2.1 E-learning and Sustainable Competitive Advantage
The Purpose of e-learning is to create learning experience through web and internet technologies (William, 2006). According Moore (1989) three types of primary interaction can occur among instructors and learners. The interaction can happen between learner and instructor or learner and content. In collaborative learning the interaction occur between learner and learner. These interaction types create effective and interactive learning atmosphere among participants. Rosenberg (2001) defined learning is a process to enhance performance through acquiring new skills and knowledge. Knowledge is well structure information (Rosenberg, 2001) and training is change in skills (Elkington, 2002). Elkington (2002) described education as a change in knowledge which is an attempt to give broad information to learners but nothing to do with developing skills.
Figure 2.1 Training, Learning and Education (Source: Nick, 2005)
Figure 2.1 illustrate the difference and relationship between learning, education and training. Nick (2005) explained the difference between education and training and how these leads to learning as per Rosenberg (2001) view. Learning can happen for change in knowledge or change in skills which can be called as education or training respectively. Both of these actions are unique, different and needs different design in the learning program.
CIPD (2010) defines learning as increased adaptive capacity through self directed, work-base process. It also argues that learning enable employees to enhance their skills and make their organization to retain its competitive advantage. According to cross (2000) learning is to change the state of knowledge of an organization or individual. Gagne and Medsker (1996) defines learning is an altered disposition of value, attitude and interest. He also adds that the learning should be retained over period of time rather than momentary. It is also vital to differentiate between training and education as it is necessary to design learning contents to achieve learning goals. Zack (1999) considered Knowledge as a strategic resource to help build and sustain competitive advantage. To gain competitive advantage, companies are in the position to provide more education for its employees in a particular segment to fill skill gap (conference board, 2003). E-learning provides just in time, cost-effective and personalized learning capability which can fill valuable skill gap (Horton, 2001).
The term e-learning denotes traditional learning which combines with electronic resources and ‘e’ stands for electronic (Masie, 1997). Koohang and Harman (2005) define e-learning as delivery of teaching which takes place through electronic media. According to Zhang et al (2004), e-learning is technology based and computer network assists to deliver learning materials to remote users. Most of the e-learning programs are come under either Learning Management System (LMS) or Learning Content Management System (LCMS). LCMS allows create and manage course contents in centralized way (Hall and Hall, 2004). The system can store, search, reuse and manage the contents to deliver learning objectives. Majority of the LCMS provides faster development capabilities where subject mater experts, content developers and instructional designers can create, distribute just-in-time training materials. It can also offer collaborative learning platform to share knowledge among co-workers. Reuse is another major advantage of LCMS where the contents used for a particular course can be used for other courses and it provides quick global updates. LCMS differs from Learning Management System (LMS) in terms of managing contents. LMS only manage learner’s activities such as training schedules, course progress status and completion status. According to Peder Jacobsen (2002), LCMS handles course preparation, course delivery, tracking and itemized user details. In addition to that, it also tracks usage of content materials, manages user’s results, offer provision to launch SCORM, AICC standard courseware and creates common repository to store contents.
It is also important to understand how e-learning can help organizations to achieve competitive advantage. Porter (1985) argues that a firm can perform well and may earn high rate of returns in unfavorable economic condition if it keeps its position above industry average profitability. Organizational Profitability is depends on five competitive forces. The competitive forces are bargaining power of buyers, potential new entrants, bargaining power of suppliers, rivalry among competitors and threat of substitutes. Sustainable Competitive Advantage (SCA) is necessary to place organizations above industry average profitability and to achieve SCA a company should have focus, differentiation and cost leadership. Cost leadership and differentiation are the requirements to achieve broader range competitive advantage. Porter (1985) also states that cost leadership may vary according to industries and it also depends on the proprietary of technology and economies of scale. In any industries, an organization is depends on the skilled resources that they have. If an organization is able to retain and train resources cost effectively then the firm can able to provide low cost services to its customers. This will aid organizations to position them selves above average level and create sustainable competitive advantage. Porter (1985, p13) suggests that “A cost leader must achieve parity or proximity in the bases of differentiation relative to its competitors to be an above average performer, even though it relies on cost leadership for its competitive advantage”. A company can ensure differentiation through its marketing approach, product, delivery system, and other wide factors. The other factors may include customer service, a company offers to its clients. To provide effective customer services the employees of a company need to train in particular product or service. Porter’s cost leadership states that a company can be cost leader if it trains their employees in a cost effective way. E-learning is widely acceptable solution to train employees in a cost effective way that can ensures competitive advantage of an organization. Ward and Riley (2008) mentioned that e-learning reduce organization’s long term administrative cost and training efforts. It also saves time and eliminates travel, hotel expenses for job training. He also argues that e-learning provides cost control to the company and it aligns solidly with organization’s goal and vision. Similarly Zuckerman (2001) argues that improved information systems and related business reduces cost, cycle time of a process and produce higher yields.
Competitive advantage can not be understood by looking an organization as a whole unit but it is feasible to understand by seeing it as discrete activities such as design, production, delivery, marketing and support (Porter, 1985). These discrete activities are prospective sources of differentiation and aim of any strategy is to create value for buyers that exceed cost of production. Value actives can be further divided into primary and support activities. Primary activities categorized into inbound logistics, marketing and sales, service and outbound logistics. Human Resource Management (HRM), Infrastructure, technology development and procurement are grouped as secondary activities. HRM is related to recruiting, training and development. Porter (1985) argues that HRM activities affect competitive advantage of any firm because it deals with skills and motivation of employees. As competitive advantage of a company depends on training and development activities, e-learning is necessary to achieve cost leadership and differentiation.
Kartz (2003) designed value chain for e-learning process and it shown in Figure 2.2. E-learning value chain consists of content creation, inbound logistics, marketing, sales, quality control, support and distribution activities. According to Kartz, the value chain analysis helps an organization to review the ability to engage with e-education activities. It also analyzes the gaps in the current process, finds out the resource needs and existing strength of an organization before enter into e-education activities.
Figure 2.2 E-learning Value Chain (Source: Katz, 2003)
According to Barney’s (1992) resourced-based view, human resource system can contribute to sustained competitive advantage by enhancing the competencies that are firm specific. He also states that sustainable competitive advantage arises from internal resource development which is not imitable by other organizations. For example organizational culture, routine are not perfectly transferable across organizational settings. Similarly, Schuler & Jackson (1987) argues that human resource management practice helps to create competitive advantage as they reinforce role based behavior which enhances product differentiation and lowering cost. Prahalad and Hamel (1990) state that sustained competitive advantage depends upon how organizations utilize its own resources when compare with its competitors. If an organization’s employees have unique knowledge, abilities, potential to make accurate assessment then the organization can achieve superior benefits than its competitors (Barney, 1986).
Quality of learning content materials and the innovative nature such as graphical presentation help to improve the learning experience (Roux et al, 2010). They argue that “self-learning which creates a learning culture” (Roux 2010, p35) that induce employees to learn for their self development and future career. Instructional System Design (ISD) or Instructional Design (ID) systematically identifies and manipulate components to increase learning activities to improve performance (Rosenberg, 1982). In a research Roux et al (2010) found that participants like the ID model which is practical and can contribute to on-the-job skills or enhance their job-specific knowledge but they are not inclined towards training model that can not enhance their knowledge. Roux et al (2010) state that Instructional Design has positive impact on job-specific knowledge and productive behavior which ultimately persuade organizational capabilities and core competency for Sustainable Competitive Advantage (SCA). Their study also reveals that there is positive linkage between development of employee training and SCA.
According to Dick et al (2006), "business e-learning is related closely to work objectives". The content should design such that the learner can easily remember the concepts and apply it in the work environment. Jacques (2002) states that the learning contents have to address practical issues and it should relate with learner’s experience. The relevance can be compared between cognitive effects and efforts. Learners put efforts to learn the contents from e-learning and the gained knowledge is the effect of cognitive process or efforts. Jacques (2010) also argue that cognitive cost will be higher if more number of information presents in a single page rather than two pages. If content relevance is high then the cognitive effects will be higher and for low content relevance the cognitive efforts will be higher. Consequently, for higher cognitive efforts the cognitive effects will be less and the cost of learning would be high. He also suggests that rather than focusing on courseware template design the content development team should focus on cognitive environment of learner. The environment is not only depends on electronic access but also depends on knowledge that the learner possesses, acquiring, and the knowledge learner uses to process information.
2.2 Learning theories and e-learning business drivers- cost, time, commitment
Learning theories can be classified into behavioral, cognitive, humanistic, social and affective. These different learning theories required different instructional model in learning design (Medsker and Holdsworth, 2001). Constructivism, behaviorism, humanism and cognitivism are known as instructional models and instructional design constantly relied on instructional model (Gagne, Briggs and Wager, 1992). In practice e-learning majorly uses three key theories namely, behaviorism, cognitivism and constructivism (Dietinger, 2003). Behaviorism completely ignores the thought process in mind and it observes the responses to stimuli quantitatively (Felix Modritscher, 2006). According to Skinner (1974) external environmental stimuli is the reason for observable learning behavior. Ally (2004) argues that cognitivists consider learning is an internal process which involves memory, thinking, reflection, abstraction and motivation. In this learning method, learners processing, thinking, remembering the information in their own way. Constructivism focuses on knowledge construction based on learner’s previous experience and they can learn from other learners (Harman and Koohang, 2005). Recent research done by Modritscher (2006) shows that behaviouristic and constructivist learning methods proved its effectiveness among learners.
Today’s most visionary human resource professionals think outside of classroom training and focus more on creative, cost-effective services (Ward and Riley, 2008). Classroom training sessions can only happen on certain schedules that also depend on number of participants and it may not feasible to conduct class room trainings on daily basis if any participants miss the schedule. At the same time e-learning modules can be taken number of times by the participants according to their convenience. Organizations may loss productivity hours of its employees during traveling for tutor-led training. Driscoll (2002) argues that, e-learning program consumes less time than class room trainings due to the factors such as travelling time and pace of the participants. The learning style would be different for each person and if they are fast enough, they can complete the trainings at their own pace in e-learning. Additionally, it reduces the time away from the job. Organizations may have limitations to training locations and if any employee needs to attend particular training in different location they may need to get prior approval. These barriers for learning eliminated in e-learning. E-learning enables users to learn the contents at their own speed and it is 20-50 percent faster than classroom training (Schooley, 2009). According to a case study done by Leteney (2004), e-learning takes only 14 percent of the cost of classroom training and it yields high Return On Investment (ROI). The lower investment cost of e-learning training finally gives the same output of classroom training which boost ROI. More employees have opportunity to take the courses if it is available in the internet and also flexible time schedules makes them committed to the skill development program. Based on internal data collected at Cisco systems Inc, the ROI for every course was 900 percent and an average employee saw 24 percent increase in efficiency through e-learning implementation. It also saved time and employees gained 17 percent effectiveness. Around 74 percent employees reported improvements in customer service and 76 percent said that customer satisfaction jumped more than 50 percent (Sarah Fister, 2002). According to Capelli (1999) employers earn ROI on trainings, because the employee’s productivity increases after they enhance their skill levels. For the same amount of wages they are getting more work and the difference in wages can be useful to fund more training. Branham (2004) quotes that inadequate coaching, less growth and advancement of opportunities are few reasons for employees to leave the organization. He also argues that providing self assessment tools and self management training will make them stay in the company.
Though e-learning has more advantages, Class room training is relatively better for small number of people and it allows to work in a group which provides options for discussion, problem solving. The classroom environment creates bonds among students and in the class room training participants have opportunity to obtain feedback from experts (Rossenberg, 2010). Before going for e-learning implementation an organization needs to think about the negative side also. Technological resources such as hardware, software and network availability are few major limitations of e-learning. According to Carr (1999), lack of Information and Communication Technology skills create barrier for e-learning training and participants has to be self motivated to learn materials (Schott et al, 2003). This leads to unsatisfactory experience for people who are not self motivated and have less ICT skills. Apart from that, poor design of e-learning contents majorly affects learners as well as the organization (Hunt, 2005). The other acceptable fact is ensuring academic honesty difficult in online environment (Kelly & Bonner, 2005) and also it may be tedious for users to select suitable courses from large number of collections.
Business drivers are vital for business growth, competitiveness, profitability and it increase the value of a business (Barksdale, 2002). According to Arevola & Lundy (2003) the most important business drivers for organizations are cost reduction, people commitment and time to competence. These business drivers are also closely related with e-learning. The implementation of e-learning is helping organization to reduce expenses. Consequently the firms achieve more ROI and performance improvement (Sarah, 2002). The speed at which organizations transfer knowledge to its employees and build new capabilities are one of the important business performance indicators (Arevolo & Lundy, 2003). If companies are able to reach customers faster than its competitor, it gains Competitive Advantage (CA) against them. Less time for competency development and quick response to ever-changing business environment are key factors to develop CA. Research shows that the process companies follows to accelerate time for competence is also important factor to accomplish CA (Denise, 2007). Retaining knowledge workers gives CA to employers and to retain them the companies need to create commitment among staffs (Capelli, 1999). E-learning helps organizations to deliver knowledge to all of its employees in lesser time and maximizes people commitment by providing learning opportunities. Competition for the future is greatly different from the present competition and organizations are in the position to compete for opportunity share. To gain disproportionate future profit, it is vital to have disproportionate essential competencies and these competencies must be share across organization. Nowadays product life cycle and development time for a product is getting shorter and customer expecting immediate service from the companies (Prahalad & Hamel, 1994). To develop product faster and service the customer better, organizations need to train and develop skills of their employees. Skilled resources are helping companies to share future opportunities. For sustainable profit and growth companies need to create, capture new demands and build new competencies to compete successfully (Prahalad & Hamel, 1994; Kim & Mauborgne, 2005). The relevance of e-learning initiative is matching with these requirements.
Employee’s commitment and loyalty are important factors to determine company’s success rate. Committed employees in an organization exhibits higher performance, lower quit rates, low tardiness and absenteeism rate. Employee turn over is one of the big issues for employers and in some cases employees may be the distinctive competence for an organization. Cost of replacing, recruiting and training new employees is equal to one year salary for managerial roles (Capelli, 1999). In another study Capelli (1999) found that efforts towards internal employee development make them more committed to the organization. Michael (2010) concluded in a research that training initiatives takes long time to give tangible and measurable results but immediate response can be achieved in staff morale, motivation and department communications. This research also proved that training to the employees helped to increase customer satisfaction which can differentiate organization from competitors. Finally more learning opportunities to the employees have direct impact on commitment and morale. Committed employees ensure better employee retention rate and trained resources act as a distinctive competence for organizations to achieve differentiation.
Many companies achieved significant returns, reduced training related cost and improved employee productivity by implementing e-learning solutions (Wettemann & Rebecca, 2003). Evaluating costs and benefits for e-learning projects help organizations to boost investment on e-learning initiatives and underpin the benefits. According to Prest & Turvey (1965) cost-benefit analysis is a practical way to access desirability of projects. It considers consequences in the future (long view) and allowing side-effects (wide view) to find all relevant costs and benefits. He also argues that the general principles of cost benefit analysis includes what are all the cost and benefits needs to be included, how they valued, discounted interest rate and relevant constrains to maximize the present value of all benefits.
2.3 Talent Management and Collaborative Learning
Training and development opportunities decrease leaving rate of employees in constant skill updating jobs and organizations should provide skill development prospects to increase the tenure of its employees (Hom & Griffeth, 1995). Compensation, tailoring rewards according to employee’s needs, feedback and recognition will reduce attrition rate (Griffeth & Hom, 2001). Likewise, engaged employees with organization less likely to quit from the company (David et al, 2010) and providing skill development opportunities keep employees to stay with the company (Ramsay, 2006). According to David et al (2010) organization commitment is one of the most important factors for attrition rate. E-learning offers skill development opportunity to the employees and makes them engaged with the company. Consequently, engaged resources become distinctive competence for the organization as per resourced based view. If an organization's employee turn over is higher than its competitors it creates competitive disadvantage for the firm because of recruitment and other training costs (David et al, 2010). David et al (2010) also argue that firms have to include financial incentives to the job profile which can not be available elsewhere so that the firm can keep talented resources.
Miller et al (1996) argues that knowledge based resources create barrier for imitation and it is difficult to understand the nature of talent by its competitors. The competitors may understand the knowledge and talent of a firm but they will take time to replicate the same. Meanwhile the organizations can develop its own knowledge further and it can utilize the talent in some other ways (Lado & Wilson, 1994). Collaborative skills are difficult to imitate (Peteraf, 1993) and team dynamics, co-ordination skills makes the resources organization specific, more valuable than competitors (Dierickx & Cool, 1989). Learning and training, collaboration with key stack holders helps to achieve competitive advantage of an organization (Bella, 2009).
Michaels et al (2001, xii) states that “talent is sum of a person’s abilities- his or her intrinsic gifts, skills, knowledge, experience, intelligence, judgment, attitude, character and drive. It also includes his or her ability to grow”. Talent management is effective management of employee talent and gain understanding of internal workforce (Lewis and Heckman, 2006). Jean Adams (2008) proposed Alignment, Interactivity and Motivation (AIM) framework for e-learning to support talent development initiatives and to fill skill gaps in organizations. The framework will be suitable for blended learning programs to achieve desire results faster. Alignment of teaching goals with technology choices is necessary factor to achieve better results. According to Jean (2008), Interactivity is essential when the main objective of learning is rule based or to promote compliance. Multiple choice questions, drag and drop exercises are few examples for interactivity based training and these exercises ensure the content retention. Incase of soft skill training, the organization has to concentrate on learners, contents to be learned and context of the training. Interactivity has to design in such a way that learner can be pushed to practice what they have learned, empower learners to take own decision from the training program. Integrating synchronous and asynchronous e-learning methods can enhance the soft skill training and performance based learning. To create win-win situation for an organization, motivation is necessary and it can be established through creating direct link between job and training. Recognitions and rewards are also help to motivate learners (Jean Adams, 2008).
“Knowledge is useless unless it is shared” (Rosenberg 2006, p106). According to Rosenberg, undiscovered knowledge in an organization creates challenges to its business. When organizations are struggled to utilize expertise of its own employees, the knowledge is becoming undiscovered and it creates barrier for product improvement, innovation. He also argues that the knowledge networks utilize informal relationships to share knowledge. Collaboration with peers and experts make the job easier to exchange knowledge and to know who knows what. Knowledge management (KM) system should support collaboration among peers, experts, group to make it most effective. Collaboration change the nature of KM from “one to many” to “many to many”. An organization which builds massive knowledge repositories and miss out collaboration side of KM loose the opportunity to tap huge reservoir of potential talent inside the business (Rosenberg, 2006). Rosenberg also suggests that collaboration needs to support by rewards otherwise innovation are slower to emerge and practices tend to stagnate. Unless have support and knowledge sharing culture in organization, the initiatives to implement collaborative activities such as deploying chat rooms applications, starting threaded discussion does not give better results.
Studies show that when participants were given opportunity to work in a collaborative environment they performed well and use strategic thinking (Ocker & Yaverbaum, 2001). According to Konstantinidis et al (2009) collaborative learning is "educational practices based on the simultaneous cognitive and mental effort of multiple students or/and educators". From research they found that collaborative learning results were meaningful and depicts efficient knowledge acquisition. This interactive learning motivates learners and provides active, realistic learning. The student-centric approach increases the probability of remembering the contents after learning and it ensures personal connection among other participants. Open learning environment that drives through learners own initiative, planning and execution can promote meaningful learning (Brown, 1994). It is proven that employees who show active participation in the learning will be more successful in work environment and they tend to implement innovative thoughts (Scardamalia, 2002). From this it is evident that an organization must supports learners to create active work environment.
2.4 Summary
Though the benefits of e-learning have been widely accepted among organizations, they are in the position to measure and improve performance through various methods. The literature laid foundation to explore relevant areas of Aviva UK e-learning for performance improvement. Literature review analyzed various learning theories and e-learning terminologies such as LMS, LCMS. This chapter provides different theories on competitive advantage and how training and development helps to achieve that to ensure sustainable profit. From resource-based view of an organization it is obvious that developing skills of internal employees is necessary to create differentiation and barrier for imitation. Theories proved that Instructional Design (ID) can significantly contribute to the Sustainable Competitive Advantage and the ID should minimize cognitive cost and maximize cognitive effects. To achieve competitive advantage an organization has to provide training materials which is relevant to their experience and related to their day-to-day work issues.
The benefits of e-learning are explained with case study results and the study reveals that majority of the companies which implemented e-learning obtained positive ROI. At the same time organizations should be aware of e-learning limitations before implementation. E-learning increases the value of business by enhancing business drivers such as cost, time and commitment. Recruiting and retaining talented resources are necessary for a firm as they play vital role to enhance competitive advantage and e-learning helps organizations to keep talented resources. Organizational commitment depends on factors such as employee training, recognition and rewards and these factors are necessary to retain talented resources.
Theories established positive link between e-learning and talent management. From the discussion it is also clear that collaborative learning can contribute to skill improvement which results enhanced employee productivity. Consequently, improved productivity ensures competitive advantage.
