• 2.1: Talent Management
• 2.2: Learning & Development
• 2.3: Interim Services
• 2.4: Business Consultancy

Some organisations are slashing their training budgets as a knee-jerk reaction to the recession, but housing experts and business leaders are warning against such short-term thinking. They believe continued investment in staff training is crucial to surviving and ultimately overcoming the recession

You might think the economic downturn has forced most chief executives to tear up their training budget for 2009. Think again. Recent polls have shown that less than a quarter of companies are planning to reduce their training budgets this year.

Training providers Beyond the Box and Cegos UK separately published the polls in late 2008. According to research by the former, 75% of companies are set to maintain their training budget. Cegos UK's poll showed that only 17% of learning and development professionals expect their training budget to be cut.

“Chief executives cut the ‘nice-to-haves’ such as learning and development”

“It’s a very private sector response to slash the training budget,” says David Blackburn, director of HR & business support at Shepherds Bush Housing Group (SBHG). “The first areas that chief executives look to cut are the ‘nice-to-haves’ and – to many of them – that includes learning and development.”

Blackburn believes slashed training budgets pose a serious risk to housing associations, in particular, because they generally prompt departures of good staff that the sector struggles to replace. “The housing sector has issues around recruitment,” he says. “There is a short supply of new blood because the surveying, sales and development sectors are all chasing the same staff.”

Indeed, everyone working for Gallions Housing Association has a personal development plan. “Part of the reason for this is retention,” says Gallions’ director of business support Debbie Viner. “I understand that some profit-making organisations don’t really care – after all, a job is no longer for life – but we can’t afford to pay massive salaries here, so we’re always looking at how we can develop our staff skills.”

Blackburn says cutting your training budget is like throwing the baby out with the bath water. “It’s wasting money invested in previous years. Organisations that do it usually discover that their workforce is soon reduced to what it was a few years earlier. Learning is about putting in building blocks, understanding a common language and repetition. If there is very little training for two years, much of that previous learning will be lost.”

SBHG is committed to learning and development. Indeed, Blackburn has spent much of his three-year tenure working with The Triangle Partnership – a talent management and business strategy consultancy specialising in the housing sector – to bring about organisational culture change. (Click here to learn how temployee engagement has been boosted at SBHG.)

HR managers must be able to show the value of their training choices

According to Blackburn, HR managers must be able to show the added value of their training choices to their boards. “Training will be the first thing shelved by any housing association whose HR manager can’t clearly show a direct correlation between training and progress, and evaluate how it is making a big difference,” he says.

Recessions also tend to cause static labour markets, with people fearing for their jobs. The trend was evident in an Ipsos Mori poll, conducted in January, which found that almost half of full-time workers (49%) were worried the recession would force them out of their jobs in 2009.

But, according to Triangle’s learning and development partner Christine Newton, now is not the time for HR managers to become dreamily complacent that fearful workers equal effective workers. “The recession will be a distraction for many workers whose companies should be seeking to engage them for their own sake as well as their employees,” she says.

"You can’t hide behind a flabby product or service"

Newton believes that staff training is more important during tough economic times. “The competition is even stronger and the workforce has possibly been reduced, leaving you with a lean framework. You can’t hide behind a flabby product or service - you have to ensure that it’s well equipped and skilled because there is no flexing. Everyone has to be spot on and sharp.”

Liz Hughes, HR director at Metropolitan Housing Partnership (MHP), concurs: “It’s a false economy not to retain your training programme. Places that cut them often find that staff have left a few years later because of a lack of training, relevant staff are no longer around to bridge missing skills, and that their organisation is giving a poor to mediocre service to its customers.”

She also cites the recessional difficulty of not being able to pay large salary increases. “This means that continued skills development and investment in your staff becomes even more important as a retentive, motivational and engagement tool. Continued investment in skills will deliver benefits to the bottom line and enable your organisation to remain robust in tough times.”

Hughes is currently responsible for overseeing the change element of MHP’s large business transformation programme, Achieving Excellence. “MHP has completely reviewed its processes within the HR, finance and procurement functions, together with investing in enhanced technology,” she says. “The training and education of some 2,300 staff on these changes is a significant challenge. Identifying the right staff to train on which element of the change will lead to better results when needs have been correctly identified and implemented.

“This transformation programme will ultimately help us to reduce the paper flow, put in place better controls and real time management information, resulting in large efficiency gains,” adds Hughes. “Duplication of effort will be totally removed and we will be certain that we have one version of the truth in our systems.”

“Training is often used as a patsy for poor management"

However, Newton believes that many training budgets are unwisely spent. She says: “Training is often used as a patsy for poor management. Some teams are under-resourced, under-trained, and face unrealistic deadlines from a manager who continually pressurises them to perform. It doesn’t work, so the manager sends the team on a customer-service training day – which totally bypasses the problem and leaves them feeling dejected and demoralised.

“When this happens, the real target for learning and development has been missed and money that would be better spent on healing the management problem is completely wasted. Companies need to re-evaluate and be more realistic about their training needs because most managers aren’t able to identify them.”

Newton believes good management is needed to facilitate the provision of good customer service. “Training should be seen positively for what it is – personal and business growth – and never as remedial or a punishment. Sometimes it’s only necessary to motivate and help one person. If handled well, that shouldn’t pose a problem.”

Effective, well-sourced training can also save money

Effective, well-sourced training can also save companies’ money by allowing them to make further business improvements elsewhere. Last November, Cranfield School of Management and Learn Direct Business published a report in which 44% of surveyed businesses reported money savings from nurturing their talent. A third (33%) improved staff motivation and more than half (52%) increased employee retention.

Dr Emma Parry, senior research fellow at Cranfield School of Management, says: "With training budgets arguably among the first to go in a recession, this research demonstrates that growing your own is an effective way for organisations to obtain the skills they need while saving money.”

MHP’s partnership arrangement with Triangle shows how using outside partners can deliver clear business improvement. MHP uses Triangle’s expertise in finding people with the right skills and cultural fit to help implement many of the housing group’s restructuring and growth projects.

"Triangle’s help is always totally committed and practical,” says Hughes. “When we combined two regional departments to form our sister company MHT London, Triangle was very effective in assisting us with the assessment of some 200 staff into their new roles, and in helping us to identify any learning needs for those staff who were promoted.”

Cathy Walsh, managing partner at Triangle, believes companies that retain their marketing budget are the ones most likely to survive any recession. “They come out less battered and bruised, and with a greater market share than their competitors,” she says. “If you develop people properly they will add value because you won’t have to replace them.”

“100 days coaching helps new senior staff to integrate”

For that reason, Triangle has devised a service called 100 days coaching, which helps newly-appointed senior mangers to become more accustomed to the contents of their bulging in-tray at the start of their tenure. It could have been designed for President Obama.

The service matches newcomers with an expert coach who will provide four work specific sessions and telephone advice within their first hundred days in office. “100 days coaching offers new senior staff the chance to integrate into their new organisation and prevent them from feeling foolish,” says Walsh. “It allows them to establish a sounding board about their business without damaging their credibility.”

Greg Brown, managing director at business coaching consultancy GB Executive Solutions, says: “There is always pressure to review costs, but one of the benefits of partnering with a consultancy is to pull people in and out when you need them. They can provide expertise on tap because they have networks from which organisations can source short-term interventions when needed, rather than splashing out on permanent staff.”

 Training needn’t be expensive: there are many cost-effective ways to develop staff

Brown says training needn’t be expensive. “There are many cost-effective ways to develop business staff. Training someone in-house to become a mentor, setting up business action teams, organising secondments or work shadowing are all low-cost interventions that largely require only people’s time,” he says.

“Staff retention and development is key to riding out the storm"

Newton warns that organisations won’t change unless they do so from the top. “It’s all very well for middle managers to be trained, but if those at the top don’t understand what their managers are going through the organisation won’t be able to instigate the changes it’s looking for.”

To help HR managers achieve this, Blackburn believes they should understand every part of their organisation well enough to have an adult discussion when the chief executive talks about slashing training budgets. “I told mine: ‘I understand certain areas that we can shave off the budget, just as long as you’re not expecting me to reduce learning and development because that would be short-sighted. Staff retention and development is the key to riding out the storm."