NVR builds and sells single-family homes and condominiums in the eastern and southern United States under a variety of names, including Ryan Homes, NVHomes, Fox Ridge Homes, and Rymarc Homes. Its primary market is first-time home buyers and a category known as "first-time move-up" buyers.

Over a 52-week period ending in October 2009, its share price increased from a low of $310 to a high of $698. But that upward trend is recent news. In 2005, before the steep decline in the housing market, NVR was one of the 10 largest homebuilders in the country, building and selling hundreds of homes a month.

With that kind of volume, the biggest challenge was to be able to identify and fix quality issues in real time. They needed to spot problems with processes and skill gaps in their personnel that were critical to quality and to fix them right away.

Jim Caprara, then vice president of learning at NVR, looked for a non-traditional way to link the learning function to this key business challenge. "We wanted to create a solution that was fast and efficient and that made sense for NVR. Our solution was to shift NVR's customer service function into the learning organization," he says.

By monitoring all of the customer call activity and managing the company's customer satisfaction surveys, the learning function was able to identify valuable opportunities for improving products and services. They could identify and target specific development needs for field managers, salespeople, and production employees. And they could monitor and measure the results of their development through the learning function's field training organization.

Merging customer service into the learning organization dramatically accelerated the speed with which the company could identify and respond to problems. That nontraditional approach clearly improved the readiness of the organization to perform. And there was customer satisfaction data to prove it.

By 2006, the homebuilding market was approaching the start of a historic downturn in sales brought on by the failure of mortgage banks and other lending institutions. But the shaky housing market gave Caprara's team another opportunity to demonstrate the power of talent management as a business tool.

"Even then, well before the crash, we knew the housing market was weakening. That gave the learning organization the chance to do some predictive forecasting of business performance," explains Caprara. Using two measures of success for salespeople, they were able to predict with great accuracy the impact of the downturn well before it hit. This allowed the company to take clear preventive action.

The learning organization used two measures of salespeople's readiness to perform: skills retention and skills utilization. They conducted proctored tests of the entire NVR salesforce. Salespeople and their managers were tested to determine how much of their skills training they had retained.

The learning organization was then able to target and deliver specific skills training that the sales teams needed to be ready to meet the challenges that were headed toward the company.

"Understanding the company's level of skills retention brought us half way there," says Caprara. Using NVR's sales training staff in the field, they began to test how many of those sales skills were being used. Within two weeks they conducted more than 180 "secret shopping" experiences using the same script in every location and videotaping each session. They were looking for utilization of the skills uncovered in the previous study of retention.

In other words, how many of the skills that salespeople retained were they actually using? The results showed that in areas such as Maryland and Washington, D.C. - where the housing market was still strong - salespeople were not using sophisticated skills to close their sales. In the weaker markets, by contrast, NVR salespeople had to call on many more of the skills on which they'd been trained.

The diagnostic procedures used to analyze the data from the secret shopping experiences revealed the specific strengths and weaknesses of the salesforce for the whole company, division by division. That information gave the learning organization even more ability to target the readiness of the salesforce for the coming downturn. The results yielded clear predictions of sales performance if the housing market continued to shift downward.

Several of the sales teams with the highest performance histories were identified to be at risk. They had never had to use the skills required in a tough market. This was a shock to management. The study also revealed that many of the company's lowest performing sales teams were better equipped for challenging conditions because they were actively using the skills that a bad market requires.

By early 2007 when housing sales everywhere began to fall, NVR's learning organization had already accurately predicted the strengths and weaknesses in the sales organization's skills, and learning programs were already in place to improve readiness to perform. Tests and control groups and additional secret shopping for the next 12 months showed significant improvements in the company's readiness.

Caprara labeled his team's actions preemptive talent management. "If we had waited for a skills training need to emerge as housing sales went down, the results for NVR would have been catastrophic," he says. As events unfolded, NVR was one of only a few large homebuilding companies in a position to make a strong recovery as the market began to improve in July 2009.

This case study was excerpted from the ASTD white paper, "Bridging the Skills Gap," published in December 2009. Click for more information about the paper.