| STRATEGIC ANALYSIS |
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| About the present with eyes on the future |
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For the seventh consecutive year, one our business partners, The Ken Blanchard Companies, managed to get together a few thousand top managers from around the world in order to answer a set of questions about their companies' status-quo and the actions they plan on taking in the future.
It's more of a picture of the present rather than a prognosis of the future. Therefore, it is more important to have answers to the following question: "What do I do now?" rather than thinking about the way the future is going to look like and making plans about the actions you are going to take.
As we have done these past few years, the research I am going to talk about focused mainly on the needs of organizations in the current environment from an employee development perspective.
Why such a subject?
First of all the reason behind this is that I noticed that one of the first reactions, when the word "crisis" became a reality, for many managers was to cut, diminish and eliminate. And because marketing was (and still is in my opinion) an expense that ensures visibility (and therefore hard to completely eliminate), the solution was to reduce budgets for employee development. Apparently, less trained employees don't have a direct influence on the company's image and won't go on strike because they haven't been trained. Still, the effects can be seen in the medium term, if not short term.
The second reason behind cutting training costs is that, due to the possibility of downsizing, some managers don't see it as necessary to invest in employees that are going to leave the company. As a result they prefer to halt investments until further orders. In other words, until a decrease in productivity will determine the company to act in force, to create an emergency plan for training employees that don't perform.
Crisis is in fact the new reality
For me, these reactions are in accordance with the term that is sometimes used by managers: crisis. We are in a crisis situation, we don't know what to do so the simplest thing to do is cut personnel expenses. However I have met managers that look at the current situation through a whole new perspective: it's not a crisis, it's the new reality. In other words, they have gotten used to the fact that we will never go back to the way things were and that the key questions is "How will we be successful in the new business context?" rather than "What can we do to survive until things come back to normal?".
My proposition is to forget, at least for a little while, that we can ever go back to the previous situation. I don't think that in the next 3-4 years it will be possible to get back to the consumerism and "insanity" of the last 2 years, when everybody was investing in anything, when the stock markets were on full throttle and the people that didn't make money were the ones who weren't investing (a friend of mine said it best: "even a fool made money on the stock market"). This current situation imposes, realistically speaking, only one way of thinking: "How do I adapt to the new reality?". For those that are still doubtful, my advice is to read a story that I think fits the situation: "Who moved my cheese?". If you read the story, read it again. If you took part in a training with the same name, take the book and read it again. It will surprise you by being so up to date with our situation, the 4 characters in the cheese labyrinth and the current economic context. And you may also be surprised by its capacity to inspire. I address a new question, regardless of your reading the book or not: "What would you do if you weren't afraid of the new reality?".
The results of the research
Our colleagues research on 1700 top managers throughout the world, show that not everybody is desperately trying to cut down costs. Whether it's by chance or not, we started to feel the effects of the crisis later on and at the same time, we didn't have such recent experiences as the Americans did. One of the effects of 9/11 was that many companies halted their employee development budgets for up to 3 years. Another effect was the rapid development of online training programs, as a reaction to an increase in the employees' fear of flying.
The impact on training budgets
What are the effects of this new environment on companies across the world? First of all top managers consider that the economy will show signs of relief in the 4th quarter of 2009. This is a challenge when it comes to finding ways of supporting company performance in a much tougher climate, in which clients may change or not buy as much as they did. The effect of this prognosis on internal strategies is an interesting one. For example, here is how tendencies in employee development investments stand for 2009: |
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| Going into more detail, managers were asked about the cutbacks, percentage wise, in the development budgets for 2009 compared with 2008. Here are their assessments: |
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Even if the numbers aren't staggeringly high, one key question still remains: where are these cutbacks being made? What is being given up? In principle, if you have been left with a small budget as a result of your negotiations with the CEO what can you do? You want to invest as much as you can in the critical areas but you also have costs to think of. And here is where dilemmas start to appear: will you give up on traditional suppliers that might be too expensive? What do you do if you find new suppliers? How credible are they when it comes to ensuring quality and results at smaller prices in comparison with the suppliers you were used to working? Do you give them up completely and start training internally? Maybe it's cheaper, however internal trainers won't always have the same impact, if they haven't been exposed to regular "training", in which their abilities could be maintained at a good level, qualitatively speaking.
To these dilemmas I add the opinions of those interviewed that say they would cut back from the following areas: |
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Although the picture seems to confirm what I said earlier, that the first reaction to the current situation is budget cutting, in essence I see an adjustment with the purpose of optimizing the way you spend money on employee development. If until now programs for every area were made with external suppliers, companies nowadays are more careful on the sort of programs they spend money on and what they can do themselves.
A plausible scenario is one where the company management continues to benefit from external training (at lower volumes, of course) and employees on execution levels have internal trainings, possibly developed in partnership with an external supplier (that prepares the program and trains internal trainers). Another scenario is that organizations are going to buy licenses for training programs that up till now were implemented by external suppliers (this would show interest in both results and quality but at lower costs). This is the first part of my article, in the second part we will address challenges when it comes to organizations and top management.
Rares Manolescu
Senior Manager |
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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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