After a few weeks of being in a lockdown due to the pandemic COVID-19, we see the reasons why economy experts are worried. Because of the current restrictions, the financial markets are going through their biggest decline since the recession in 2008. Entire industries, small and medium-sized enterprises are in serious crisis because of the imposed social restrictions and shortly reduced consumption.
In times of crisis, the first (and the most logical) reaction of the business is to reduce the costs, starting from not so critical for existence areas. Usually, training is one of the first “victims” in the battle.
At first, this seems pretty logical. Although there is a clear connection between increasing investments in training and development and increasing productivity. (therefore better productivity leads to higher income).
Study of European commission during 2008 about the last recession says
‘For men and women facing difficulties in gaining new employment, the ‘training first approach’ should be considered. For the entire workforce, upskilling and reskilling is crucial to ensure adaptability and employability in uncertain times.’
“Decreasing costs” is the main reason 46% of the companies in Germany have to cut down their training budgets during the recession in 2008. Most of them share that training is ‘too expensive’ in times of crisis.
When in crisis, managers often are put under pressure to invest in activities, related to short-term financial stabilization. Unlike them, real financial income due to training investments can be realized in a longer period of time. That’s why (at first sight) cutting training in times of recession seems understandable.
However, studies about the effects of the last crisis show something different. Thinking about the short- term finances it looks reasonable to have the training as one of the first “killed”. But in terms of successful realization at the end of the crisis, this seems to be one of the most stupid things we could do. Mostly because it has a devastating effect on our most valuable resource- talent and therefore the capability of being successful at the end of the crisis.
Here are 4 reasons why saving training in times of recession is the right decision.
01 TRAINING IS A KEY POINT IN SAVING MARKET POSITIONS
At the end of the crisis the business has to meet a whole new world- clients, competitors and suppliers will have a different expectations and behaviour. In order to have the business ready to meet the new circumstances, the preparation has to begin while the crisis is ongoing.
How to do so in three single steps:
Adaptation of the current business strategies.
Testing out new approaches and technologies and different types of knowledge management.
And plenty of specialists confirm- Investment in preparation of reliable and competent employees and managers.
Investing in knowledge proves to be a key factor in creating a competitive advantage in the post-crisis future – companies that do it effectively come out with a huge advantage in new market conditions.
Researchers share that the big success in Asian countries is owing to the investment made by Asian companies in knowledge during the last crisis. And many European and American companies are no longer on key positions because they enter in a “survival mode”.
02 TRAINING DURING RECESSION INCREASE EFFICENCY
Global crises cause a complete change in the market. This is particularly true for the current one created by COVID-19 – it puts the business in an unprecedented situation. Dealing with it requires employees with new skills – and their preparation and training is not only desirable, it is mandatory and urgent.
Training your managers is critically important. Mostly because every day they have to make decisions, being in new and difficult situations. And to increase the chances of these decisions being good and reasonable, we should be especially focused on developing leaders.
Only businesses that put in the shoes we can guarantee the effectiveness of employees and managers.
03 SAVING EMPLOYEES
Confronting complicated issues in times of insecurity can seriously demotivate the teams. Keeping training in times of recession has a big impact on keeping (and according to various studies even increasing) motivation of employees.
“If I am being trained, I have a bright future here”.
There is no clearer signal of calm and long-term intentions that leaders can send to their people.
If employers accept the present conditions as a principle, based on “Just providing job”, this signal will not be sufficient for employees. This is a strategy, providing a way for the employees to remain in the company until the peak of the crisis passes. And after that, a number of studies show that the best will leave the company and go to a place where they have the opportunity to develop. This is exactly what happens in a number of indusrties in Germany which, due to the lack of investment in people during the last crisis, are losing critical knowledge and are lagging behind in the global market.
Check out the Kelly International Survey results for 2008-2009 in the free eBook guide ‘Do not kill training’: https://www.mishostefanov.com/ebook
04 EFFECTIVENESS OF THE INVESTMENT
Training is cheaper at a time of lower productivity. In addition, using technology effectively enough and providing optimization of training processes, knowledge and intellectual property are increased with less capital investment than before.
Currently, most training suppliers will be inclined to lower their prices or give you more services for the same amount of money.
The crisis is the right time to build internal training capacity, which will further reduce the amount of investment.
For businesses that invest in maintaining a good level of training during the crisis, the cost of training afterwards will be horrifying high. It is possible demotivation of employees and the loss of the best staff after the crisis to put the business in need of recruiting and training new people.
This, especially on the Bulgarian market, is an extremely expensive and uncertain step. And surely the investment you will have to make then will be far greater than keeping your key training programs highly optimized during the crisis.
As a conclusion, it is critically important to maintain the investment in knowledge and training of employees and managers.
The best way to do it is to optimize your expenses and increase efficency of training, in order them to be justified during a recession.
Find more detailed analysis, ideas and tips on how to deal with the current recession in the free eBook guide ‘Do not kill training’. Through it we support leaders of teams and managers ‘Human resources’ and ‘Talent development’.
What we have icluded?
✔️ Analysis of the companies that successfully passed the 2008-2009 crisis not only regionally but also globally;
✔️ The biggest risks facing the business in the future and how companies could keep their training at a time when budgets are cut down;
✔️ Developed strategy to build internal training capacity to continue to develop teams and leaders;
✔️ Practical tips and ideas for creating training content;
✔️ Examples of our work with some of the largest companies in Bulgaria;
✔️ Printable checklist when selecting educational providers;
✔️ +70 educational technology links;