We’re expected to be in a recession until the summer of 2023 provided we don’t take a downturn. With inflation rate potentially rising up to 18%, it makes sense to see more and more companies tightening their purse strings.
But should the training and development budget be scrapped or increased?
As a 13-year old training provider not only have we lived through two economic downturns and a pandemic, we’ve also witnessed how much positive impact training can have on companies and their ability to not just survive, but thrive in uncertain times.
If you’re tempted to cut your training budget, here are five reasons why you shouldn’t:
1 | training helps you fill skill gaps needed to adapt
Training tends to be the first thing to be cut from company budgets during recession, but that typically leads to bigger skill gaps than companies who continue investing in their people. Leadership skills required to take companies through difficult financial times are essential and widening the gap can only mean falling behind competition.
The UK is significantly behind other countries when it comes to digital transformation. Ranking globally at #42 for skill proficiency, we have to invest in skill training more than ever now. By 2023, digital transformation has the potential to grow the UK economy by over £413 billion, demonstrating how valuable upskilling is (Amazon).
With the rise of new technologies and Web3 looming over the way we operate, the only way to stay ahead is to embrace the new ways and train our employees to be able to do their jobs. As more than half of UK businesses are currently experiencing skills shortages, it’s critical to act now and bridge the skill gaps.
This is where training comes in, as it helps businesses:
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Gain new skills and perspectives
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Learn from other leaders’ best practices, trials and errors, and insights learned
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Become better decision makers
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Enable high performing teams
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Expand their thinking
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Facilitate innovation processes
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Gain creative problem solving skills
If you’re not sure where to start, check out our upcoming courses for 2023 here.
2 | training helps you retain your employees
Employee retention
Hiring freezes are not only damaging for companies’ ability to innovate, it’s also risky if there’s no effective retention plan in place. Most business owners try to mitigate the impact of recession by cutting recruitment costs, pausing bonuses, and putting promotions on hold. This inevitably drives top talent away and leaves you vulnerable to the challenging external competitive landscape, and exposing you as a business with no strong talent, poor employer brand, and often declining performance.
There’s good news though, companies with strong learning cultures witness retention rates rise by 30-50% Source. If you’re concerned about losing new-gen talent, 86% of training-hungry millennials say that career training and development would keep them from leaving their current position (Bridge).
Even in recession, learning-focused organisations can ensure their people’s skills continue to evolve and contribute to company performance. It’s evident retention is crucial, and here’s why:
Cost of high turnover
Employee turnover is no longer a small problem. In the UK alone, replacing staff is costing businesses £4 billion every year (Telegraph). Oxford Economics estimate that the average cost to replace an employee is £30,614, which includes the recruitment cost as well as the time it takes for the person to reach an optimum level of productivity, which is believed to be around 28 weeks.
LinkedIn’s 2018 Workplace Learning & Development Report reveals that a staggering 94% of employees said that they would stay at a company longer if it invested in their career development. This means employee retention is not as difficult as we imagine, and there is a clear solution to prevent losing our talent: training. LinkedIn’s 2020 Global Talent Report demonstrates that companies who rate high on employee training see 53% lower attrition.
If you’re worried about losing your top talent, contact us today to talk about our in-house training sessions and how we can help your organisation offer practical and engaging training.
New wave of innovative leaders
The pandemic has transformed the way we work, and ultimately, that requires a new way of thinking for leaders. That’s especially true for newer generations who are looking at the way we do things very differently from us. It’s our responsibility to empower them and nurture their skills to step up and become more innovative. The technological landscape along with the fast pace of emerging technologies requires new generations to not only embrace change faster than we did, but also re-imagine the future and the way we work.
16% of Gen Z and Millennial employees have quit a job because they felt the technology provided by their employer was inadequate (source). This demonstrates a real need for newer technologies, fresh skillsets, and an adaptable mindset where you embrace change and new ways of thinking.
It’s not just skills and training future leaders need to survive challenging times, it’s also the way we work together. 30% of next-gen leaders say they want more coaching and feedback (DDI), showing there’s still a gap in the way we currently lead. We help leaders learn how to turn any conversation into a potential coaching interaction in our one day course here.
3 | training gives you a competitive advantage
Future-focused training
1 in 3 employees say their organisation’s training is out-of-date (Lorman). Applicability-wise, what’s learned throughout a training session is rarely applied to everyday situations. This highlights just how critical it is to increase effectiveness of training by making content practical, relevant, and modern.
The solution is to work with training providers who actively invest in expert trainers. They are far more likely to regularly update their training content and make it relatable to today’s challenges. That’s why at The Hub Events we’re extremely selective about who we hire and we only work with experts passionate about providing value. As a team, our ‘why’ is to help businesses solve problems, and we passionately believe the right training can achieve that. Check out more about us here.
“We see a lot more businesses enrol in high-level courses that teach critical thinking skills to their senior leaders. They want to build high performing teams, stay resilient during uncertainty, and shift from managing to innovation. Most businesses are going through the motions, and with the right training they’re able to think long-term and future-proof their people to stay ahead no matter what happens. Just like the pandemic, recession shows us that the only way to stay competitive is to leverage uncertainty to think differently and more creatively.”
Emma Salveson, Managing Director at The Hub Events
4 | training boosts employee productivity
Higher engagement
It’s no secret that most people aren’t engaged at work. Employee engagement is currently at an all time low in the UK as only 9% of UK workers feel enthused by their work and workplace (Gallup). If people are our greatest asset, how can we re-engage them even during a recession?
The most reliable way to increase employee engagement is training, here’s why:
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It gives them the skills and knowledge to do their job better
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It boosts their confidence and sense of competence
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It increases their job satisfaction and sense of accomplishment
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It allows them to feel more invested in theory work and organisation
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It makes them feel more supported by their employer
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It can also foster a sense of collaboration and community
Higher productivity
Not only can training save productivity levels that would have been lost due to high turnover, regularly trained employees are more likely to perform at a higher level than those with no training. Highly engaged employees take 41% fewer sick days and increase their productivity by 17% (Gallup) and by acquiring new skills and confidence they’re more likely to step up and exceed expectations.
Profitable productivity
Training and business growth go hand in hand. Since training helps you reassess your current processes and acquire new skills, it’s not surprising that 50% of sales teams believe training is effective in helping them reach their goals. Another study by the ASTD (American Society for Training and Development) of over 2,500 companies with well-developed training programs highlights 24% higher profit margins and 218% higher revenue per employee (BusinessTraningExperts).
And when you consider that every unfilled position costs an estimated £30,614 (Inside), training seems like a priority especially during a recession.
5 | training makes you more strategic
The fear is real
Economic downturns force businesses to become more strategic. But uncertainty and not knowing what to focus on can make many owners unsure about what to do. That’s why training is crucial. But standard cookie cutter training is not enough. To truly optimise the return on investment we have to increase efficiency of the training delivered. Whether it’s your CFO, CMO, or COO, they need the most up to date information and relevant insights from experts to be able to steer the strategic direction of the business.
Strategic managers
Nearly 50% of managers with over ten years of experience claim they’ve only received about nine total hours of training (Lorman). And when you combine it with the fact that 77% of business leaders expect line managers to support employee morale during a recession as their top priority (CezanneHR) we face a serious problem. Without the right skills or resource to navigate an economic downturn, managers are left under tremendous pressure which can only lead to serious burnout.
While most companies spend time and resources on strategic planning, they can use recession as an opportunity to tweak their long term strategy and empower managers to think differently and try new things to prevent declining sales. Forbes recommends businesses to prioritise Workforce transformation for example as a way to drive more organisational agility. It suggests that by developing your people’s ability to manage change and match skills required to navigate emerging processes and technology can give you a stronger chance at thriving in difficult times.
We highly recommend training courses like:
Seriously Excellent Management
Boosting Innovation and Creativity in Your Team
Overall, employee training during a recession is crucial for businesses. Not only does it help in the short term by keeping staff happy and engaged, it’s actually an effective way to future-proof companies in the long term. Whether it’s a pandemic or economic downturn, employee training has been proven to increase productivity, engagement, strategic thinking, and profitability. It’s also a great way to bridge skill gaps needed to help companies come out of difficult times as more successful and competitive than before.
If you’d like to explore our training courses, click here.