When the economy is shrinking and businesses are struggling, training budgets get cut back just like everything else. However, this time companies with a long-term view on talent management are approaching things differently. The Wall Street Journal reported this week that although training budgets at U.S. corporations are down an estimated 11%, the share of budgets allotted to leadership development is growing:
Yaarit Silverstone, global managing director for the organization effectiveness practice at consulting firm Accenture, Ltd., says the emphasis on leadership development is a departure from the past. Ms. Silverstone says companies historically cut leadership-development programs during down-turns, but the moves backfired, prompting midlevel managers and top performers to leave when the economy recovered. Now, she says, executives believe that without capable managers, “their ability to come through [the recession] in a healthy fashion is diminished.”
This time around, companies continue to investin leadership development programs, while looking at ways to save cost. Estee Lauder reduced their annual high-potential training program from 120 to 60. Philips is holding training programs near their regional campuses to reduce travel costs, and is shifting facilitation away from external consultants to internal employees.
Another trend we’ll see more of is shifting training online, even for leadership development which has traditionally been delivered almost entirely via classroom environment. Cannon USA is taking this approach, integrating web-tools with classroom-based instruction to deliver leadership training to new managers.
Even companies that are laying off employees are reportedly increasing investment in the leaders that remain. Although counter-intuitive to people who look only at the cost side of investing in training, this strategy makes sense. For a company experiencing layoffs, the leaders who remain are required to do more with less. Now is the time to support them with training in skills and knowledge to help them lead the company successfully through a difficult time.
Investing in leaders who have survived downsizing makes sense. However, these companies should make sure, now more than ever, that those dollars are invested wisely. They should make sure that those leaders are prepared for learning, that they are supported throughout the learning process, and that they and their organizations are held accountable for what they learn. That will increase the likelihood that training will result in positive business outcomes for these companies.
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