training during a recession
Post on 07-Apr-2018
218 Views
Preview:
TRANSCRIPT
-
8/6/2019 Training During a Recession
1/5
Steady Under PreSSUre
Cncelled leadership classes,travel restrictions, and brokenlinks on the online universitysite are the training professionals worst
fears during an economic downturn.
The current climate is causing
many training leaders to step back,
if not cut back, and rethink how they
deliver training. Travel reductions
are an obvious first step, followed by
increased online offerings. Panic has
not set in inside training departments,
and most organizations report
pressure to do more with the same
budget without being asked to reduce
expenditures outright.
No workplace analyst believes that
times are as severe as the downturn
earlier this decade. Tom Starr, leader of
learning and employee development
at Booz & Company consultancy, clas-
sifies the current climate as status quo,
with selective cuts to programs. He
recalls darker days in the 1990s when
DuPont placed a two-year moratorium
on training. Nothing in the current
climate resembles such a drastic step.
Maybe struggling business units are
making cuts, but theres no corporate or
enterprisewide moratorium, Starr says.
Even if training budgets are spared
now, decisions about training purchases
Phoo by iSockphoo.com46 | T+D | AuguSt 2008
TrainingBy Mcl L
rcss s shk bus us w ws cp.
dUring a reCeSSion
-
8/6/2019 Training During a Recession
2/5
are being delayed until the end of the
year, according to Rommin Adl, a vice
president with BTS, a management
consultancy. Classroom time is be-
ing shortened, and organizations are
exploring ways to do more teaching
online. Adl says one client in chemical
manufacturing is currently working
to pare down the number of vendors
it employs in training from 125 to 25.
Other organizations are attempting to
renegotiate training contracts or put
out projects for bidding.
Watchful eyesThere is greater scrutiny on training
budgets just as there is with spend-
ing in all departments, but learning
officials no longer discuss strategy
with senior executives from a position
of weakness. Smart organizations, in
fields as diverse as the financial sector
and construction, integrate training
into daily performance and maintain it
as a development resource, not simplya shield against attrition.
Whats different now from eight
years ago is that learning organiza-
tions are better prepared to tell their
stories, says Bill Pelster, leader of
Deloittes human capital training and
development practice.
Where many training organiza-
tions are scrambling to demonstrate
value in terms of skills acquired
versus dollars spent, Pelster believes
such calculations are a waste of
time. The need to prove some kind
of metric for trainings value is a red
herringa clear sign that the train-
ing department lacks confidence in
its ability to illustrate how training
aided the organization.
Should the economy worsen, Pel-
ster believes that it usually takes two
years from the time a recession hits for
training budgets to return to previous
levels. Training budgets are a lagging
indicator, he says. They come back in
increments, not in one fell swoop.
If reductions are mandated,
learning officials should consider
cofunded training among multiple
teams to reduce travel and
registration. Heidi Spirgi, president
of Knowledge Infusion, noted that
large organizations have multiple
vendor contracts for training, which
limits their ability to receive volume
discounts. She advises that learning
departments consider consolidationinto a single contract. Any kind
of single-user licensing fee for
applications should be renegotiated.
Sharp cutsVulnerable sectors, notably retail and
the government, are cutting back on
training. Susan Varnadoe, president of
Ninth House, says businesses with nar-
row margins cut training entirely, even
if they already possess an online learn-
ing curriculum. New hires are simplypushed onto the sales floor and told to
follow the lead of a current employee.
Likewise, government agencies and
technology companies are beginning
to conserve resources.
A government agency told me they
are too busy buying gasoline and bul-
lets, Varnadoe says. Its all they can
afford to do.
Varnadoe is confident that govern-
ment agencies will restore their training
budgets to prerecession levels, as will
technology and telecommunications
businesses. Throughout the long-term,
the recession is accelerating a change
in training delivery, whereby organiza-
tions move from site-based training to a
mobile, technology-enabled classroom.
One large healthcare provider that
formerly conducted training at the
hospital level worked with Varnadoe to
develop more online offerings, specifi-
cally in management and leadership
Listen to this feature
a www.asd.or/tD/tDpodcass.hm
AuguSt 2008 | T+D | 47
development. An online performance
management suite was developed
consisting of three-minute segments
that are tailored to physicians and
other healthcare workers whose time
away from the hospital floor is limited.
The harsh reality is that training
with a direct financial return will take
precedence over intangible develop-
ment skills. Sebastian Grady, chief
operating officer of Altus Corpora-
tion, says that if organizations were to
rank training based on priority, newproduct knowledge and instruction on
how to sell the product would receive
greater priority over soft skills.
Spending less on training delivery
does not necessarily mean offering a
cheaper, watered-down version. By us-
ing technology wisely, the material can
be captured and distributed to a wider
audience at a reduced cost.
When NetApp scheduled its annual
Fall Classic training seminar for sales
staff, management wanted to cut costswithout sacrificing the quality of what
became a tradition. Typically, 3,000
sales staff members attend the event.
Altus sent a production team to the
site, taped all of the sessions, and pro-
vided the entire seminar online with
search capability to locate particular
seminars based on specific words spo-
ken by each presenter.
Only 1,500 attendees were present
for 2006. All of the material was
condensed from three weeks of
learning to one week. Production costs
totaled $150,000. The company saved
$1 million. Because the material was
available online, attendees could listen
to the presenters without having to
take copious notes.
Grady suggests that chief learning
officers create a balance sheet with an
-
8/6/2019 Training During a Recession
3/5
itemized list of all content. Then calcu-
late the cost per hour of each course,
and address difficult questions about
whether a particular offering contrib-
utes to revenue.
Narrowing focusFollowing such strict financial calcula-
tions, however, can undermine future
development initiatives. Long-term
priorities for closing the talent and
leadership gap are among the first
casualties in a downturn, according
to Rich Thompson, vice president of
training and development at Adecco.
Especially in the wake of corporate
financial scandals, the next generation
needs to learn how to steer an organi-
zation responsibly without focusing
exclusively on inflating the companys
stock price.
The biggest need in corporate
America is leadership development,
Thompson says. But its not considered
among the hard skills, so it never gets off
the ground. Its always the first to go. The
lack of interest in leadership develop-
ment is costing organizations greatly.
Thompson suggests that training
officers prepare a list of priorities
during budget season, outlining the
must have programsones that can
be delayed for a yearand potential
cuts to incremental programs. New
initiatives should be avoided.
Training departments dont have to
show value; they have to help the busi-
ness improve, he says. They should
be proactive and be able to validate,
not justify their existence.
At a time when travel, guest instruc-
tors, and class registration fees are
under scrutiny, analysts believe that
technical means influenced by the
investment community and that are
used to prove training dollars are well
spent, will fall on deaf ears.
Training analysts have long debated
the merits of return-on-investment
and other measures to demonstrate a
financial yield for training new leaderscommunicating with colleagues, or
teaching managers to delegate. Any
improvements in intangible skills
are unlikely to be reflected on the
balance sheet.
A lot of people have tried to answer
that question, says Gordon Johnson,
vice president of marketing for Exper-
tus. There is no good answer. You just
cant do it. You measure what you can.
Experts agree that in the current
environment, curriculum-basedinstruction dependent on enrollment
is an obvious candidate for cuts.
Any kind of off-the-shelf, general
development courses, such as
finance for nonfinancial managers,
conflict resolution, or novice software
application tools, are also potential
candidates for cuts.
If internal programs are already
small, shrinking the class size offers
another approach. One company in the
oil sector is preparing for the retirement
of a generation of managers. The inter-
nal leadership development program is
essential, but with tighter budgets, the
company chose to develop a smaller
group of individuals, according to
Marc Sokol, vice president of Person-
nel Decisions International. He believes
organizations could be more selective
about who receives training instead of
debating whether to slash programs.
Dont spread training dollars thin
just to say that you touched every-
body, Sokol says.
Phoo by iSockphoo.com48 | T+D | AuguSt 2008
Sp cus m chh mc h wkplc. iv-uls f s c-s pm wh pssss spclsklls m lch h ppu.
-
8/6/2019 Training During a Recession
4/5
Training administration is an-
other expense under the microscope.
Johnson recalls working with a hard-
ware manufacturer that counted 500
people in the training department,
some working part-time for just one
hour per week. The company decided
to contract with a vendor, using 20
people working full-time.
For larger organizations,
outsourcing seems a logical step, but
it introduces a host of unanswered
questions, specifically about who
owns training. Starr recalls pitching
a financial services client a contract
whereby the client would reduce its
annual training budget of $120 million
by 25 percent. The company balked,
believing that outsourcing the divisionwould be disruptive.
A lot of companies are nervous
about ceding too much authority to a
supplier, Starr says.
Against the grainWhile several organizations made the
transition to outsourcing, one company
that relies heavily on development is
taking the opposite tack. Five years
ago, Suffolk Construction brought all
of its training in-house. A new facilityin Florida, set to open this fall, includes
a 2,500square-foot training center.
Among a staff of 1,000, Suffolk employs
eight full-time trainers, two of whom
are responsible for curriculum plan-
ning. All of the 80 training courses are
reviewed annually.
To meet the needs of the millennial
generation, Suffolk offers an eight-
month rotation in each business unit,
including project management, field
operations, and estimator to teach
new hires the entire business. Fred
Day, director of training at Suffolk, says
the job rotation program is a major
enticement for graduates. The training
regimen has helped build the compa-
nys reputation. The only pressure we
faced was to cut travel, Day says.
Organizations committed to ongo-
ing development with an integrated
training regimen no longer debate
whether training yields any kind of
tangible return. For others, discus-
sion is heating up, whereby training
is linked to an overall talent manage-
ment strategy. Absent any training and
development, proponents argue that
turnover is bound to rise.
The biggest effect training has is to
reduce turnover, Thompson says. If
55 percent of your employees are not
engaged, and 15 percent are actively
disengaged, theyre destroying your
brand. Theyre telling customers and
colleagues how bad the company is.
Instead of forecasting their own
demise, training officials face the same
prospects as their colleagues. David
Smith, managing director of talent and
organization performance at Accenture,
compares the current climate with the
annual expectations in manufacturing
where greater productivity is expected
without increased investment in
resources. He noted no significant cutsin training budgets as of yet.
Yes, some pressure has hit learning
departments, Smith says. They are
being asked to do more with less, but
thats business. Training departments
asked to be treated like a business unit,
and thats what chief financial officers
are doing.
Sea changeWith the expectation that more train-
ing is delivered through online or
social networking tools, Smith believes
training officials need to undergo
training themselves to become more
familiar with the new delivery systems.
Piecemeal cuts to training do not
need to be painful. Starr believes
that cuts to the corporate training
catalog or e-learning can be made
without harm to the environment.
However, wholesale cuts carry a much
greater risk.
If all of a sudden you reduce sales
training or management training or
What Do You think?T+Dwelcomes yor commens. If yo woldlike o respond o his aricle, or any aricleha appears in T+D, please send yor feedbacko mlbx@d.g . Responses sen o hemailbox are considered available for pblicaionand may be edied for lenh and clariy.
AuguSt 2008 | T+D | 49
cancel classes, that sends an alarm
through the organization, he says.
After a year, you go from being a
company that offers training to one
that doesnt.
Steep cuts may change the entire
dynamic in the workplace. Individuals
identified as candidates for promotion
or who possess special skills may latch
on to another opportunity. Staff ex-
penses, specific jobs, and development
programs are the easiest to cut and the
most difficult to rebuild.
Companies that cut human capital
aggressively in the early 2000s caught
the last wave to shore when other com-
panies were thriving, Thompson says.
If organizations take a flexible ap-
proach to provide training using othermediums, they can meet the needs of
the new workforce. The younger gen-
eration is omnivorous regarding how
they learn. Organizations employ staff
with years of experience and the desire
to teach. Online resources can capture
such expertise so the individual need
not present training anew, though few
organizations are following this path.
One analyst believes that the transi-
tion from instruction based on class-
rooms and materials to one relyingentirely on expertise has yet to occur
in a meaningful way. For years there
has been talk about blended learning
where people work in teams with in-
house trainers, and no one has done
it, says Kerry Patterson, cofounder of
VitalSmarts, a corporate training con-
sultancy. They dont think it will work.
Organizations have a long history of
sending people to training. Classrooms
and a big university are one of the first
things they build into a company. They
hate the idea of not using them. Its the
devil that they know. T+D
Michael Laffis senior associate editor of
T+D; mlaff@astd.org.
th cu clm scus m ls sp bck, cu bck, -
hk hw h lv.
-
8/6/2019 Training During a Recession
5/5
top related