Training is Always a Good Investment

Financial instability or changing market conditions should not lead to reduced training investment, say a number of top businessmen in the UK. They recommend sustaining or even increasing training budgets in difficult times.

In the recent climate of global financial difficulties and the credit crunch resulting in cross-sector job losses, a coalition of the UK's most senior businessmen have taken the unprecedented step of urging  employers to continue their commitment to staff training.

In an open letter published in a number of national newspapers on 23 October 2008, top UK business people including Sir Mike Rake, Chairman of BT group and the UK Commission for Employment and Skills, Sir Stuart Rose, Chief Executive of Marks & Spencer and Chairman of Business in the Community, Mervyn Davies, Chairman of Standard Chartered plc, and Richard Lambert, Director General of the CBI, recommend employers to sustain or even increase their investment in training. The open letter states:

“'Now is precisely the time to keep investing in the skills and talents of our people. It is the people we employ who will get us through. When markets are shrinking and order books falling, it is their commitment, productivity and ability to add value that will keep us competitive. Investing now in building new skills will put us in the strongest position as the economy recovers” (1).

The aim of the letter is to highlight how training is not an added-on, non-revenue producing staff benefit. According to the co-signers, training should instead be seen as an inherent part of business operations which cannot be cut out without wide-ranging consequences for the business, both in the short and longer term.

Focus on training for overall strength

There is strong research evidence that skimping on staff training is not the quick resolution for a struggling organisation that it could seem to be. A recent report shows that more than one in four organisations (27%) that did not invest in training closed for business over the 1998-2004 period, whilst only about one in nine organisations that did invest in training (11%) closed down over the same period (2). These findings are supported by a 2003 report, which also found that raising investment in training directly corresponded with reducing the risk of company closure (3).

Also, according to HR expert Susan Heathfield, emphasis on ongoing development is one of the top five factors that attract employees to a particular work place. And the lack of potential for continued development is a frequently cited reason for poor performance or even leaving an employer (4).

These facts show how vital training can be – not just for the internal climate of an organisation, but indeed for its overall productivity and survival. Whilst it can seem tempting to cut down training costs and other expenses that are not immediately revenue-generating in challenging times, it is at the same time essential to get the most from the people of an organisation when resources are scarce and the future uncertain. Regular, targeted training can play an important role in sustaining competitive advantage which for many companies now seems more crucial than ever.

References

(1) Open letter can be found on: http://www.unionlearn.org.uk/about/learn-2470-f0.cfm

(2) SSDA, Training and Establishment Survival, March 2007. The full report is available at www.ukces.org.uk

(3) William Collier, Francis Green, John Peirson and David Wilkinson, Training for Survival, University of Kent, 2003

(4) Susan M. Heathfield, “Training: Your Investment in People Development and Retention”, www.about.com