Corporate Training Companies During a Recession

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In any hard economy, there will be impact on the training companies corporate learning environment. We often talk about the current impact of the recessions we have been in since 2007, how it affects our lives, and what fears and concerns have come with it. Lately, as we begin to see many of our customers ramp back up post recession, we ask ourselves: how do we asses the damage that has already been done to learners over the past 12 to 24 months?

So from a purely analytical (and somewhat empathetic) point of view, let me share the following:

When the CEO believes the company is facing an uncertain environment, it is expected of him/her to take steps to meet the challenges of that uncertain environment. Companies of course, have two different levels to control things more or less—revenue and expense. On the (buy) revenue side, there is less control because there are more uncertainties, more competition. Do we really understand where the consumer is going? Is buying? In such a scenario, business leaders will start focusing on the “must have” versus the “need to have” across their organizations. Sadly training and development in some organizations will fall on the nice to have side or the perceived expense versus investment side of things (BIG MISTAKE …but we will get to that later).

This idea of tightening the belt from the “must have” notch to the “nice to have” notch impacts the learner directly and indirectly during and post a recession phase. How do we know this? Almost 30 years of being in business has allowed us to weather a few such periods with our clients.

Not to go too far back, we travel to the 2001-02 IT bubble burst, where we saw companies pulling back on their training infrastructure. Not the hard infrastructure (classrooms, equipment sunk costs in technology), mind you, since most of the expenses around training revolved around people—but training organizations or the people giving the training. Moreover, as companies downsized in personnel, indirect training and knowledge was lost as good employees were forced into early retirement(tribal knowledge lost) and different subject matter experts looked to more operational jobs to keep their job security.

The immediate result was obvious: less training equaled less affirmation for issues surrounding compliance, best practices, customer service etc… In the short run, since you weren’t dealing with much new hire training, the impact was probably minimal. But in the medium- to long-run, the effects were more damaging. (See Study on Downsizing).

What it boils down to is this: training impact or lack of through its absence is no different than investments in marketing to our customers. We train to get the mindshare of our employees much like we invest in marketing to discover our customers (where many companies will raise investment in the recession to go after harder-to-find customers, which is not the case in training). Ask your marketing colleague at work and he/she will tell you that lack of marketing one year will impact sales in the years to come. Building a culture of performance and better customer service is no different.

For a more discerning customer during a recession and the highly competitive market that follows, we can only bemoan the choices on cutbacks some companies made in training and applaud those that looked for competitive advantages by stepping up training to a much more motivated and job security conscious learner population during this recession.

The good news is that more and more organizations understand this ….some supporting data can be in Environmental Protection or it can be purchased under the State of the Industry Report from ASTD. You can also find great information on Bersin’s Factbook 2010 Overview.

Going forward, we will write about the direct impact on our clients training organizations and of course the learners we worry so much about.

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  1. Thanks for the information and the resources to help show the impact of cutting back on training. I try to help companies continue training through free podcasts and blogs myself, and I'm going to link to your blog and share one of these articles there.
    Again, thanks for the information…it helped.