Training and Development in Recessionary Times
What type of training should I be doing now in the recession?
When the economy is in a recession and costs are being cut in many businesses, there is always a temptation to cut spending on training. This ‘saving ‘ can look like a simple way to cut costs quickly, but nothing could be further from the truth. Research in 2007 shows that companies that don’t train are two and a half times more likely to fail than those that do. It is in the current environment, more than ever that we need people who are developed, trained, committed, motivated, innovative and driven in what they do. This is one of the vital keys to ensuring businesses survive and stay competitive when the odds are against them, together critically with being ready to embrace the opportunities as the upturn eventually starts to happen.
A Report by the International Leadership organisation, Common Purpose, found that 97% of the companies they surveyed said that cutting their spending on training during a previous downturn had negative consequences on the business in both the short and long term, with a critical loss of top talent being a significant trend reported. Evidence shows that those companies that invest in the area of training during a down turn are better placed to grow the business as soon as the economy starts to recover. Cutting this cost in the short term is a serious mistake that will cost organisations dearly in the future, so all training professionals need to continue influencing decision makers in the business as to the value and contribution of focused training and development initiatives during this time.
An example of a progressive, innovative company that survived the dramatic fall in their business after 9/ 11 and brought the company back to profitability when many competitors went out of business, was South West Airlines. A series of major cuts were initiated after the dramatic slump in the business which followed the 9/11 disaster. However, Herb Kelliher, CEO, resisted cutting the training budget even at the bleakest time for the organisation. The company’s University for People with a 3 million dollar annual budget kept its full funding as the criticality of all Training and Development activity was recognised as being central to the success of the company at this time. The budget for training was actually increased with targeted programmes designed to help staff deal with uncertainty being designed and run. Keeping morale up was seen as a critical role of the training department at this time as staff feared losing their jobs as well as being unsure of how to deal with security threats overall in the airline industry. As our economy is in one of the worst recessions we have seen, helping those survivors in the organisation to deal with fear and uncertainty will have a direct impact on productivity, customer service and innovation. Businesses also need to focus on front line management training as these are the staff with the most influence on the critical people closest to the customer.
What are the Top 7 Tips for Training Professionals in Today’s Business Environment?
1.Encourage your Organisation to Innovate and Use the Talent and Ideas of your People
Recessions can be a great time for the collective intelligence of every member of your organisation to be tapped into. Training and development professionals need to design programmes that gather ideas from those in the business as part of the ongoing T/ D strategy. Companies that survive and do well are those that spot opportunities and have the flexibility to act quickly as they are identified. A thinking culture is one that every organisation needs to foster, now more than ever, where ideas on cost savings, new products, better services, improved communication and better business efficiency become central to the way that every member of staff thinks and acts. Downturns are about psychology as much as the business survival. During previous recessions innovations such as the Frequent Flyer Programme, Fortune magazine and Federal Express were born. Courageous organisations are those that listen to their people, encourage innovation and are willing to take risks to make things happen.
2.Leaders need to Lead
A lack of visible leadership in an organisation that is dealing with a recession adds to the sense of fear that is almost palpable in today’s business climate. The CEO is the person responsible for generating and maintaining energy and enthusiasm among those in the business in a time when there is a huge amount of uncertainty and fear. People need to feel confident in their leader, which includes their line manager ; they need to believe he/she believes the company is going to survive and that they will keep their jobs. They need to be clear how they can help and what is expected of them as well as feeling that they are part of the same team working on the survival and success of the company. Developing the skills and strategies of leaders throughout the business is a critical role for the T/D profession at a time of economic downturn when true leadership will help companies to spot opportunities and to think laterally. When you think of today’s business culture, the analogy of passengers on a flight comes to mind. When the plane journey gets bumpy, every passenger wants to hear from the Captain immediately, even it means fastening seat belts for turbulence ahead. Training and Development is essential in order to ensure the leaders in the business lead their people in ways that reduce fear and ensure real buy in and involvement. Leaders lead people out of the darkness, they don’t leave them sitting in it. Now, more than ever, senior management need to believe in the criticality of developing new leadership skills and strategies among all levels in the organisation so that staff who are fearful about their jobs can be motivated, included and inspired by those they follow.
3.Top Talent Retention
If training budgets are cut during a time of recession, talented people will see the corporatemessage that their development and growth can wait for a while, when in fact it is this group of people who, if invested in during tough times, will spot the growth opportunities for the business and will motivate those around them, accelerating the organisation out of the economic down turn. Training and Development interventions need to focus on the needs of this group, specifically linking the support they need with the new strategic direction of the organisation in a planned way. Targeted development opportunities for this sector of the workforce needs to reflect the needs they are identifying in the current climate and offer practical, current solutions that will make a real difference to the individual and the organisation.
4.Convince Senior Management of the need to be strategic in the area of Training and Development at this time
According to a Report by Cranfield University called ‘ Nurturing Talent’, employers who make strategic decisions in their Training and Development plans during a downturn, are better placed to grow their businesses during this period as well as when the economy starts to recover. Many organisations react to external events by either cutting spend or running a range of ad hoc training events which may be aimed at helping staff deal with the new reality, but because they are not linked to any real strategy, their impact is short term and minimal. Those companies that take a strategic view of the Training and Development needs of their business, are much better placed to bring staff with them during hard times, having higher levels of overall engagement throughout this period, all of which has a positive impact on the bottom line in the business.
5.Grow your own Talent
The development and growth of potential from within the business gives organisations that invest in training in a serious way, a clear competitive advantage during a recession. The CranfieldUniversity ‘Nurturing Talent’ Report demonstrates the cost savings involved in developing people internally for roles in the organisation rather than selecting form externally during recessionary times. This includes training and development programmes, employee coaching, staff mentoring and job enrichment as ways of stretching current staff to take up new roles as the organisation may need to downsize or to expand the jobs they currently hold. As recruitment stops or slows down dramatically, organisations need to recognise that nurturing staff is a vital strategy for the business in terms of succession planning, cost savings and boosting morale.
6.Deliver Real Results for Real Times
To survive the current challenge, many organisations will have to review and make fundamental changes to their current strategy. This requires leadership teams to ask:
Where are we now?
Where are we going?
How are we going to get there?
Effective, strategic Training and Development plans can help those in the business to take the time to refocus the business strategy on the new economic reality. By encouraging the senior team to undertake this type of focused strategic training intervention, there is renewed clarity about key business goals which then need to be communicated to the entire workforce. All Training and Development interventions have to then link into this strategy in a planned and focused way with a critical eye on the return on investment that every initiative makes. Although, this can be difficult to quantify, there is a real need to break down and measure the value to the business, ensuring that the areas that will bring the most advantages are prioritised such as debt collection, selling, creativity, downsizing, leadership, managing in changing times etc. So, selecting the right training and following up to ensure the learning is applied back at work is critical. Managers must take responsibility to make sure their trainees are adequately briefed before attending programmes, agree learning outcomes and schedule regular follow ups post training to ensure lessons learned are put into practice.
7.Flexible and Creative Delivery Methodologies
The delivery of training interventions needs to be flexible in a downturn. Methods such as distance learning, coaching, mentoring, buddying, using internal trainers and venues, running ‘bite sized’ learning events of 2-3 hours, should all be considered as ways of delivering on business goals. Training specialists also need to prioritise development needs, using the pareto principle to identify which percentage of training interventions account for the largest pay offs in terms of business results. The results and successes in these areas also need to be publicised to ensure all staff are clear as to the value of spending time and resources in this way.
There is now a realisation that no sector is protected from job losses, so the concept of lifelong learning is even more relevant today than before. As our economy struggles, employers need workers who can cope with frequent change and lead the way in all areas of innovation. At the same time, employees need higher skill levels for their personal advancement as well as to enhance their contribution to organisational success. Training and Development has a critical role in recessionary times in ensuring the business doesn’t get caught up in short term goals and solutions. The business case for Training and Development in this type of economy is clear and has proven itself in the past. Progressive organisations are those that really value the role their people can make to their survival, helping them to seize the opportunities that may arise and ensuring they grow or maintain market share during and after the downturn. Keeping talented people, generating a ‘thinking culture’, developing leaders at all levels in the business, being flexible in how training is delivered and ensuring there is a strategy that links to the overall business goals are some of the key drivers of people development in today’s market. Organisations that can see the long term value of investing in their people during tough times show real leadership at a time when so many people need clarity, focus and to see the road ahead.