Cutting off your nose to spite your face

Released 01/07/2008

Maybe there's something in the old proverb afterall...

As recession kicks and pockets are not so flush with money, some of the first budgets to reduce are the marketing and staff training budgets.

Where dealers can replace the loss in marketing by using manufacturers' promotional tools, squeezing the training and development budget can have a serious consequence on the company.

A new study about this very topic helpfully landed on our desk at USP Magazine this week. The report, Taming the Wolf at the Door, by leadership development organisation Common Purpose, found that almost half of training and development professionals surveyed are expecting a budget cut of 20% or more. Team building and soft skills development will be hit hardest, while technical skills training and surprisingly, leadership development, will be the least likely to be cut.

According to the survey over half of respondents stated that the short term benefits of training cuts and reprioritisation will have long term negative consequences, and only 3% of training and development professionals who have held budgetary responsibility during a previous economic downturn said that cutting the budget did not have negative consequences. The negative consequences experienced included limiting the ability to fulfil organisational goals and setting back the learning and development strategy.

The cuts are predicted to be fairly evenly spread across organisations although, the more senior the manager, the more likely they are to see a drop in investment in their development. One of the most striking findings of the report was that over half of respondents are worried about retaining key staff during an economic downturn.

The belief is that talented managers, those most likely to give an organisation its competitive edge, may be the first to move on to another organisation if commitment to their development starts to wane.

Julia Middleton, CEO of Common Purpose says: "As economic storm clouds gather, many organisations cut their learning and development budgets in a misinformed attempt to see them through the tough times. This is entirely understandable, yet these are the very same people who will be looked on to both pull through and spot the growth opportunities and accelerate out of an economic downturn."

Cuts will more than likely have to be made to keep up a competitive edge of the competition, but if doing this means not developing the talent that keeps your company in this position, what is the point?

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