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The Role of Human Capital Investment in
Sustainable Economic Development
Patrick Sherry, Ph.D.
Director, National Center for Intermodal Transportation
University of Denver
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Overview
Effects of Human Capital Investment
Anticipated Economic Activity
Identification of Needed Areas for Human Capital Development
Leadership
Workforce
Practical Considerations for Implementation
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Four Pillars of Activities
Technology (Including ITS and Global Navigation Satellite Systems)
The development and implementation of selected integrated technologies is important to the successful management and operation of intermodal transportation.
Supply Chain Management (Focused on Transportation)
Seamless interconnectivity of different modes of transportation. Efficient management of the supply chain involved in regional freight and shipping movement is critical to seamless interconnectivity.
Sustainability (Including Energy and the Environment)
The identification of opportunities for the development and promotion of fuel efficient transport policies and practices is particularly important in the APEC region.
Human Capacity Development
Human capacity skills are important to the effective movement of intermodal transportation. The ability of the work force to develop, manage, and safely implement existing and emerging technologies is essential to the ongoing facilitation of trade in the APEC region.
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Asian Economic Downturn
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US International Container Traffic
5Source: RITA
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Circa 2008-2009
Developing cooperative alliances
Working with customers
Investing in Technology
Investing in equipment and infrastructure
Investing in employees
Hiring additional employees
What Are US Railroads Doing to Increase Productivity & Profit?
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Railroad PerformanceClass I Railroads
0
50
100
150
200
250
300
64 68 72 76 80 84 88 92 96 00 04
Index 1981 = 100
Source: Railroad Facts, AAR (Based on a design by R. Gallamore)
Productivity
Volume
Revenue
Price
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Railroad Capital ExpendituresClass I Railroads – and so far 2008 looks to be a paradigm shift!
$0
$2
$4
$6
$8
$10
$12
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Billions
Source: Railroad Facts, AAR
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U.S. Railroad Intermodal Traffic(millions)
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2
4
6
8
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81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
U.S. Railroad TOFC/COFC Units
Source: Association of American Railroads’ Weekly Railroad Traffic
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U.S. Railroad Intermodal TrafficTrailers vs. Containers (millions)
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1
2
3
4
5
6
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88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
U.S. Railroad TOFC Units U.S. Railroad COFC Units
Source: Association of American Railroads’ Railroad Facts
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0 10 20 30 40
2035p
2002
Future Demand for Freight Transportation Will Continue to Grow
p – U.S. DOT projection
Billions of Tons of Freight Transported in the U.S.
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Projected % Growth in Trains Per Day From 2005 to 2035 by Primary Rail
Corridor
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-$2
$0
$2
$4
$6
$8
$10
$12
'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08
Source: Association of American Railroads
Net Income
Capital Spending
Class I Railroad Capital Spending vs. Net Income
(Current Dollars)
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25% tax credit for projects that expand rail capacity
Expense other infrastructure capital expenditures
Leverage private investment
Need tax CREDITS for HUMAN CAPITAL INVESTMENT
Tax Incentives to Leverage Capacity Expansion
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150,000
152,000
154,000
156,000
158,000
160,000
162,000
164,000
166,000
168,000
170,000
2001 2002 2003 2004 2005 2006 2007 2008
Total Class I Employment: Jan. 2001-Nov. 2008
US Rail Employment is Up for the First Time in Decades
Source: Surface Transportation Board
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Railroad Employee ProductivityClass I Railroads, Ton-Miles Per Freight Service Employee
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80 82 84 86 88 90 92 94 96 98 00 02 04 06
Source: Railroad Facts, AAR
Millions
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The Role of Training
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Investment in Human Capital Related to Increased Productivity
Increased Percent Time in Training
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Source: Kim & Bloom (2003)
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The mean proportion of workers being trained in an industry is about 10%.
If industry managed to increase the proportion of workers from the mean to 15% this would be associated with a 4% increase in productivity and a 1.5% increase in wages.
Note that it took the UK economy 13 years to generate an increase in the proportion workers trained on this scale (from 9% in 1984 to 14% in 1996).
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Effects of Education on Productivity
Becker 1964, Mincer 1974 looked at the impact of education on earnings or estimated private rate of returns ().
A survey of growth accounting studies covering 29 developing countries found estimates of education’s contribution to economic growth ranging from less than 1 percent in Mexico to as high as 23 percent in Ghana (Psacharopoulos, 1984).
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Education is also an important contributor to technological capability and technical change in industry. Statistical analysis of the clothing and engineering industries showed that the skill and education levels of workers and entrepreneurs were positively related to the rate of technical change of the firm (Deraniyagala, 1995).
http://www.geocities.com/ceteris_paribus_tr2/i_ozturk.htm
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Lucas (1998), found that the higher the level of education of the work force the higher the overall productivity of capital because the more educated are more likely to innovate, and thus affect everyone’s productivity.
Increased education of individuals raises not only their own productivity but also that of others with whom they interact, so that total productivity increases as the average level of education rises (Perotti, 1993).
The impact of education on the nature and growth of exports, which, in turn, affect the aggregate growth rate, is another way in which human development influences macro performance.
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One of the emerging requirements for a successful economic development program is a workforce delivery system that works for local, emerging, and new businesses in the community.
Survey after survey notes businesses need a skilled workforce to be competitive. Traditionally economic developers have not had to deal with the workforce delivery system and that system tends to be complicated by regulations, vendor influence, and perceptions that it only deals with those least capable of holding a job.
International Economic Development Council
http://www.iedconline.org/?p=Training_Workforce#agenda
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World Bank: Knowledge Economy Index
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Bloom et al 2006
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In a study of more than 3,100 U.S. workplaces, the National Center on the Educational Quality of the Workforce (EQW) found that on average, a 10 percent increase in workforce education level led to an 8.6 percent gain in total productivity. But a 10 percent increase in the value of equipment increased productivity just 3.4 percent.
Another study by ASTD showed that “leading-edge” companies trained 86 percent of employees while “average” companies trained only 74 percent. Leading edge companies also spent twice as much per employee. Companies that invest the most in workplace learning, the study showed, yielded higher net sales per employee, higher gross profits per employee, and a higher ratio in market-to-book values.
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Difficulty in finding workers with key skills
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An Expanded Role for APEC
To increase and sustain economic development there needs to be continued investment in education and training of workforce
APEC can take the lead by providing training and development actiiities for key leaders throughout the region
In addition to providing skills training APEC should seek to enhance the leadership and developmental sklls of key industry represntaitinves
Focus should be aon giding and shaping the values and praoctices fo businesses from the top as well as supporting skills development at all levels
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Business Week’s 50 Most Innovative Companies
1 1 APPLE 2 2 GOOGLE 3 3 TOYOTA MOTOR 4 5 MICROSOFT 5 7 NINTENDO 6 12 IBM 7 15 HEWLETT-PACKARD 8 13 RESEARCH IN MOTION 9 10 NOKIA 10 23 WAL-MART STORES 11 11 AMAZON.COM 12 8 PROCTER & GAMBLE 13 6 TATA GROUP 14 9 SONY 15 19 RELIANCE INDUSTRIES 16 26 SAMSUNG ELECTRONICS 17 4 GENERAL ELECTRIC 18 NR VOLKSWAGEN 19 30 MCDONALDS 20 14 BMW 21 17 WALT DISNEY 22 16 HONDA MOTOR 23 27 AT&T 24 NR COCA-COLA 25 47 VODAFONE 26 NR INFOSYS 27 NR LG ELECTRONICS 28 NR TELEFÓNICA 29 31 DAIMLER 30 34 VERIZON COMMUNICATIONS 31 NR FORD MOTOR 32 35 CISCO SYSTEMS 33 48 INTEL 34 28 VIRGIN GROUP 35 NR ARCELORMITTAL 36 40 HSBC HOLDINGS 37 42 EXXONMOBIL 38 NR NESTLÉ 39 NR IBERDROLA 40 25 FACEBOOK 41 22 3M 42 NR BANCO SANTANDER 43 45 NIKE 44 NR JOHNSON & JOHNSON 45 49 SOUTHWEST AIRLINES 46 NR LENOVO 47 NR JPMORGAN CHASE 48 NR FIAT 49 24 TARGET 50 NR ROYAL DUTCH SHELL
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Innovative Transportation Companies
2009 20081 1 APPLE 2 2 GOOGLE 3 3 TOYOTA MOTOR 4 5 MICROSOFT 5 7 NINTENDO 6 12 IBM 7 15 HEWLETT-PACKARD 8 13 RESEARCH IN MOTION 9 10 NOKIA 10 23 WAL-MART STORES 18 NR VOLKSWAGEN 20 14 BMW 22 16 HONDA MOTOR 29 31 DAIMLER 31 NR FORD MOTOR 34 28 VIRGIN GROUP 45 49 SOUTHWEST AIRLINES 48 NR FIAT http://images.businessweek.com/ss/09/04/0409_most_innovative_cos/index.htm
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Procter & Gamble
Gets 400,000 applications for entry-level management positions each year.
It will hire less than one half of 1% of them,
"We actually recruit for values," says Chief Operating Officer Robert McDonald.
"If you are not inspired to improve lives, this isn't the company you want to work for."
The careful vetting, training, and career development pay off. P&G boasts 23 brands with at least $1 billion in annual sales and is the market leader in everything from detergent to diapers to razors.
bringing in and promoting creative thinkers.
Interviewers look for what they call a candidate's "power," including leadership ability and empathy.
Innovation skills and values are measured in an online assessment. "Our managers are skilled at probing for the right fit," says William Reina, director for global talent. "The people they identify score well on the assessment."
every department has its own "university." The general manager's college, holds a week-long school term once a year when there are a handful of newly promoted managers
There are nearly 50 courses—helps managers with technical writing or financial analysis.
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Development of Human Capital
Begins with the leadership
Having a vision
Recognizing that technology levels the playing fields
Recognize that new technology will take time to develop
Recognize that we need to improve our ability to identify new techs
Recognize that we need to implement new techology
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Leadership Competencies
Vision
CommunicationSkills
Execution
Values
Problem Solving
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How do you develop Innovative and Productive
Leadership?
Our Team at the
National Center for Intermodal Transportation has
Twenty Five years of experience developing leaders
University of Denver Pioneer Leadership Program
Center for Creative Leadership Consultants
Academics – USC, Harvard, Georgia Tech
Businesses -
Trainers
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371-E-4 Intermodal Training Model
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Technical Assistance
Provided by our extensive industry contacts and ITI board members
Lindsay E. Fox
Fox Group
Australia
Peter KellerExec Vice President
NYK Lines
North America
Clifford J. Hardt
Fmr. VP
Strategic Planning
FEDEX
Tom Hardin
President,
Hub Group
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Construct a Competency
Model
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The Key Competencies for Success
BUSINESS
PERFORMANCE
STRATEGIC LEADERSHIP
PEOPLE & CULTURE
RESULTS DRIVEN
EXPERTISE
BUSINESS ACUMEN
CREATIVE THINKING
CUSTOMER
SERVICE
LEADSHIP
RELATIONSH
IPS
VALUES
1. Demonstrates
drive and hunger
2. Consistently delivers superior business results.
3. Spends time and
energy on the most important priorities.
4. Perseveres in
delivering what is promised, even when obstacles arise.
5. Demonstrates
functional/technical expertise.
6. Leverages
expertise to get things done in the business.
7. Talks in EMI
language vs. the language of a function or profession.
8. Knows the
music business. 9. Knows how to
get things done. 10. Understand
competitors and how to compete effectively against them.
11. Exercises good
business judgement – balances risks and rewards.
12. Demonstrates
creativity; is a source of new ideas and approaches.
13. Encourages
innovation and calculated risk taking.
14. Always keeps the
consumer in mind when solving problems.
15. Anticipates
future consumer trends.
16. Knows what the
competition is doing with consumers.
17. Communicates an
exciting vision of the future for our business.
18. Selects and
promotes the best people for the organisation.
19. Inspires and
motivates people and teams to greater levels of performances and commitment.
20. Recognises
people for good performance more often than criticises them for performance problems.
21. Provides feedback
that is even-handed and fair.
22. Works
constructively with people to correct performance
24. Behaves in a
way that builds trust with others..
25. Is open and
candid with people rather than vague or indirect.
26. Confronts
conflict situations win an honest and direct manner.
27. Collaborates
effectively with others; is a good team player.
28. Encourages
people to collaborate with other EMI business units.
29. Develops
networks across EMI.
30. Is a role model
who champions the EMI values.
31. Demonstrates
high personal standards
32. Communicates
infectious enthusiasm for music and EMI.
33. Places the needs
of the business ahead of personal agendas.
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Identify Gaps in Skill, Knowledge & Capacity
Evaluate BENCH STRENGTH
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SUMMARY OF RESULTSUsing Competency Model
Competency Limited Solid StrongWorld Class
Courage / Initiative X
Drive for Results X
Partnering (One company focus)
X
Building Organizational Capability
X
Strategic Leadership X
Thinking Skills X
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THINKING SKILLS
Critical Thinking Skills
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BOGOR
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Working With TOP Leadership Teams
APEC Leadership SHOULD take the LEAD with
Both PUBLIC and PRIVATE SECTOR
Identify key COMPETENCIES needed
Identify key areas for development
Create opportunities to discuss and promote INNOVATIVE thinking and development
Ensure that EXECUTIVES are thinking about how to develop their workforce
Encourage incentives to promote HUMAN CAPTIAL INVESTMENT
FACILITATE evaluation and growth of executive Capability & Bench Strength
Examine key areas for growth
Promote the thinking and investment needed to advance and develop the workforce
Work with Teams to create Strategic Vision
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Workforce Development Activities
Identification of Skills Needed
Identification of Available Training
Programs
Identification of
Gaps
Development of Skills
Courses
Intermodal Skills
Insufficient Training Available
““Needed Intermodal Skills”Needed Intermodal Skills”““Intermodal Managers”Intermodal Managers”““Refrigeration Handlers”Refrigeration Handlers”
Provide COACHING and MENTORING
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Priority Skill Areas
FOUNDATIONAL KNOWLEDGE:Government Regulations & PoliciesAvailable Transport TechnologyGlobal Business EnvironmentGeneral Business EnvironmentLabor RelationsVarious Transportation ModesHow Modes InterfaceUnderstanding of Legal Issues
INTERPERSONAL SKILLS: General Managerial Skills Customer Service Skills Communications Skills Listening Skills Sales Skills Coalition Building Skills Teambuilding Skills Conflict Management & Negotiation Leadership Skills
ANALYTICAL SKILLS: Environ Impact Analysis Economic & Financial Analysis Policy Analysis Strategic Planning Forecasting Skills Futures Analysis Systems Analysis Ethical Analysis
TECHNICAL SKILLS: Computer Applications Technology Management Modeling Skills Logistics & Supply Chain Processes Data Gathering, Analysis &
Manipulation Marketing Skills Transportation Experience
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Success Stories
Cohort 1999-2000
José Antonio Pérez Antón was promoted to Chief Executive Officer of Grupo ADO.
Cohort 1
Shannon Brown, Senior VP and Chief Human Resources Officer FedEx.
Michael Byrne, CEO, Linfox Australia, Pty Limited.
Bruce Denny, Asst VP, Terminal Operations, with Pacer Stacktrain.
Barbara Gilliland, Principal at Parametrix Consulting in Denver.
Adam Rodery, Director, Operational Process Improvement with Excel.
Chris Schuleit ,Vice President of the Enterprise Business Development with Hub Group.
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Cohort 2
Michael Brothers, Vice President, Intermodal Operations, at JB Hunt Transport Services, Inc.,
David Leech, Vice President of US Operations, Southern Region of FedEx Express.
Adam J. Lemarr, Manager of Intermodal Hub Operations within Norfolk Southern.
James Price, Vice President Rail Operations, Hampton Roads Transit, Norfolk, Virginia.
Cohort 3
Grantley Martelly, Regional General Manager, Utah Transit Authority.
Tim E. Naylor, Manager of Service Delivery, Utah Transit Authority.
Than Seeds, Vice President of Operations, Americas with APL.
Ben Sullivan, Country Manager of Linfox, India.
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Challenges
Economic activity increasing
Shortage of skills in developing economies Intelligent Transportation
Intermodal Transportation
Employment outlook good Shortages of key talent identified
Opportunity to shape the future
Develop self-sustaining training efforts
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Local Case Study
Visit to JIT
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Executive Level Management
Bob Sleeker Exec Vice President of Intermodal Omnitrax Experience -- CSX Operates Terminals for the Major Class I railroads
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2. Executive Management of Intermodal Transportation Operations
Module Objectives:Common organizational
structuresLeadership and
motivation conceptsBest practices in major IM
transportation Teamwork and
productivity theoriesCoaching and
development strategiesImproving collaboration,
cooperation, and partnership
Developed by: Professor Patrick Sherry University of Denver
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Proposed Workforce Development Activities Strategy
Identification of Skills
Identification of Available Training
Programs
Identification of Gaps
Between Skills Needed & Training
Programs
Development of Supplemental
Training Programs
Development of Train the Trainer
Programs
Scan of Workforce Skills
Shortages
External Funding of Training Programs
Create a Roadmap for Workforce Development
Intelligent Transportation Skills Needed?Transportation Security Skills Needed?