Reducing Training Programs During Recession - Essay Example

TRAINING DURING GLOBAL RECESSION A report on the advisability of reducing training programs during recession Introduction There is currently an unfolding global economic recession that has eroded the confidence of business to pursue its long-term visions and strategies. There is an immediate resort to caution, consolidation, and cost-cutting, the last often pursued as a knee-jerk reaction to the prospects of reduced revenues and unrecouped expenses. Cost centres in companies come under immediate scrutiny, and foremost among these cost centres is the human resources development programmes. Seen as not directly income generating, training and skills development programmes are usually the first to come under the axe. This paper will posit the various views stating why it is an unwise move for the company to discontinue its training programmes. The effects of the economic recession Galagan (2009) views the effect of the economic challenges of 2008 as motivators for greater precision and efficiency in the execution of business strategies. There is a move towards more constrained use of resources, including people. At about the same time, however, there is an accelerating retirement trend among the Baby Boomer generation, creating a skills gap in several organizations. This is apparent in the rehiring or extension of retirees and retirables in jobs that require specialized knowledge and skills, and for which there is a dearth of qualified younger workers. The confluence of forces that bear upon industry’s manpower complement sometimes create perplexing developments. For instance, the grim economy has manufacturers and other businesses laying off record numbers of workers, yet at the same time there is strong, unsatisfied demand for employees that have anxious companies begging on their knees (Cadrain, 2009). According to economists, academics and human resource managers, the causes can be traced to changing technology, offshoring, global competition and retirements. It is thus not a matter of the unavailability of jobs, but the unavailability of the right types of employees to fill the jobs that are open and waiting. Apparently, “it’s not a worker shortage, it’s a talent shortage,” according to a report by The Manufacturing Institute, Deloitte and Oracle (Cadrain, 2009). In all companies, there is need for particular skills and talents that training can address, even and especially during an economic slowdown. It takes a matter of strong leadership, vision and foresight to perceive the necessity of training, the kind of training needed, and how such training can benefit the company long after the recession has ended (Van Buskirk, 2009). The nature of skills gaps The American Society for Training and Development, or ASTD, defines a skills gap as “a significant gap between an organization’s current capabilities and the skills it needs to achieve its goals. It is the point at which an organization can no longer execute its strategies, fulfil its mission, grow, or change because it cannot fill critical jobs with employees who have the right knowledge, skills and abilities” (emphasis supplied) (Galagan, 2009:61-62). The distinction of the critical point when the organization is no longer self-sustaining or effective underscores the importance of not only having the right number of workers, or even the workers with the proper qualifications, but the workers with the proper skills. Sadly, there are people who possess the proper credentials and documents, but who are not equipped with the needed skills for the jobs they are intended to perform. What is remarkable in the occurrence of skills gaps is that it occurs on a more or less constant basis in organizations that consistently stay ahead of the changing conditions in their operating environment and the evolving expectations of their stakeholders. One may say that constant change is the price of organizational excellence. Regular redefinition of goals is necessary to remain relevant, and when goals are redefined innovations in strategy and operations will normally follow. Thus, a skills gap is created which the organization must fill, either by training the people presently with the company, or sourcing new workers with the needed skills (Galagan, 2009). The ASTD observed that not only organizations but communities, states, regions and even entire nations are seriously compromised when they fail to find or train workers with the right skills for the critical jobs. It thus identified in its 2009 research two underlying causes of the skills gap: (1) “jobs are changing to require more knowledge work, more teamwork, and more use of technology (2) “educational attainment has fallen behind the nation’s need for skills” (Galagan, 2009). Competitive opportunities created Nic Read, president of international consulting firm SalesLabs, is a strong believer in skills training particularly during a recession. He argues that any recession will eventually lead to a recovery, and there will be industries that are likely to emerge from the recession ahead of the others. Growth opportunities are created during a recession, and several companies will be identifying new directions and adopting new processes (USA Today, 2010). The recession is thus the precise time for training to be provided, but it must be the right kind of training to the right people. Tough economic times do not preclude spending, only wasteful use of resources. Strategically determined and acquired skill capabilities are the cornerstone to implementing any early recovery plan, and take advantage of the chance to get an early start ahead of the competition. This perception is shared by Wood (2009), who is all for taking advantage of training courses in the midst of a recession, for both companies and individuals. The crisis economy resulted in more redundancies week after week. Redundancy is created when individuals with the same skills lose their relevance to their employer because the employer’s need for people with this skill has been reduced. However, a good way out of being redundant is to create new skills within the person for which he or she will gain relevance to the employer’s needs. Even for individuals who have lost their jobs, seeking training adds new strings to their bows and opening them up to more opportunities than they otherwise would have. Wood observes that in a slow economy, training providers make their courses available at discounted prices, so there is added incentive for both individuals and institutions to avail of training precisely during a recession. Protecting the company’s investment For institutions, Wood perceptively states that training during a recession is in the nature of protecting a company’s investment in the worker. It is not easy sourcing personnel from the labour market, and there is a cost incurred in advertising for a vacancy, screening, testing and interviewing the several applicants who would respond to the notice, selecting the successful applicant and orienting and training him or her for the job. It is important, therefore, that companies strive to maintain their personnel, particularly those who input the greatest value into the company, and to keep them engaged in the organization. The phenomenon of “jobs thaw” – the increasing number of resignations over layoffs that occurs after a recession – is due to good employees becoming disengaged from the company during the slowdown, and waiting for the earliest opportunity to look for greener pastures at the earliest sign of a recovery (Leonard & Rugaber, 2010). Brown (2009) writes of his company called Primary Freight Services, that showed to what lengths it went to maintain its original workforce, and how it coped through the height of the crisis. The painful decision was made to cut salary expenditures by 20% across the board. This meant that as many as 18 employees are in danger of losing their jobs, a prospect Brown dreaded as CEO. As it happened, everyone in the company felt the same. It was ultimately agreed that instead of laying off personnel, all employees will suffer their workweek to be reduced to only four days, thus allowing everybody to keep their jobs. There was naturally concern that because of this demotivator, quality of work will suffer and service will decrease – which is a major concern since Primary Freight is a service-oriented company. “Primary Freight’s product is really our workers,” according to Brown, and management was acutely aware that there was dire need to keep their workers physically and mentally healthy. Immediately, the company launched a support and training program with a professional business coach from the Motivational Training Institute. The six-week program, entitled “Battling Burnout and Regaining Control”, was launched before adopting the change in work schedule. The program guided the staff to acquire coping skills for the loss of income, and attitude-adjusting techniques in response to the situation. It addressed stress management, the build-up of self-esteem, and maintaining optimism. A particular focus of the sessions is how the employee could take control of the fifth day so that they could recoup lost wages and build stronger family relationships (Brown, 2009). Directly as a benefit of the program, employees learned to consider the no-work fifth day as a benefit and took advantage of it for other productive activities, such as resuming an old hobby, spending time with the family, or simply relaxing. Needless to say, the company was able to retain all its workers with very few transfers, service did not suffer and in fact was enhanced, and the workforce emerged a stronger, highly competitive, and more engaged and motivated organization than it had been before the crisis. Coping with layoffs Not only is training advantageous during a recession, but in many cases is an imperative as a result of the layoffs. When some staff have been made redundant, the remaining staff are straddled with the jobs formerly performed by those who were separated from the company. This usually causes among the remaining staff an increased level of anxiety, poor performance at the new job for lack of skills, poor performance even at their customary jobs because of increased inefficiency in handling two or more jobs, and subsequent disengagement from the company. The latter is a dangerous prospect, because the employees who were not laid off were considered too valuable to separate from the company and, therefore, vital to its operations. A surge in dissatisfaction among valuable personnel render them prime candidates for the jobs thaw, and the company may count on them tendering their resignations at the first job offer that materializes. Personnel whose job responsibilities have been increased are in need of management support on so many levels. Most apparent is the need to equip them with the right skills for the new jobs they are to assume (Wood, 2009). Not only are they to learn the new skills more quickly, but they need to learn the more expedient manner of applying them. These workers will have to be doubly efficient to perform two or more jobs, and to perform them in such a way that neither function suffers. Aside from the job skills for performance’s sake, there is a need to provide these employees with the necessary psychological and moral support to be able to work efficiently with their new responsibilities. Increasing salaries and monetary incentives may not be feasible given the economic recession, and such would not be effective long-term motivators against the dissatisfaction and pressure of performing additional duties. Management will have to be especially concerned of the physical as well as psychological well-being of its remaining employees, and this preparation could best be addressed through training and counselling. It also conveys to the staff that the management views them as valuable to the company. A higher purpose During a recession, there is a presumption that training and other manpower costs should be cut back, indicating that they are not considered priorities, being line items that do not show immediate returns (LaWell, 2009). Consequently, training and other such activities are relegated to the category of embellishment or triviality, and thus the first things to be done away with during lean times. MP Karen Buck is adamantly opposed to such an idea, but for purposes different from those cited by businessmen, such as competitiveness, investment, efficiency or engagement. Buck (2009) cites how in past recessions, there had been repeated neglect of training needs particularly in the case of youth who are leaving the school system and entering the labour force, and society had paid a high price for this negligence. The cut-down in training programmes during economic slumps have seriously compromised the country’s labour regeneration. “The challenge is to offer opportunities that equip people for a labour market that is changing at unprecedented speed,” according to Buck (2009, p. 12). On a larger scale, training for the new workforce is vital to the progress of the economy after the slump, not only on the interim but in the long term. The world economy is forecasted to double in twenty years, at the time the new entrants today will comprise the bulk of the regular labour force. The economy will be changing so quickly that they need the ability to move between sectors as quickly as possible (Buck, 2009). Society must not once again abandon its young workers as it had done in previous recessions. Saving the training budget When all is said and done, despite all its merits a company may still feel justified in slashing its training because there is just not enough money. Robert Tanner, instructor for continuing education in California State University, is of the opinion that companies that cut down significantly on their training programmes are not positioned to take advantage of a rebounding economy, and thereby lose their competitive advantage (LaWell, 2009). Tanner says that cutting down on the training budget does not translate to cutting out necessary training. He suggests several ways of addressing the budget problem: (1) Selectivity in approving training expenses: The company should verify if it was funding such items as employees’ advanced degrees that are useless to the company. (2) Follow up for effectivity: Allowing for sufficient time, resources, and feedback will enhance the value of the training for effective application the company’s operations. (3) Adopt the long-term view: Training is always for the long-term, therefore training needs should be assessed based on future strategies and directions (i.e., after the recession). Conclusion “During times of recession, companies often tend to cut back on training and marketing to save money… [T]his provides a completely false economy” (Wood, 2009). This report set out to argue against the proposal to discontinue or significantly reduce the number of employee training programmes of the company, or severely reduce the budget allocated for such training. More than at any other time, an economic recession is the critical time when training should be explored not only as a coping mechanism, but also a strategic tool for advancement. The company should resist the temptation of giving in to panic at the prospect of interim losses, but instead focus its attention at the competitive tools it should be stocking in its arsenal, for deployment at the earliest indication of recovery. All the arguments presented here point to manpower training and skills development as the most important tool in that arsenal. To do away with training now will be the biggest mistake the company would make, the realization of which will dawn on our leadership only when it is too late. WORDCOUNT = 2,500 References Brown, J 2009 “Motivating Your Staff During a Down Economy”. Material Handling Management, May 2009, 64(5), 44-45 Buck, K 2009 “Young cannot go to waste once again”, Regeneration & Renewal, 5/4/2009, p12 Cadrain, D 2009 “U.S. Manufacturers Starving Amid Plenty”, HRMagazine, Dec2009, 54(12), 13 “Dont force UK workers into pointless vocational courses”, Education, 5/15/2009, Issue 354, p5 Galagan, P 2009 “Bridging the Skills Gap - Part I”, Public Manager, Winter 2009/2010, 38(4), 61-67 LaWell, C 2009 “Multiple choice”, Smart Business Northern California, Jul 2009, 2(8), 8-9 Leitner, K 2009 “Making the most of your training resources during challenging economic times”, Human Resources Magazine, Oct/Nov 2009, 14(4), 16-17 Leonard, C & Rugaber, C S 2010 “Signs of jobs thaw: Quitters outnumber layoffs”, Associated Press, 9 June 2010. Accessed 13 June 2010 < http://www.msnbc.msn.com/id/37590360/> Raleigh, P 2009 “Coffee with or without Sugar”, Process Engineering, Jul/Aug 2009, 90(4), 5 USA Today 2010 “5 questions for Nic Read”, USA Today, 5 April 2010, p. 3 Van Buskirk, M 2009 “Strong leadership makes a difference during difficult times”, North Western Financial Review, 8/1/2009, 194(15), 5-20 Wood, F 2009 “The way ahead….” Bookseller, 8/28/2009, Issue 5397, p39 Read More