When going gets tough, spend more on training

Nov 05 2008 by Nic Paton Print This Article

The training budget is one of the first items, historically, to get the chop when things start to get tough. But latest research has added more weight to the counter-intuitive argument that it makes sense to spend more on training when faced with a downturn.

A report from the UK's Cranfield School of Management has concluded that organisations which invested in their staff were generally best placed to save money, improve staff motivation and increase employee retention.

The poll of more than 1,100 training and recruitment managers found that nearly eight out of 10 saw developing the skills of their existing staff as a more beneficial option than simply throwing money at external recruitment.

More than four out of 10 felt firms that spent money on their staff ended up better placed to save money, with a third arguing that it improved staff motivation and more than half pointing out that it improved employee retention.

The most successful organisations typically had formal training policies in place to nurture their talent, with less successful firms tending to rely on training that was delivered on an ad hoc basis.

Yet, despite this, just a third of employers actually had a formal training strategy in place, suggesting there was often a clear gap between aspiration and reality.

The Cranfield report echoes research from the U.S published in September by recruitment firm Personnel Decisions International which argued that, despite the economy taking a nosedive, managers now needed to be spending more time on retaining and training key staff.

Dr Emma Parry, senior research fellow at Cranfield School of Management and author of the report, said: "With training budgets arguably amongst 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.

"For employers, the nurturing talent concept means managing and developing employees to achieve business goals. This could include training employee coaching staff mentoring and job enrichment to stretch employees with new tasks," she added.

The report was commissioned by UK skills body learndirect and Sarah Jones, chief executive of Ufi, the organisation responsible for learndirect, said the report showed the importance for firms of nurturing their staff.

"In tougher times it can become a challenge as other business demands take priority," she conceded.

"However, as this research highlights, organisations do not just stop hiring during an economic downturn Ė they simply work harder to ensure their available resources are allocated more effectively," she added.

Effective training could be effective in reducing staff turnover and absenteeism, improving motivation and productivity as well as boosting customer satisfaction, she argued.

"By focusing resources on nurturing existing talent, organisations can ensure they reap significant rewards," she said.