When economic times get tough, training is almost always one of the first things put on the chopping block. Everything from attending conferences, spending on third party courses and internal training and development resources get put under the microscope and labeled as easy cost to strip out that’ll support margins. If you’ve been in the industry long enough, this probably isn’t a surprise to you.
As things around the world look increasingly shaky, it’s likely talks of training cuts have already begun. Despite many leaders starting to rethink their training efforts, the importance of these investments have never been more important to ensuring an organization’s people are equipped to navigate the difficult times ahead.
During these challenging times, you may be wondering what you can do to ensure you help your organization’s employees stay at their peaks.
Let’s dive in.
While historically, training has been one of the first, and easiest sources of costs to cut during a downturn, this kind of mindset is more dangerous today than in times past.
Gallup recently found that organizations who make strategic investments in employee development like training report 11% greater profitability and are twice as likely to retain their employees.
It’s no wonder then why when asked about what’s important to them, employees are increasingly stating support for ongoing skill development and learning is a critical driver of interest to stay with their current employer. Training investments are a clear signal to one’s workforce that their company is committed to their success both in their current role and potentially, others. When the economy turns around, your people are going to remember how they were treated during the tough times so doing all that you can to nurture your relationships with them will pay dividends down the road.
Additionally, training can be critical to ensuring your employees are sharpening their skills, developing new ones and keeping up with the latest practices, tools and trends across their disciplines. With jobs and the skills that underpin them changing so fast, not fostering an environment of continuous learning will undoubtedly put your organization at a competitive disadvantage. Ongoing skill development can also be a key factor of ensuring organizational resiliency. If the pandemic has taught us anything it’s that we shouldn’t understate the importance of organizational resilience.
The bottom line is that eventually, the economy will turn around and things will get better. When it does, fostering an organization with a culture of learning whose been leveling up while things were rough, sets the stage for a fast recovery. If however, you can’t save your training budget, there are several things you can do to continue pushing your training agenda forward.
Many organizations set up their training costs on a per employee basis and line up resources accordingly. The result of this often comes in the form of a standard “open” budget allocation that provides employees discretion to spend a defined amount on whatever training they want, whenever they want. While this might be a good option to optimize for flexibility, it’s not the most strategic way to set up a training budget that can be tied to defensible strategic measures. When times get tough, instead of taking an axe to your entire training budget, take what dollars you do have and focus them towards a single, specific offering that’s only accessible at the request of employee interest, timeboxed over a given period and in support of a strategic project. Doing this will enable a direct linking of available training dollars to strategic initiatives while ensuring only the most motivated employees benefit from available funds. As Chris Holmes, former Director of Global L&D at Booz Allen Hamilton mentioned, “If learning is integrated as a part of a shared outcome, then the need to ‘advocate’ for training investment can be a very different conversation.”
If you are unable to invest in outside training, one of the best things you can do is set up initiatives that enable the sharing of knowledge from across the organization. Peer mentoring or coaching can be an effective way for senior and junior employees to exchange ideas, best practices, advice and discuss opportunities for improving business operations. They can also be helpful for ensuring less tenured employees get a taste of what future career opportunities might look like at the company while more tenured individuals gain insight into cutting edge market trends. Standing up an effective peer mentoring program can be a quick and effective way to keep your training agenda going in the absence of budget, however, it must be done thoughtfully and grounded in specific business metrics. You’ll also want to ensure all content, themes and objectives of the program directly align with each participant’s specific career goals. This can be done through thoughtful and deliberate peer mentoring matching along with tying program activities back to the participant’s OKRs. When budgets are tight, leveraging that which you currently have should be the first place to look to keep the training agenda moving forward.
Book clubs can be an effective low cost, low touch way to enable skill development without a lot of budget. Given the amount of knowledge and leading thinking being put out daily across formal books, Substacks, personal websites, podcasts and general corporate thought leadership, it’s never been easier to source learning content organically. If setting up a formal book club program sounds interesting to you, you’ll want to think through how “Self managed” and organic the program should be, the content that should be included, the teams that should be involved and the tangible actions that should be implemented to drive accountability. For example, you could provide teams of data scientists carte blanche to choose their books to read, topics to focus on and a sample project to complete afterwards to implement their learnings or, all direction and content can be managed centrally. To successfully implement a book club program, participants need to feel like they have a certain amount of agency in the process and defined timelines, responsibilities and outputs along the way. Running a book club can be an effective and refreshing “training” experience as it encourages structured learning through social and cross functional interactions at low cost. With proper incentives and planning, it can become an effective way to drive training in the face of thin budgets.
Every organization should be constantly assessing what skills are currently or will become most critical to their success. In tough economic times, you may want to shift or reallocate what training dollars you do have left towards supporting skill development in high priority areas. Whether it’s emphasizing functions where skills needs are shifting most quickly or ones that are directly or indirectly responsible for key revenue/ growth drivers, sometimes you need to make hard choices with your dollars. If this is the approach you end up taking, make sure not to concentrate what budget you do have on the most senior or high performing individuals.
Decisions like these may result in ill will across other parts of the company so if this is the approach you must ultimately take, make sure there is an associated talk track and reasoning behind these decisions. When times turn around, you’ll be able to quickly get back to covering every part of the organization with equal training support but until then, you’ll need to be far more strategic in terms of where you invest.
In the skills age, foregoing training investments can come at higher and higher opportunity costs. To keep pace with rapid changes in the skills economy and support broader organizational resilience, it’s prudent to think deeply about how to keep some sort of training support alive in the face of budget cuts.
As noted by celebrated MIT organizational scholar Peter Senge, "A learning organization is an organization that is continually expanding its capacity to create its future.”
Now more than never, L&D and business leaders have an opportunity to take a balanced approach towards the way they think about and allocate their learning budgets in the face of an impending economic downturn.