When times get tough, L&D gets cut. That’s what past recessions have shown.
Many economic experts say another recession is imminent – fueled by inflation the world’s wealthiest countries haven’t seen since floral shirts, flares and bell bottoms were in fashion.
Instead of slashing learning budgets to save money, firms should continue to invest in L&D and reshape their strategy to strengthen business success.
Business panic and short-termism are rampant during recessions
“We need to do more with less” is often the battle-cry from the boardroom.
Speculative growth experiments are abandoned for tried-and-tested systems that deliver predictable results. To cut costs hiring is frozen, promised pay rises are suspended, new projects are canceled, and employees are made redundant.
During the Great Recession of the late 2000s, U.S. companies made double digit cuts to L&D budgets, and two-thirds of U.K. employers did the same, with 30 percent reducing in-house training.
Consolidation of learning providers is also common. Employers will push to renegotiate existing contracts with L&D suppliers and narrow their list of providers – preferring those with the best track record for return-on-investment.
Performance management becomes an even bigger necessity during a recession
With fewer resources available, companies focus on maximizing efficiency, productivity and innovation to ensure they can keep their heads above water.
Organizations avoid taking risks where possible and reduce the autonomy of lower-ranking managers and employees to make big decisions. And generating a high-performance culture becomes essential.
A high-performance culture is generally considered to be “a physical or virtual environment designed to make workers as effective as possible in supporting business goals and providing value.” It is also “values-driven” and consistently attracts and retains a highly talented, motivated and committed workforce.
Recessions see the weakest companies disappear and the demise of competition will create holes in the market that need to be filled. An organization with a high-performance culture is in the best position to adapt to drastic changes, find the gaps in the market and pick up the customers left by the competition.
But learning is at the heart of a high-performance culture
Research shows people who work for companies that invest in resources for learning are 83 percent more likely to feel happier in their job and 94 percent of employees would stay at a company longer if it invested in their career development.
In fact, in an analysis of 3 million employee surveys, “learning and development opportunities” were found to be the second most significant factor in determining engagement.
Highly engaged organizations experience 41 percent less absenteeism, 17 percent more productivity and 59 percent less employee turnover compared to lower engaged companies.
Learning keeps your high performers happy
Despite the threat of the recession, 40 percent of workers across all levels of seniority are considering quitting their current jobs in the next three to six months.
While financial pressures may lead organizations to make cuts to their workforce, they will need to keep their highest performers, as they are the ones who will drive them out of the recession successfully.
To do so, learning is critical to make employees feel valued, supported and empowered to achieve greater business results. Research shows 94 percent of employees say they would stay at a company longer if it simply invested in helping them learn.
Also, organizations with a strong learning culture are 92 percent more likely to develop new products and processes, 52 percent more productive, 17 percent more profitable than their peers and their retention rates are 30-50 percent higher than average.
Three ways to recession-proof your L&D strategy
- Connect all learning initiatives to organizational goals
What is most important to your organization now? By identifying areas of your business where you’d like to see improvement and digging down to find the root cause, you can make sure your training is relevant and effective.
Speak to leaders from other departments, assess the data available to you – from financial reports to customer feedback, to produce the lists of skills that your organization needs to improve on, and the appropriate learning that’s associated with it.
- Help leaders navigate their tensions
Even before the recession, 70 percent of managers say they’re overworked and overstressed.
The basic skills all managers need to be effective, such as driving business, executing, focusing, aligning, boosting and connecting with employees, don’t go far enough to overcome bigger challenges and hit higher targets.
By investing in learning that teaches your leaders attunement, leaders will have a pliable solution that can keep up with ever-evolving situations and provide leaders with the insight they need to balance and respond to tensions.
- Focus learning on generating high performance
Studies show organizations that deliver performance management systems well are more productive, have higher customer satisfaction and perform better financially than ones that don’t.
The key to building an effective performance management culture is to create the right psychological conditions:
- Purpose: We need to feel our work matters.
- Challenge: We’re getting outside of our comfort zone.
- Attention: We know how to improve through feedback.
- Growth: We are progressing and achieving our goals.
- Recognition: We are recognized fairly for our contributions.
- Choice: We have a choice to persevere and retain control of what we do.
