ask questions. There’s real camaraderie.”

That was the design. “We time the trainings to match their experience level, so they’ll learn what they need to do to function on a project,” says Josh Kobal, a manager. “We break it up because if we throw too much at them it won’t stick.”

Peer Instruction

All modules are taught by Triage staff, most only a few years removed from the trainees.

“I like that the trainings are done by senior associates who have been here for at least two years,” says associate Emily McMahon. “They know what they’re talking about but aren’t so removed from us. It’s encouraging to know that in 20 months, I’ll be where they are.”

Many consulting firms ship trainees off-site for three weeks of intensive classes; then they’re done. Triage prefers the longer, combined module/field approach.

“We recognize that a lot of training will take place on-site and want to get them out there as soon as possible so they’re not overwhelmed with information that they can’t relate to,” Phippen says.

“When you go to training, you learn something you’ve never seen before; you remember parts, forget parts. In the field, you see something and it triggers the training in your mind. Sometimes you go into the trainings and you already had the experiences three weeks ago. The senior associate took you through it on-site; then the module reinforces it. You get a mix of both.”

Promotion Hook

Promotion is the carrot that keeps most associates in the fold. They know up front that if they stick it out for 21 months, they’ll be promoted to “senior associate” with a salary increase and a chance to run their own project.

“It’s appealing because of the opportunity to move up,” says McMahon. “It’s not a dead end; promoting everyone gives you so much motivation.”

“When I look at what my peers are doing out of college, the fact that I’ll be running my own project, supervising people, responsible for profits in 21 months seems pretty quick,” agrees associate Brian Friedlander. “And I’ll only be 24.”

Prescribed Training

Under Lee-Hoffman’s lead, the company provides an estimated 100 hours of training annually for each employee. Unlike Kyphon, which values learning in general, even when it is not directly linked to the business, Triage needs to focus on training that is immediately job specific—particularly for entry-level workers. Not only must the company get these workers up to speed quickly before they leave, it also faces greater competition for market share than Kyphon and must stay more focused on generating immediate revenue.

Perhaps it’s not surprising, then, that outside training does not receive unqualified support at Triage. Looking to pursue an outside degree? If you have time, which is unlikely, you’ll have to do it on your own. Though Triage principals write effusive graduate school references, they discourage associates from attending. They believe school is an unnecessary diversion, that the real-life experience associates are getting on the job is preferable.

In-house training, however, is another matter. Partially to encourage staff to extend their tenure after achieving promotion, Triage offers seasoned senior associates—those who have managed at least three projects—the opportunity to enroll in an on-site “Mini-MBA” program. Offered by faculty from the University of California at Berkeley and designed specifically for Triage, it’s divided into eight sections; each runs for two days. Topics include the U.S. health care system, negotiations and social responsibilities.

“The idea is to give them a more well-rounded health care background so they know what the client is dealing with,” Lee-Hoffman says. Attendees do not earn an MBA, but they do receive a certificate when they complete the program.

Building the Senior Team

Continuing education for senior associates and managers occurs at quarterly meetings, where outside experts brief staff on critical business and health care issues. In addition, Lee-Hoffman conducts “next generation” leadership training for Triage’s 23 managers, all former senior associates, preparing them to make the jump to principal. (So far no one has made it.) She leads skills workshops and brings in outside experts to assist, stressing the practical.

“We’re having people deal with case studies that relate to our work,” she says. “What do you do when a senior associate is in trouble? How do you make a toast? How do you make a speech at a retirement party?”

Overall, Lee-Hoffman believes Triage’s programs are unparalleled in depth and quality. There’s reason to believe she may be right. Clearly her passion for education is a major factor.

“I never wanted to stop being trained; that’s why I do it,” she says. “You need someone who loves to learn in charge. It wouldn’t be fun for me unless I saw this talent develop.”

Robert J. Grossman, a contributing editor of HR Magazine, is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.

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The Case for Development 

A strategy of developing internal talent can drive business performance, say experts. In general, executives and managers promoted from within reach levels of peak performance more rapidly than outside recruitsand theyre more likely to stick around. Forty percent of executives brought in from the outside fail within 18 months; half will have left the company, observes Michael Watkins, founder of Genesis Advisers LLC in West Newton, Mass. Youll succeed more rapidly, and at a significantly higher rate, with internals.

Similarities Abound

The willingness to develop talent may be one reason that both Kyphon and Triage Consulting Group are popular with workers. Kyphon is No. 9 on the list of best medium companies to work for, compiled by the Great Place to Work Institute in San Francisco and published in the July 2005 issue of HR Magazine; Triage ranks No. 2 among the best small companies to work for.

Both companies are star performers in the financial arena as well. Triage is the market leader in its consulting niche; Kyphon continues to experience double-digit sales growth.

Whats more, in their core commitment to talent development, they share the following characteristics:  

Business models and cultures where  education and staff development are integral, untouchable priorities.

Leaders who are passionate about education, training and promoting from within.

Succession planning that identifies and develops managers at all levels.

An integrative approach to learning that recognizes the importance of coaching, on-the-job mentoring and experiential learning, as well as traditional instruction.

Transparent promotion pipelines with fast-track possibilities.

A commitment to trainingeven if it means regularly pulling revenue-generating employees in from the field for instruction.

Despite these similarities, the companies different approaches show that successful training and development initiatives need not be clones of one another; instead, they need only to address the specific issues faced by a particular business.

Lessons Learned at Kyphon 

Steve Ham, Kyphons vice president of HR, credits the C-suite and board for enabling him to put a productive talent-development infrastructure in place.

From my first meeting with Rich Mott, it was clear that education and development was a passion of his. I had the mandate from the beginning, but I didnt expect it so uniformly. Whenever weve introduced new programs, theres been uniform support and enthusiasm. Thats unique compared to my other experiences where I felt like I was fighting for mindshare.

Ham says when CEOs are cool to training, you have to light the fire. Otherwise youre always swimming upstream. Do it by being able to demonstrate the contribution it will make to the companys ability to be successful. Examples of companies like GE and HP who do this well are instructive. Its a key differentiator.

He takes pride in whats been accomplished but isnt completely satisfied. I worry that we havent aimed high enough. Did we do enough soon enough? Could we have created some programs earlier? In the future, well build more-sophisticated leadership programs and provide more opportunities for development at the executive level. 

 

Youth Culture Rules at Triage  

Triage Consulting Group features a culture that is particularly attractive to freshly minted college graduates. Theyre drawn to the glamour of consulting, travel with an expense account, a competitive financial package, and the Triage youth-oriented culture focused on fun, friendship and family.

The average recruit, usually 21 or 22, finds the rah-rah stuff attractive, says senior associate Kristi Davis. Its a family, very different from the kind of place your father works at. Face it; no one is willing to give up on college if they don't have to!