Cutting training budgets in tough times is a false economy

20th February by Lee Robertson

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As 2023 is likely to see a continuation of economic challenge and uncertainty, we look at some of the reasons why organisations need to maintain an ongoing commitment to investing in learning and development.

The provision of L&D is a deciding factor when choosing an employer

A survey published by Docebo in late 2022 shows more than eight in ten (83%) UK employees would be more likely to choose to work for an employer who prioritises continuous learning and development (L&D) opportunities, than one that doesn’t.

The data reveals that a good L&D programme is also crucial for retention purposes as two thirds (66%) of UK workers said they would consider quitting their jobs within 12 months if L&D to support career development was cutback. This is also echoed by stats from Corndel’s Workplace Training 2023 report which found 56% of staff would leave their role if they did not receive the developmental support they needed.

Moreover, when asked by Docebo for the top three reasons why they would have left their job in the past, 75% of workers cited not being paid enough, 49% said poor management and 34% stated the under-resourcing of teams. 

Maximise your existing workforce or risk your competitive advantage

Can you really afford to underfund the learning and development opportunities you offer?

As education tech company Udemy, says in its guide – Why Learning Programs Matter During Economic Uncertainty, the only certainty is change.

Employers must recognise that there is a continual need to keep their workforce relevant, up to date and productive. If organisations feel pressured to cut costs in areas regarded as ‘nice to have’ such as training, they risk losing workers, knowledge and their competitive advantage.

In its guide, Udemy makes the important point that employers need to find a way of bridging skills gaps at a time when they may also be experiencing hiring freezes or layoffs.  It argues that by building integrated company-wide L&D programmes supported by a culture of learning, organisations can upskill their people and build a better employee experience.

McKinsey Global Institute(MGI) also puts forward that “a dual focus on developing people and managing them well gives a select group of companies a long-term performance edge.” In one of its latest articles ‘Performance through people’, McKinsey analysed 1,800 large companies across 15 countries and sorted them on two factors – how much they focus on developing human capital and whether they financially outperform their sector peers. It identified four subsets – People & Performance Winners, People-Focused Companies, Performance-Driven Companies and Typical Performers.

One subset stood out in particular with MGI ascertaining that “People + Performance Winners (P+P Winners) excel at creating opportunities for their employees to build skills (which MGI measured by looking at internal mobility, training hours, and organisational health scores) while consistently clearing the highest bar for financial performance.”

According to McKinsey “the Performance-Driven Companies similarly achieved top-tier financial results but do not put the same kind of emphasis on skills development and the work environment. The third group, People-Focused Companies, put resources into developing employees but are unable to translate that into strong financials. Finally, the majority of firms are Typical Performers that stand out on neither dimension.”

Moving from transactional to relational and personal

We all need a fair and competitive wage and the recent ongoing strikes over pay and conditions in the UK have highlighted the transactional relationship that can still exist between employer and employee. Work should not just be a transaction, and neither should the provision of personal and professional development.

Putting the learner in control of the skills they are gaining will ensure that employees are more engaged with the training they are receiving. Business, technical and personal skills are in high demand with employees keen to embrace learning that will make them more successful at work. Coaching, mentoring, classroom learning, online delivery, stretch assignments and on-the-job training are all affordable and crucial in settings where you have to do more with less.

Going back to the Workplace Training 2023 report, Corndel makes the case that “without a development plan and opportunities to grow and progress, it is clear to see why individuals may not feel committed to their organisation.”

Its research makes the case for more investment in employees because it will satisfy many and improve their workplace experience. It found “that just under three in ten (28%) of employees feel that their employer often invests in their professional development, with a third (33%) saying they do so only sometimes. One in ten do not receive any investment, which is a definite way of ensuring your employees do not remain within your organisation.”

Karen Smart, head of consultancy at the AoEC remarked: “It can be seen as a quick way to cut costs in tough economic conditions, but slashing training budgets is a false economy. The way we work is changing, so employers need to be investing in effective ways of giving their employees more autonomy so they can problem solve and innovate more quickly.” 

She continues: “Learning and development that makes best use of a suite of different training methods means money can be spent more frugally but in high impact areas such as coaching skills or mentoring. Employers should be approaching learning as a journey of creation and discovery so that workers can maximise their skills and be authentic to who they are at work. Give them the right skills and you will see productivity go up. Otherwise those organisations that don’t invest in people to help them grow and develop, will not hold onto their best talent.”

Photo by Andre Taissin on Unsplash