In March 2007, as Michigan faced a severe budget deficit, Gov. Jennifer Granholm ordered a moratorium on training expenditures for state employees. Her directive required that training outlays be deferred and limited to the most essential requirements.
Training for state employees did not come to a standstill, however. Much of it went forward as trainers found money-saving ways to deliver training and made adjustments in the types of training they conducted.
For example, the Civil Service Commission still offers courses developed internally as well as those with an inventory of participant materials, says Matt Fedorchuk, a spokesman for the Office of Compensation and HRTD (Human Resource Training and Development) in Lansing. The office has temporarily shelved new programs requiring outside facilitators or purchase of materials.
As the economic crisis worsened last fall, most organizations were curtailing training expenditures to some extent. In Training Efficiency: Optimizing Costs, a 2008 survey by training provider Expertus and training information portal TrainingIndustry..com, 54 percent of trainers said they were under “significant” or “intense” pressure to cut costs, and 91 percent said they had felt pressured to some degree to do so. Forty-nine percent said their budgets had been cut, and 60 percent had been asked to train more with no budget increases.
The retail, government, financial and travel industries number among those most likely to curtail training, while those still in growth mode—health care, pharmaceuticals, petroleum and green energy—are less affected by the current financial catastrophe, says Jeanne Picardi, marketing director for The Training Associates, a contract training firm in Westborough, Mass. “Certainly, businesses with narrow margins, such as small companies, will be more likely to cut training.”
Analyze and Prioritize
Understandably, many trainers and HR managers are asking: What to do? Postpone all plans until a brighter tomorrow? Cancel upcoming classes? Those solutions are probably too drastic. But like the HR team in the Michigan agency, you may have to shelve some plans and get creative to continue meeting employees’ needs.
Picardi says HR professionals should be “analyzing the costs and benefits of current methods, and seeking out new ways to deliver necessary training.” She suggests “identifying and consolidating multiple vendor contracts for training into a single contract to receive volume discounts [and] being more selective when deciding who will receive training on what.” Specifically, experts recommend that HR professionals:
Understand the moratorium’s guidelines. Some moratoriums may not be as bleak as they appear. For instance, a moratorium may simply mean no training with fewer than 10 participants; Michigan’s moratorium requires six. The moratorium may limit frequency of training but not prohibit it, or may rule out purchases but not the use of what you already own, or it may prohibit the use of outside providers but let you do the training yourself.
Don’t overlook training required by law. After listing the types of training you are mandated to provide, determine how that training can be carried out within the moratorium. “Some organizations are only focusing on the risk management stuff, like safety training; they are weighing the risk of what will happen if we don’t teach this, such as not being in compliance or a potential lawsuit,” says Steven R. Yacovelli, owner and principal of TopDog Learning Group LLC in Orlando, Fla. He recommends conducting any training that impacts the customer, influences the brand, or is safety-related or government-regulated.
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It’s important for HR professionals to advise other organization leaders to continue to offer training that mitigates risk, Picardi says. Organizations should “continue offering mandatory, federally required training. Not all senior leaders are familiar with employment law, and may see all training as ‘discretionary spending’ to be cut. This is a bad idea at any time, and especially in a downturn, because employment law claims increase substantially during a poor economy.”
Picardi continues: The U.S. Equal Employment Opportunity Commission “charge-filing statistics support this fact. Poor economic times translate into more discrimination claims. An organization’s ability to provide ‘proof of training’ in ethics, harassment, discrimination, and wage and hour compliance is critical to establishing its defense in the event of litigation.”
Determine what’s essential to survival of your business. “It is about sharpening your focus,” says Tom Starr, principal of Booz & Co., a global management consulting firm headquartered in Chicago. “Build a taxonomy of what is critical, and invest disproportionately in those areas. Be more selective about who it is you’re training. For instance, in retail banking, a pivotal role is the branch manager. You want to be sure to maintain training for [pivotal employees].”
Picardi agrees. Companies “focus their training efforts in areas critical to infrastructure and the jobs that have the most impact on corporate revenue,” she says, citing Starbucks as an example. “After closing 100 stores and eliminating 600 jobs, Starbucks temporarily closed 7,100 of its coffeehouses for three hours to retrain the baristas who serve their customers.”
Starr adds that types of training that are falling by the wayside include communications, interpersonal skills, negotiating and finance for nonfinance people. Now, “Training is on a need-to-know basis,” he says.
At Cubellis, a multidisciplinary design firm headquartered in Boston, Neil Rouleau, vice president of operations, says, “We have a moratorium on all nonessential expenses companywide. It impacts a number of different areas, including training.”
The firm does not conduct a lot of federally mandated training, but essentials include infrastructure training—on software platforms such as AutoCAD, for example. “Essential things are those that can be billed to a project,” Rouleau explains. “There has to be a direct, immediate correlation to a project or to win a project. It’s assessed on a case-by-case basis.”
Cut Back Creatively
Training experts have discovered ways to trim expenditures while keeping the core intact—if at a reduced level. Among their suggestions:
Cut travel costs. Airfares, lodging and meals for dozens of employees for a week of training can be prohibitive. Instead, bring one trainer to the employees. Or, conduct training online, via videoconference or by telephone. “We are using more videoconferencing than we used to,” says Rouleau.
Piggyback training. “We’re seeing companies trying to package training with what they’re already doing,” Starr says. “If they have a half-day regional meeting coming up, they might do training at the same time.”
Increase classroom fill rates. In an era of just-in-time training, trainers want to conduct courses as close as possible to the time when the employee will need the information. But this can result in trainers conducting courses for only a handful of attendees. While it’s counterproductive to wait six months for training you need now or to share a classroom with 300 employees, it’s reasonable to wait three weeks and share a classroom with a dozen others. Moreover, larger classes enable trainers to include more group-learning activities.
Shift schedules to minimize the impact on working hours. “When the economy is good, you don’t get uptight about taking an hour in the middle of the week for training,” Rouleau says. Now, “You want to be doing billable work” during prime working hours. Cubellis has shifted its training to early mornings, lunch breaks and late evenings. The company pays employees for one hour and asks them to give one hour of personal time for training.
Eliminate catering. Trainers often joke that employees come to training for free food. Catering can be an unnecessary cost, however. “In the past,” Rouleau says, “we would do one hour at lunch and provide lunch during the training sessions. We don’t do that anymore. If there’s a lunchtime session, it’s brown-bag. We saved $150,000 a year on lunches.”
Maximize employee knowledge. “Mentoring, coaching and shadowing will all likely become more important during the downturn,” predicts Michael Grohs, research analyst for the Institute for Corporate Productivity, based in St. Petersburg, Fla. “It is also important because of the upcoming Baby Boomer retirements, for which many companies are not properly preparing. Mentoring can be critical to easing through that transition.”
Develop a wiki database. “Open-source software [databases], such as Wikipedia, can be very useful,” says Grohs. Technology giant Intel has a wiki called Intelpedia, “and in just two years, the domain has 5,000 authors contributing to 20,000 pages that receive 200,000 hits a day,” he says.
Put training online. Moving courses online reduces instructor and vendor costs. According to the American Society for Training & Development’s 2008 State of the Industry Report, technology-based training has been steadily increasing, from an average of 12 percent of learning hours available in 2001 to 33 percent in 2007, while real-time instructor-led training has decreased from 76 percent in 2001 to 61 percent in 2007.
If you already have a learning management system, market it well and encourage employees to use it. If you don’t have one, consider developing one. “Things like podcasts can be archived and replayed,” Grohs says. “Online training can cut costs by eliminating that travel cost as well as [the cost of renting] meeting spaces.”
Tap Free Resources
The Internet can be a gold mine for trainers in search of no-cost ways to maintain momentum. Among the types of free resources available online:
Communication tools. Yacovelli describes an example: “One client needed to deliver some brief training to a geographically dispersed salesforce, but [the company] currently did not have a learning management system or virtual classroom technology in place, and to purchase one could be expensive. The initial sales meeting was canceled due to travel costs.
“While [the client] could have employed some of the for-pay web-based tools, such as GoToMeeting, I suggested using Skype [www.skype.com] for free, making sure the 20 sales folks around the country downloaded the free virtual classroom plug-in, shared their Skype name with the HR leader managing the training, and—voila!—we had a virtual classroom solution with virtually no expense.”
Skype—a free-for-use, pervasive application for various operating systems—can be quickly leveraged for learning, as well as corporate communications, with low impact on the company’s technical infrastructure, he says.
Learning management systems (LMS). “Another client had been moving toward purchasing an LMS to schedule both instructor-led training and web-based training,” Yacovelli says. Then the client’s budget was frozen, “so we quickly switched gears to see how we could leverage Moodle, a free, open-source LMS, for their use. While it doesn’t have all the bells and whistles the proposed LMS had, it is a great stopgap measure.
“These types of creative work-arounds have shown the flexibility of the training department to service their customers while mitigating operational costs.”
- Sexual harassment training— required in California, considered essential by most employers elsewhere
- Diversity training
- Ethics training
- Safety training—if mandated by the U.S. Occupational Safety and Health Administration
Training courses. Many universities, including the Massachusetts Institute of Technology and the University of California, Berkeley, have placed courses online and made them available to the public on demand without charge. Therein, users can learn about laws for managers or about patents, copyright and intellectual property.
Or download free podcasts of business-related lectures by Stanford University professors at Stanford on iTunesU.
Free computer software training courses are especially plentiful online. For instance, Microsoft offers free, instant online tutorials for its software products. Free-Ed.net provides a wealth of free online courses on topics from computer programs and health care to strategic planning and accounting for the nonfinance professional.
Seize the Day
If you’re spending less time in the classroom, take advantage of that “found time” to learn new skills, such as how to teach synchronous online training. “You don’t want to hang out for two months [not training] and have no product,” says Yacovelli. He recommends developing curriculums or converting existing classroom training content into online interactive training. “Hone your skills,” he urges.
Grohs underscores the point: “People tend to forget a down economy might be a good time to train.” As business grows, training might take a back seat to day-to-day demands.
Yacovelli agrees: “In adversity, comes opportunity. Find that and leverage it.”
The author is a freelance writer and former HR generalist and trainer in Wixom, Mich.