From training budgets to budget training

: What a difference a year can make! Companies are today hunkering down and settling in for what some believe will be a cold long period of receding profitability and uncertain future. While some industries have been harder hit than others, all have become cautious and averse to experiments.

In a more affluent time, trainers of large companies had money and the mandate to develop innovative courses such as ‘emotional intelligence’ and ‘creative thinking’ and meet what in today’s context might seem like esoteric needs. Taking planeloads of employees to Mauritius for employee retreats seems to be an indulgence today. Companies are hamstrung by minuscule budgets, with instructions to cut down on ‘non-essential’ spending.

Companies tend to deal with hard times through ‘slash and burn’, cutting people and programmess that seem expendable. While this might save a few bucks, the company would lose valuable people and initiatives; it also leaves them ill-equipped to deal with a complex market environment.

According to management consulting firm Hay Group’s latest Global Employee Pay and Staffing Survey in November 2008, 16.1% of Asian companies and 16.2% global companies had slashed investments in training and development. The percentages have gone up since. According to unofficial sources, many IT companies in India have frozen training expenses while others—from manufacturing, automotive to retail—have cut down training spend by 20-50%.

As a training and consulting advisory business, we have noticed in the past nine to 12 months that larger companies, especially the IT firms, have clamped down on external ‘vendors’. Companies are asking their internal training departments to conduct most training programmes. The word on the street is that budgets are going to be very conservative definitely for the next two quarters and possibly even to the end of 2009, if not early 2010.There is a narrowing definition of learning needs, and companies are focused less on behavioural trainings and more on technical training. Companies are focusing on return on investment, though measurement of return on behavioural training is complex. Some companies are cutting down on face-to-face classroom training, preferring on-line training or e-learning. There also seems to be a shift in the demographic of the training participants. Since companies are focusing on high performers and key personnel, there is an emphasis on senior-level trainings. The large rollouts that we saw in 2005-07, where entry level managers were exposed to high-end trainings, are no longer there.

Even as training budgets are being cut,...