| STRATEGIC ANALYSIS |
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| Why you must still invest in training in times of crisis... |
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As news of the global economic downturn spreads, we must consider how we can best position ourselves and our clients to come out on top. While speaking to our clients we often hear that HR departments need to find ways to trim their budgets. These companies may see cutting training and development costs as an easy way to preserve the bottom line, but there is major peril in there too. A recent study from Common Purpose concludes that cutting training budgets will have long term negative results: weakened staff morale, lower levels of trust within the organisation, potential loss of talent, and performance issues, all due to a lack of appropriate training.
Cutting training and development programs could mean that the organisation as
a whole will be limited in its ability to achieve long term goals. Many HR
Managers feel that "talented managers - those most likely to give an organisation
its competitive edge - may be the first to move to another organisation if commitment
to their development starts to fade. Furthermore, leaders and managers who lose
their motivation often diminish motivation and morale within their teams which
can potentially lead to reduced productivity and loss of staff".
In an economic downturn, the war for talent is fiercer than ever. Recently, McKinsey
revisited their 1997 study on The War for Talent and concluded that finding and
retaining talented people continues to be "the single biggest managerial preoccupation"!
What organisations need to be cautious of is that all the efforts and costs spent
on finding talent would be lost if these individuals are not developed and motivated
through severe economic times. Continuing to train and develop talent is one
way of ensuring that the organisation comes out of these challenging times stronger
than their competition. It is this talent that, if motivated, will leverage on
growth opportunities.
It is important not to lose sight of long term organisational goals, even when
a crisis forces all of us to look for short term solutions. "During a recession,
many organisations cut back on their employees training and development budgets,"
observed a Senior Consultant. "This is completely understandable, yet these are
the very people who will be looked on to help the organisation pull through,
spot the growth opportunities and accelerate out of an economic recession."
Discussions on major on-line forums on this subject offer the following conclusions and advice for those responsible for staff development during the downturn:
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Keep the strategic goal firmly in sight and where the organisation will need to be when the economy shifts again
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Think laterally and look for the opportunities to create 'first-mover advantage' when coming out of a downturn
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Go slower rather than cut entirely; the benefits will still accrue and you'll have less training to do when things improve
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Show commitment to and reward those people who you wish to retain. It will keep morale - and productivity - high
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Keep learning and development top of the agenda; it could make all the difference between surviving and thriving later on
In Romania it is no different. We at Human Invest value close contact with our customers. This is why we have continuous discussions about the challenges our clients face, the most current being the challenges with their budget for the coming year. We openly discuss the potential harm which cutting training and development budgets can do on both the short and the long term. We help point out to the management team what the threats are of cutting budgets and what the overall benefits are of continuing the organisations commitment to training and development of their most vital resource: their staff.
Our advice to our clients is therefore to be very selective when cutting budgets. In those unfortunate occasions in which budget reduction is inevitable, also in the people development area, we advise to focus on key employees. Companies should never diminish their attention to the leaders who keep the company up and running and those potential saviours who take initiatives that directly affect image and client satisfaction. Leadership development, self-leadership and communication skills show immediate results in performance and motivation throughout the company, personal satisfaction and in clarity of communication. When we draw for example an effort-impact-matrix with our clients we separate immediately and visibly the indispensible training sessions from the less essential ones.
We are convinced that 2009 will be a challenging year in which everybody will
feel the impact of the global crisis. Some companies will feel a drop in sales,
especially those in durable goods, others will feel a slight drop in visitors
or contacts, some will even be heavily affected and will have to downsize. Still,
whatever the effect of the crisis on your organisation, do everything possible
to retain the best people you have in order to keep your competitive advantage
during and - most important - after these times of trouble!
Richard Reese
Managing Partner |
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Human Invest is a Premier League company in the arena of training and
organizational development consultancy services, present on the Romanian market since 1998.
We are recognized for conceiving and implementing programs which offer managers an authentic experience towards improving their leadership
performances, and thus we support companies in becoming more and more engaged in delivering excellent services for their clients.
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