April 23, 2009

Harsh Cuts to Training If you’re tired of gloomy economic statistics about training, here’s more. A recently released study by Cognisco titled “Knowledge—the New Commodity,” paints a grim portrait of investment in training. Average training per employee in the United States declined 11 percent from 2007 to 2008. Inside medium and large organizations, the number of learners per 1,000 employees is dropping precipitously. Any employee with a pulse could predict that much. What the survey indicates is the potential long term implications for the U.S. Severe cuts to training might save money now but will cost more in the future. The report makes the case that investment in training is tied to global competitiveness, not just annual survival. It is probably unrealistic to expect any organization to invest in its people or training when revenue is going in reverse across the board. The language of “our people are an important asset” or “we never cut training” is undergoing a stress test of its own. In Germany 12 percent of manufacturing companies are cutting back on development and training while 63 percent report maintaining the same level of investment. Only 11 percent reported an increased investment. Depending upon one’s perspective, that figure is optimistic. Yet emerging markets in Asia are not cutting employee development as severely and will be in a better position when the economy recovers, according to the Cognisco report. Learning professionals often beat the drum for training when budgets are tight, primarily out of fear. So why does training matter? If you want to do business effectively, it does. According to the Global Competitiveness Report for 2009, 12 percent of respondents believe an inadequately trained workforce is the most difficult obstacle to doing business in the United States, a higher figure than one cited for the United Kingdom, China (6.2 percent) and India (4.8 percent). What’s more, as organizations can do what their competitors can in equal time, the emphasis is on expanded knowledge and not services or price. According to British research analyst IDC, 19 billion pounds ($28 billion) was lost in 2008 because of employee misunderstanding. No, training is not the solution but it does provide a source of knowledge. Training is considered an “efficiency enhancer” internationally. Unfortunately, in the United States, it is still considered a discretionary expense, according to the results of this study. So the obvious corollary is that U.S. companies will be at a competitive disadvantage compared with their counterparts in China and India when the recession fades.

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The T+D blog covers training, learning, business, and technology topics as well as relevant content from ASTD (the American Society for Training and Development) publications and services.

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