Why cutting training is a false economy

As has been widely reported 2009 is going to be a tough year for business and when business is hard survival instincts take priority.

By Vanessa White, managing director, freshbaked Corporate

As appeared in Business in Wales magazine

As has been widely reported 2009 is going to be a tough year for business and when business is hard survival instincts take priority. Budgets are cut and usually the first thing to get the chop is the spend on staff training.

With all eyes on the bottom line, training may well seem like an unnecessary luxury. However, this is exactly the time when a business should pay special attention to investing in key members of staff as there is nothing more crucial to the success of a business than the skills and attitudes of the people it employs. A business is all about its people, and its success depends on their performance.

Many companies will unfortunately face difficulties in 2009 but this is when you need your people to perform at their best. Better trained staff can give your company a competitive edge and give you a way through the hard times.

Even some of the UK's top business people are in agreement that cutting training spend is a false economy. Instead they advocate investing in skills and training as an effective means of combating an economic downturn.

In a recent open letter to UK employers, business leaders including Sir Mike Rake, Chairman of BT group, Sir Stuart Rose, Chairman of Marks & Spencer and Mervyn Davies, Chairman of Standard Chartered plc voiced their absolute commitment to training investment urging employers to sustain or even increase their investment in training.

Citing their experience of previous economic downturns they state: "Now is precisely the time to keep investing in the skills and talents of our people. It is the people we employ who will get us through. When markets are shrinking and order books falling, it is their commitment, productivity and ability to add value that will keep us competitive. Investing now in building new skills will put us in the strongest position as the economy recovers."

This statement is reinforced by research from 2007 that confirms that firms that don’t train are 2.5 times more likely to fail than those who do.

The business case for developing staff is compelling. Effective training can reduce staff turnover and absenteeism, improve motivation, increase productivity, and help boost customer satisfaction.

Even more importantly when hundreds of people are being made redundant every week, maintaining investment in their development sends one of the most powerful messages to staff that the organization values them and can see merit in investing in them for the long-term. It also helps to motivate employees by arming them with the necessary tools to effectively carry out their roles in tough market conditions, even if that means taking on extra responsibilities.

Visibly reducing a commitment to training, particularly in organisations where there has been a long history of staff development, is likely to enhance any concerns staff may have and create a culture where people are on edge and fear redundancy.

For those businesses that still want to benefit from having a highly trained workforce, yet have tight budgets, ensuring that they get the best possible return on investment via training is key.

The first and most vital thing to do is decide on the employees in which to invest. There is no point trying to 'blanket' train staff, directors and managers need to ensure they pick the people within their organisations who have the potential to make the most difference and will use the new skills and knowledge most effectively.

To further ensure the best results, businesses should set clear objectives for what they’d like the training to achieve and look for training providers who will work closely with them to understand their priorities and needs. If you know what you want, good training providers will aim to establish if this is also what you need.

It is also essential that employees attending training programmes understand how their participation impacts on overall business objectives. Understanding a clear link between the outcomes of the development and the needs of the organisation will give them clarity and focus, enabling them to achieve maximum results from training.

By following these simple steps - sending the right employees on the right training courses armed with the knowledge about what's expected of them - the benefits can be huge. Effective training results in improved profit margins and a happier and more engaged workforce, which ultimately helps a business to develop a real competitive edge that will help it to ride out the turbulent times.

freshbaked Corporate specializes in the areas of Leadership and Management offering a wide range of commercial and funded training and development services to range of clients in all sectors across Wales including Admiral Group, BAE, Euro Commercials, KTSOwensThomas, Julian Hodge Bank and Principality.

Using a unique approach to learning, freshbaked Corporate’s solutions are designed to shape attitudes, build skills and communicate new knowledge in combination, and draw on an extensive repertoire of methods, tools and techniques to achieve its clients’ desired results.

For more information email dbratcher@freshbaked.co.uk