With the flow of capital starting to freeze up in organizations and markets, learning leaders will need to consider the possibility of flat or even decreasing budgets for the foreseeable future. More to the point, they’ll have to figure out how to spend their money most effectively.
“When times are a little bit more challenging, the biggest thing they worry about is how they preserve their budgets and show ROI so [business leaders] aren’t trimming away at them,” said Nancy Martini, CEO and president of PI Worldwide. “Is learning discretionary, or is it really at the core of the growth and development of the business?”
While it’s always important for learning to be — and be perceived — as a critical factor in business success, that’s especially the case in a down market, she said.
“The wrinkles become more apparent. Good times cover up a lot. When times are tough, every sale is more essential, and every person’s skill set is more essential.”
When budgets get tighter, learning executives’ first instincts may be to look for things to cut, including programs and personnel. However, they should be very cautious with regard to the latter, as they’ll likely want to preserve a stable and productive work environment.
“We’re hearing concerns about how to keep up morale in uncertain times,” Martini said. “[CLOs should] make sure retention is strong so your good people don’t jump ship because they think their industry’s getting hit or their business isn’t strong enough.”
With regard to programs, CLOs probably can find things to cut that will save money, such as travel to live learning events.
“The good news — and we didn’t have this in previous challenging times — is the array of new media options like podcasts and webinars, so you can be creative with your learning dollars,” Martini said. “If there’s less opportunity to invest in [live] learning and development, at least use alternative modes. Don’t skip it: Look for alternative technologies to deliver the same ‘sticky’ reinforcement.”
However, she added a warning: Don’t roll out a new training program if the modality doesn’t align to the message or if the learning function cannot sustain its momentum.
“If you can’t do it right, then wait. It’s worse to try and do something that everyone gets excited about, but nothing happens to reinforce it.”
As far as training for particular areas of the workforce is concerned, it’s best to focus on the employee populations that will provide the greatest return to the organization.
“If you’re doing learning [during an economic downturn], who do you really need to skill up? The managers, who will lead people through the tough times, and the salespeople, because they generate revenue for the company,” Martini explained. “From a learning and development standpoint, the sales organization is typically the last place they’ll cut the training budget. That’s the one place where [we can] invest money and see revenue return immediately. It’s also highly measurable: You invest X and get back Y. Sales training historically goes up when everything else stays flat or goes down.”
Finally, when it comes to their approach to the department’s budget, learning leaders should have multiple plans to deal with various fiscal scenarios. Martini said some learning executives already are moving in this direction.
“What I’m seeing — for the first time in a long time — is contingency budgets.”