Top NavTop NavTop Nav

Multiple Choice: How to keep the training budget alive in an unstable economy

  • July 1, 2009

By Carolyn LaWell

Let’s face it, when you’re in a budget crunch you’re looking to slash any line item that doesn’t show an immediate return. In today’s recession, training is becoming that item more and more.

The U.S. corporate training market shrunk from $58.5 billion in 2007 to $56.2 billion in 2008, according to research firm Bersin & Associates. The average training expenditures per employee fell 11 percent from 2007 to 2008, and small and midsize businesses were hit the hardest, averaging 33 percent fewer training hours per employee.

You may think trimming or even axing training is justifiable — training takes time and money and doesn’t usually have an immediate return on investment. But educators say now is a prime time to enhance your employees’ skills, whether it’s taking advantage of slower business to cross train employees or supporting your employees in the additional responsibilities that they took on following company layoffs.

“When these major recessions occur, they change the world of business,” says Robert Tanner, instructor for continuing education at California State University, East Bay, and founder, principal consultant and president of Business Consulting Solutions LLC. “If the training budget is cut too severely, then these companies are not really positioned to do well when the economy rebounds. So as a result of that, they can lose their competitive advantage.”

Eliminating your training or education budget can be detrimental. But there are ways to maintain productivity with fewer dollars, and it starts and ends with efficiency.

Track your spending and its returns

One place to start is looking at the training or education you’ve done in years past. Did you see results that directly improved your bottom line? If not, look closely at what you’ve spent money on. Maybe you’re paying for employees to get advanced degrees that are useless to your company or maybe you lack the resources needed for your staff members to fully implement what they learned in training.

“When we talk about training, this is a common mistake companies make: They don’t allow sufficient time for the business professionals to observe, to practice and to provide feedback, they just try to get all the material out,” Tanner says. “The training design has to allow enough time for activities, for feedback and all of these things to occur for people really being able to take this back and make meaning of it in the workplace.”

There are multiple ways to track training, the most popular being pretesting and post-testing to grasp the change in employee knowledge. Whether or not you measured your employees’ change in skills, a follow-up assessment to gauge retention and whether more training is needed can provide positive feedback. Questions to think about are: Did they learn something from the training? If they learned something, can they apply it on the job? If they can apply what they learned on the job, did it have a positive financial effect on the company?

If you haven’t seen the results you were hoping for, don’t continue to throw the same training program at the problem and hope for a different outcome. It’s important to remember that training isn’t always the solution and that people learn in different ways. The best thing to do is either sit down with a training provider or internally spend time evaluating the best solutions moving forward.

Find solutions now, while planning for the future

Effective training that gets to the core of the problem starts with an analysis of what the issue is and having a sense of what you want to accomplish through training. A common mistake is assembling training for a particular reason but never defining the why and a quantifiable outcome.
An internal training department can outline the company’s objective, but you can always look to the experts at consulting firms, colleges and universities to do a needs assessment and align an educational plan with the results.

External providers can offer objective advice to what your company’s priorities should be when it comes to training and carryout implementation. And while you may be thinking short term in this economy, a long-term plan is essential to be a step ahead of your competition and execute successful training.

The best ways to assure you’re meeting your company’s needs and spending your money wisely are to link training to your strategic plan and your performance management system — each job description and employee annual review.

“Every employee, every time their performance is evaluated should also have attached to that evaluation a plan for how they’re going to get better in their job based on their own needs and the needs of the employers,” says Gail Whitaker, associate vice president for academic program development and dean of the College of Extended Learning at San Francisco State University. “Then the training regimen should be planned according to that.”

That guarantees a regular evaluation of your training program and your employees’ skills, and if you’re working with a provider, it keeps them abreast of your company’s future plans, which can lead to identifying problems and solutions earlier and faster.

Determine training that suits you and your budget

There’s a plethora of external sources to partner with, whether it be sending administrators to pursue master’s degrees or training employees on communication techniques. Colleges and universities tend to be the best bang for the buck, offering a one-stop shop with consulting, full implementation and a broad range of courses.

When it comes to training, the costs that add up are flying in topic experts, sending employees to out-of-town conferences or even holding training off-site. If you’re hoping to trim your training budget — and it seems many are — then think locally. Look at the office training and online services offered by local community colleges and universities.

Tough times call for creativity. Think about internal and external resources that lend themselves to free training. Check professional associations for round tables and seminars. Survey your employees on their areas of expertise and hold brown-bag lunches on those topics. If you’re bringing training in-house, just make sure you’re using a variety of techniques to meet each employee’s learning styles.

“What I would suggest taking a look at in a down economy is the motivation of the employees,” says Whitaker, who proposes splitting the cost of training with employees. “We’re seeing more and more of that, and employees are willing to do that, because they value the training so much. It’s a way for them to continue their upward mobility even in the down economy.”

And look for funding sources — federal, state and local organizations offer training grants, whether it’s the U.S. Department of Labor or one of your local economic development corporations.

If you’re thinking about dramatically cutting your budget, first think about why you have training in the first place: to improve your retention, customer satisfaction, corporate culture and the overall growth of the company.

“People think that maybe education is dispensable, but it isn’t any more dispensable in the corporate world or in the nonprofit world than it is at the elementary-school level,” Whitaker says. “Not investing in education and training would be like the state not funding education — everybody knows you have to do that.”

© California State University, East Bay. All Rights Reserved.