Businesses are becoming concerned about the impending recession as operating expenses continue to rise rapidly. It’s no surprise that companies have begun cutting costs wherever they can—often in areas they see as nonessential, such as marketing and learning and development.
However, investing in employee learning and development (L&D) should not be considered a luxury, even in times of economic uncertainty. In fact, it is more important than ever to invest in the workforce to attract and keep the best employees.
Boosting the company’s retention rate ensures maximum productivity at all times. In contrast, replacing employees can cost the business several months of income in recruitment, onboarding, and training expenses.
L&D professionals face constant battles for adequate funding, and the best approach to advocate for training programs in such challenging times is to demonstrate their value.
The Value of L&D in a Recession
Many organizations consider L&D training programs as frivolous expenses with little direct impact on their bottom line. Due to budgetary constraints, many businesses are postponing training or eliminating their L&D departments altogether. However, there is merit in prioritizing learning and development, especially once the recession has passed.
Companies that are able to hold onto their best employees and maintain highly skilled teams will be able to get through difficult times. Furthermore, learning and development experts can help businesses stay competitive by getting their employees future-ready.
Because everyone on these teams already has the essential skills and is equipped to handle emerging issues, the business won’t need to recruit fresh talent or re-train teams. Furthermore, investing in L&D departments positively impacts overall productivity.
When a company invests in its employees, those employees work harder, have higher morale, and remain loyal to the enterprise. Given the high cost of new hires, any strategy that can reduce employee turnover is a boon to any business.
Why L&D Professionals Need to Be Strategic
Some businesses are ready to reduce their learning and development budgets on the assumption that it won’t make a difference if they cease for a few months. However, as company roles evolve and work demands increase, having no training at all can affect worker productivity and efficacy. During long periods without learning, workers can become less confident in their abilities, exert less effort to learn new things, and are less persistent in overcoming obstacles.
Additionally, once the economy is back on track, all teams must be in tip-top shape to go full speed ahead. Retaining the best talent is in every business’s best interests if they want to remain competitive in their niche.
Another argument in favor of L&D is that up to 70% of employees would consider leaving their current employer for one that invests in their learning and development. A staggering 94% of employees said they would continue working for a company that supports their professional growth.
L&D experts must demonstrate why investing in future-proofing the workforce is crucial, not just to keep up with the times but also to safeguard the business’ most precious resource.
Demonstrating the Value of L&D
Few businesses have dedicated L&D departments because many still regard it as a luxury—a nice-to-have and not a must-have. This creates the impression that L&D involves generic training modules that encourage employees to work harder, instead of what it really is: arming them with the tools they need to produce more value for the company.
This can be avoided if L&D is established as an integral element of a company’s long-term goals. Demonstrating its importance can be done with the following:
Aligning With the Company’s Business Goals
It is essential to determine the organization’s objectives and then design a training program to help employees develop the skills to achieve those goals.
Identifying Skill Gaps
Skill gap analysis is a process through which you can identify skills and competencies that are missing from your workforce. This analysis will help you develop a clear picture of the skills the organization needs to prioritize moving forward.
Bring Relevance to Training
Employees will be more driven to put new skills into practice if they are relevant to their daily tasks. Additionally, they’ll be more likely to participate in your training programs if you clearly outline the benefits of learning for the individual and the business.
Documenting the Success of Your Programs
Make sure your L&D efforts are recognized. If retention rates are increasing because of your training programs, compare historical and current retention rates to demonstrate the value of your L&D strategy.
If possible, show how your program impacts internal mobility. One indication of success can be how many learners shifted roles internally, whether for a promotion or to take on new, more important roles. Employees will be more inclined to participate in L&D opportunities if they SEE that doing so will lead to a promotion or a lateral move to a position they are interested in.
If you have made any progress in bridging skill gaps, it is another positive indicator of your training plan’s effectiveness.
Showcasing the Cost of Not Having Training
Companies facing an economic downturn should strive to retain their top talent. If a business is having trouble staying afloat, its greatest bet is to invest in its most valuable employees. They will return the favor by helping the company succeed despite many obstacles.
Highly motivated employees may start to feel dissatisfied if they are not given opportunities for professional development and advancement. As a result, your company may see high attrition rates during the downturn and even after the economy recovers.
Learning and development is one of the top benefits of working for a company in the long term. Cutting funding for it can affect employee loyalty, decrease morale, and even cost the company a significant amount of money in recruiting and training new hires.
Positioning L&D as a Tool to Attract New Talent
In a hyper-competitive world, companies need to offer benefits other than commensurate salaries and vacation leaves. They also need to provide their employees with opportunities for growth and development. This involves robust and practical learning resources at their disposal.
Position your L&D program as an asset that will attract new talent and help you gain a competitive advantage over other companies in your industry. The younger workforce, including millennials and Gen Z, are serious about their professional development.
According to 59% of millennials, having opportunities to learn is a crucial factor when considering a job, while 87% of millennials believe that professional growth and development in the workplace are essential.
Millennials will soon be making up a majority of the US workforce. To entice the best and brightest, your company must demonstrate a willingness to invest in their long-term growth.
Likewise, the ambitious Gen Z are shown to prioritize career advancement on top of being financially motivated.
Keeping Your Goals and Objectives Specific and Measurable
You must be very clear about your objective if you want to succeed in winning the approval of your L&D budget. Your learning strategy must be based on measurable, achievable goals that will serve the company’s larger objectives.
Here are three questions to help you get started:
- What do I want to accomplish?
- What do I want to measure specifically?
- What are the goals that my company is trying to accomplish?
Your solutions must be focused, grounded, and within your budget plan.
Many L&D professionals cannot obtain budget approvals because they fail to provide C-suite executives and upper management with concrete data demonstrating the value of investing in L&D. To ensure everyone is on the same page, write out your goals using the SMART framework.
By aligning your goals with the organization’s overarching objectives, L&D becomes less of a luxury and more of a necessity that will power business expansion. It will remain on the company budget if it is shown to benefit the company throughout the economic downturn and even beyond.
The Takeaway
L&D budgets often take a hit in times of economic uncertainty—many business owners see employee training as expendable. However, investing in employees and the company’s future is crucial.
Your most valuable asset is people; investing in them boosts productivity, morale, and retention rates. Even better, it draws in fresh, young talent while safeguarding your company from high attrition rates and expensive recruitment expenses.
Are you a leader trying to build a business case and strategically position talent & L&D programs in your company? Contact Us to learn how we can partner on the ROI and design of impactful talent programs!