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Trimming the Training Budget During a Recession? You Will Pay Later

I just ran across a well-written article that sums up the reason why you should never cut your training budget in a recession. I know it’s tempting. Training and Organizational Development have always been challenged to show ROI. After all, the activities involved in training do not tie directly to the bottom line, and soft skills training is tough to measure.
However, the statistics on this topic are clear. Michael Haberman, the author of the article, makes the point very clearly:

People feel more valued when they realize the company is willing to invest money in their skill sets, despite tough times. Yes, I understand that people with a job are probably going to stay put whether or not they are trained. However, when the recovery starts (and it will, with or without the help of the government) employees who felt valued will be most likely to stay put when opportunities become available. Turnover is expensive and anything you can do to retain good workers will be beneficial. Training will help accomplish that.

Here’s the real question? Does the kind of training matter? Not really. The honest truth is that your employees need to feel valued. Investing in your employees through training will pay you back through increased skills, engagement, and longer tenure.

The cost of disengagement and turnover are devastating. Some researchers estimate that disengagement costs US companies $300 Billion annually, and turnover can reach as much as 200% of the position’s salary.

Ladies and gentlemen, if we’re not talking dollars, then we’re not making sense. Training isn’t some fluffy HR outing with trust falls. True training and development supports continuing education, skill development, and focuses on necessary competencies to perform a job.

So, instead of cutting training outright, find ways to extend the training in new ways. HR Magazine had some great suggestions for training on a shoe-string budget in January 2009.

A few key ideas were to:
• Reduce the travel budget for the training- can the training be done online via webinar? We live in a virtual world- grab a webcam for $50 and save on your airfare.
• Keep the business going- instead of taking everyone out of business for a half-day, try to separate the training into two shifts, so productivity stays steady and everyone receives the training.
• Brown bag it- If you’re running an all-day training, don’t feel you have to cater in lunch. Additionally, consider holding “lunch and learn” meetings. Hold open one-hour trainings/discussions on a topic and people can voluntarily join and bring a brown bag for lunch.
• Put your training online, so development happens On-Demand. If you’ve read my last few posts, you know this is an issue I feel strongly about. For instance, give http://mbtithinkbox.com a try.
• Create a company wiki where employees can share their knowledge
There are many ways to use technology to maintain a strong training curriculum that won’t break the budget. Regardless, executives should be careful not to overlook the value they hold in their hands. At the end of the day 90% of your organization’s capital walk out the door (your human capital). Invest in your capital, and you will see a significant return on your investment.

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