Training Adapts to the Downturn
It’s a tough sell as executives curtail such events either because of immediate cost concerns or longer-term perception worries, says Nell Nicholas, a HelmsBriscoe regional director who serves the New England area. To update their sales pitch, the associates in the New England office—called associates because they work exclusively on commission—reached out last fall for some training assistance.
Those sessions have helped the associates reframe their approach, Nicholas says. Now they highlight the ways that HelmsBriscoe can assist with economy-related headaches, such as abrupt meeting cancellations or unused blocks of rooms. (The Scottsdale, Arizona-based company books $2 million a day globally in hotel space and other sleep-related revenue.) They also play up their ability to ease the workload of overtaxed human resources staffers and event planners, says Nicholas. "There’s a lot more multitasking going on in this economic environment," she says. "Outsourcing is a great way to go. Companies are receptive."
During economic downturns, training dollars might appear to be a tempting line item to cut or re-evaluate, as companies shed workers. Some companies will likely adjust their thinking in the current recession, tracking return on investment more closely and restricting limited dollars to the most talented of employees, according to training leaders interviewed. In the years after the dot-com bust, a sizable percentage of training moved to technology-based options that didn’t involve travel expenses, according to data from the American Society for Training & Development.
The retrenchment in this recession appears to be substantial, according to a new report by research firm Bersin & Associates. In 2008, average training expenditures per employee fell 11 percent, from $1,202 per learner in 2007 to $1,075 per learner last year. The U.S. corporate training market shrank from $58.5 billion in 2007 to $56.2 billion in 2008, the greatest decline in more than 10 years, according to the report, which was released in January.
But radical or indiscriminate cuts can be risky, because economic tumult exposes yawning business challenges and emerging competitive opportunities alike, says Pat Galagan, executive editor for the American Society for Training & Development. "Often in tough times, companies will change direction," she says. "They will change their business model or decide to put more emphasis on a particular function, such as sales. Those things require more training rather than less."
Galagan says she is watching for trends in technology-based learning. From 2001 to 2003, the average percentage of hours that companies devoted to e-learning and other technology-based options increased from 11.5 percent to 26.2 percent, according to data compiled in ASTD’s annual "State of the Industry" report. "We could see another big jump," she says.
Based on early feedback, Laird Post of management consulting firm Booz & Co. predicts that corporate leaders will be more selective in how they cut staff development. "In past downturns it’s been very typical to stop all training for an indefinite period of time because it’s simpler and easier to do it that way," he says.
This time around, it appears that corporate leaders are more inclined to use "a scalpel," picking and choosing based on long-term strategic goals, says Post, leader of the human capital management practice at Booz. "Your workforce is your only true competitive advantage," he says.
Training programs that are most vulnerable to being jettisoned are those that hadn’t taken steps to show their value before the economy stalled, say Post and other training leaders. It’s also more important than ever to assess relative cost-effectiveness of various programs, says Nadine Keller, founder of Precision Sales Coaching and Training, who worked with the HelmsBriscoe associates. Rather than running yet another training session on the art of the sale, she says, perhaps those employees would benefit more from a crash course in time management—efficiencies that could better boost sales over the long haul.
If their training budgets are tight, human resources leaders also should consider which employees are worth developing, Keller says. On the sales side, for example, companies have already figured out in recent months which employees were simply "order takers" rather than innovative sales professionals. "I think good markets mask poor skills," she says. "In this environment, I think you need to get rid of the underperformers and you’ve got to invest from the top down."
As Southwest Airlines negotiated economic and security uncertainties following the September 11 terrorist attacks, the company didn’t ratchet back on training, says Elizabeth Bryant, senior director of talent development. But the airline’s leaders knew their employees needed to develop maximum adaptability amid a rapidly evolving airline industry, she says.
Employees were not only adopting new security roles, but technologies such as online ticket reservations meant they interacted less frequently with the flying public. As a result, a single encounter could make or break a customer relationship. Meanwhile, volatile fuel prices and weather changes aggravated other daily stresses. "The kind of challenges we are facing, and have faced over the last several years, necessitate our leaders to be more flexible and agile in response to the changing marketplace," Bryant says. "Change is absolutely a theme for us—the only constant is change."
To assist frontline supervisors with adaptive thinking, Southwest officials have incorporated a game-based system into the airline’s extensive training program. Working together in teams, Southwest employees use the Paradigm Learning game, called Zodiak, to create and build a mythical company. Then facilitators work with the teams on applying what they’ve learned to similar challenges and surprise scenarios at Southwest, Bryant says.
"If we can expose them to as many experiences as we can today, that’s going to prepare them for tomorrow," she says. "For example, what if fuel prices go up to $170 [a barrel] tomorrow? What does that mean for us?"
Leaders at Paychex, a payroll and benefits outsourcing company, also pride themselves on not dialing back their training focus, despite the short-term economic forecast. The company, which employs about 13,000 people, averaged 92 hours of training per employee in fiscal year 2008.
Economic downturns can create their own opportunities, says Will Kuchta, vice president of organizational development. In the current scenario, for example, laid-off employees are launching their own small businesses, Kuchta points out. That provides a fertile emerging market, given Paychex’s focus on small businesses; its average client employs fewer than 20 people.
And, he adds: "Considering that we believe that our training and the knowledge of our employees improves our product, the more that other companies cut back, they actually weaken their product against ours."
Similarly, Nicholas believes that her associates’ recent training will help them better reposition themselves. Associations that book annual meetings have been particularly receptive to the new sales pitch, as they are vulnerable to being stuck with a block of rooms and other headaches if the economy reduces how many members can travel to a particular event, she says.
Meanwhile, any clients who have temporarily cut back aren’t going anywhere, Nicholas says. "They will come back to me when the meeting is back on," she says. "I haven’t lost the client. When the economy comes back, we will be much better for it."