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Employers paying the piper now for training cuts during recession

October 2, 2012

Article courtesy of SBAM Approved Partner ASE

By Cheryl Kuch  

According to recent survey findings from AMA Enterprise, most companies delayed employee development initiatives during the Great Recession. Today they are strategizing about when to bring those initiatives back to pre-recession levels, and wondering what impact, if any, the cutbacks they made then are having on business operations today.

First, examine the numbers.  The AMA Enterprise organization surveyed top managers and executives from over 300 organizations and asked if they delayed development initiatives during the late recession. Nearly half (47 percent) indicated they had delayed at least one initiative and about a third (36 percent) reported they delayed more than one initiative.

These data also correspond to the annual State of the Industry Report conducted by The American Society of Training and Development (ASTD). ASTD collects annual training data from hundreds of companies.  Their 2011 report also suggests a sharp drop-off in training investment from 2007 to 2008, the start of the Great Recession, and has stayed at about the same low level since.  However, according to their findings, organizations are reporting a slight increase in their training per employee investment figures in 2010 and 2011, offering some hope that training investments may be on their way up.

The reasons employers reported for postponing their initiatives included limited budget and resources, shifting business priorities, lack of time, and lack of senior management support.

Which programs were most likely to be put on hold during the recession? Sandi Edwards, senior vice president for AMA Enterprise, says “It’s no secret that the recession challenged development efforts at most organizations.  Broader management development programs were most frequently put on hold, while certain strategic training projects moved forward in response to pressing business priorities.” According to AMA Enterprise, Management Development (49 percent) and Individual Professional Development (45 percent) were the most reported categories of development that were postponed. But few categories were not affected by delays; others delayed included Leadership Development (39 percent), Technical Skills (28 percent), General Communication Skills (26 percent), Succession Planning (26 percent), Coaching (25 percent), Business Acumen Skills (24 percent), Executive Development (23 percent), High Potential Programs (21 percent) and Global Leadership Development (8 percent). 

Did those delays effectively foretell the current state of employee engagement? Since development and growth are major factors in employee engagement according to Gallup, it would seem at least arguable that these reported delays have directly impacted today’s reported low levels of employee engagement.

Gallup reports that nearly 70 percent of today’s workforce is either not engaged at all or not actively engaged.

The consequences of a lack of employee engagement, according to Gallup. negatively affect a company’s overall performance. They can also greatly affect an employer’s ability to retain top talent.

There are indicators that some employers are getting the message. AMA Enterprise respondents also reported that they consider both management and leadership development most likely to benefit their organization in 2013.

What is an organization to do? It would seem that a lot of employers have some catching up to do.

Investment in leaders, managers and supervisors can not only have a direct impact on an organization’s bottom line. More than that, it can have a significant impact on the factors that most impact employee engagement, as described by the Gallup organization as part of their Gallup Q12 engagement research.

If your organization aims to get caught up to where it needs to be in management development, ASE can help. ASE offers an entire curriculum of classes covering many leadership and management topics and offers special pricing for SBAM members.  Email Sarah Miller for details.

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