Learning in a Tough Economy

Although there seems to be no shortage of bad news in the business world these days, there is a bright spot for learning leaders: Economic downturns often present opportunities to make learning more effective, thereby making organizations more competitive.

When the economy slows, corporations are forced to respond. It's a simple financial matter: Less money coming in means less money available to spend. Common fiscal belt-tightening techniques include budget cuts, spending and hiring freezes, and reducing the size of the employment base through buyouts, attrition or layoffs.
As organizational leaders weigh tough decisions on where to cut costs, they should ask themselves one simple question: "Do we still want to be in business after the downturn?" If the answer is "yes," one area in which spending should not be cut without some serious strategic thought is employee learning and development.

True, adjustments may be needed. The learning and development department probably should reduce spending just like everyone else. Instead of cutting all initiatives in equal fashion, smart organizations retain initiatives that are critical to business success and cut back on those that may simply be "nice to do." Think of it this way: It wouldn't be prudent for a restaurant kitchen to eliminate fire extinguishers to save costs in lean times, would it?

Canceling an arbitrary portion of training initiatives across the board creates the illusion of savings - some real via eliminated travel expenses and some potential under the assumption that freed-up staff time is put to good use. But without strategic thinking about where cuts should be made, such moves could end up damaging the differentiators responsible for competitive advantage.

Planning to Outlive a Recession

Development is a key factor in ensuring people stay engaged in the organization and continue to have an impact on the company's bottom line. Giving current and potential leaders the development they need helps a company weather the storm and continue to excel. So how can necessary cuts be made with minimal long-term damage? What can be cut, and what should remain?

To guide the decision-making process, company leaders should sit down with line managers and talent professionals to examine the key factors to business success and which training and development initiatives enhance these factors. Smart companies proceed strategically so that reduced learning and development spending won't blunt long-term corporate success.

Look at Talent Management as a Response to Economic Downturn

Don't spread reduced training dollars as if they were peanut butter and you were trying to make 10 sandwiches with only enough available for five. Such a nonstrategic approach simply reduces effectiveness across the board - including in the areas responsible for a firm's competitive advantages.

Instead, choose more carefully who you need to invest in and which types of behavior you need to impact. This means you have to determine which offerings have the most immediate and direct effect on the business and on customer experience. It also may mean you have to be more selective about who is invited to participate.

Take the example of Company X, which has a significant development initiative for high-potential leaders. This program has shown visible impact for participants and their managers. As the economy enters a soft period, Company X opts to cut spending for the coming year. How will this initiative be changed to compensate for this cut? Should the program be eliminated for a year or two? Should it be adjusted so it's less intensive? In the end, a decision is made to retain the initiative as its current level of intensity, but to offer it to fewer individuals.

Let's look at the impact of this decision:

a) The nomination criteria for the program are strengthened. This results in more in-depth discussions by senior leaders and managers about who should attend and increases the value of this initiative in the minds of these influential individuals.

b) Chosen participants benefit from the same high-quality program as participants from previous years, and any feelings of being cheated by having to settle for a second-rate version are avoided.

c) Management takes the opportunity to communicate to those who didn't make the cut. They're told of the reduction in slots this year and are reassured they will be reconsidered for participation the following year. They are disappointed they won't get to attend this year, but are glad that when their turn comes they will not get a second-rate version of a program that has become well-respected.

d) Those who did make the cut are told they were among a smaller group chosen, leading to a clear understanding of the company's desire to retain them over the long term and even more accountability to put what they learn into visible practice.
In this way, a spending cut ends up positioning the company to reinforce its commitment to a development program that really makes a difference. Most companies tell their employees that they are the firm's most important asset. Company X found a way to walk that talk.

Ensure All Training Efforts Are Critical to Continued Business Success

The key issue here is deciding what behaviors, industry gatherings and activities are truly critical to business success. When budgets are cut, learning and development managers need to ensure a clear line of sight exists between training efforts and the value they provide for the business and its customers. A good example comes from the manufacturing sector: A downturn is not the time to scale back training on quality or safety technique. Any refinery manager will tell you the same thing in a heartbeat.
On the other hand, an economic downturn probably is a good time for a company expanding in Latin America to limit Spanish-language instruction to only those being deployed there in the near future. Broader training across the talent pipeline in this area can be resumed once the economic storm has passed.

In truth, a time of universal economic contraction may even be a time when expanded training efforts become necessary. Key customer relationships may cool due to less frequent in-person visits and increased reliance on voicemail and e-mail. This may happen at precisely the moment when the customer is looking for its own ways to cut spending.

Companies in this situation would be wise to invest in new or enhanced targeted sales training to ensure confidence and credibility in dealing with nervous clients. It's human nature. We all want to affiliate ourselves with the strong, the confident and those who will survive. Customers of organizations are no different. They want to know that the entities they outsource to or buy products from will still be there after an economic downturn has run its course. Such a strategy not only serves an immediate business need but also positions the company well for when the economy regains its health.

Leverage Learning From Work Experience

An economic downturn is a great time for companies to think beyond the traditional workshop format. Much can be learned on the job and in collaborative groups. Simulation-based learning, increased coaching and mentoring, and looking to company leaders to teach others based on their own experiences all can have a deeply positive impact on the leadership pipeline.

Whether the format looks like a community of practice, an action learning team or simply a facilitated discussion group, learning and development leaders can help get people talking with each other about their own experiences and what they have learned.

Look to Technology

Technology-enabled learning can extend development investment when economic times are tight. Similar program content can be delivered without the associated travel costs, and if done well, an atmosphere of engaged group learning can be maintained.
Let's look at another example, this time from a firm we'll call Company Y. This organization has professionals based in locations around the globe. These individuals gather in person twice each year to review case studies, swap notes and discuss the latest trends. Company Y anticipates a slowing economy and makes a decision to eliminate these twice-yearly gatherings to save travel and accommodation costs.

But Company Y doesn't stop there. In fact, its corporate leaders have been researching lower-cost alternatives ever since the meetings' costs were tagged for discussion. After all, the value of these best-practice exchanges are tangible and are one reason why Company Y's people are so clued in to the needs of their clients. Although Company Y eliminates the twice-yearly in-person gatherings, a quarterly webinar is instituted in its place to cover the same topics. The employees experience continuity of best-practice information flow. True, employees miss the face time with colleagues, but at least they know their needs for connection and development still matter as Company Y realizes cost savings.

Companies should look to intranets, online chat rooms, SharePoint technology or other existing resources to enable collaboration and idea exchange between teams and colleagues geographically separated from one another.

Move From 'Training' to 'Development That Makes a Difference'

Learning professionals know that, as engaging as any training event can be, the lessons learned quickly can dissipate and fail to translate into meaningful changes on the job without an effort to make the learning "stick."

To reap full the benefit from resources spent on learning and development, companies need to effectively communicate expectations to the individuals who will be taking part, as well as to their managers. Success is more than just showing up at a training event. Insights must lead to action, and action must translate into practical improvements in performance.

Taking a realistic approach to learning and development means ensuring people know what needs to be improved, they are motivated to improve and they get useful knowledge and tools to address their targeted areas. They also need opportunities to apply what they have learned, and they need to be held accountable for improvement. These strategies can help drive effective integration of new skills. They're also another example of a reaction to an economic downturn that can have a lasting positive effect on the company long after the economy has improved. Learning professionals can seize the moment to drive best practices into place.

Foster Dialogue About How Competitive Advantage Can Be Maintained or Enhanced

An economic recession is like any other type of organizational change, only this one is imposed from the outside. Employees and management can't hide their heads in the sand waiting for the recession to pass or for the "other shoe to drop." The challenge needs to be faced head-on.

Learning and development leaders can help foster dialogue among employees about what the business needs to do to be more competitive than the next company. After all, the whole industry is in the same situation. Issues need to be addressed with emotional engagement, not just a set of dispassionate adjustments. This is the time to increase communication in all directions and encourage employees to respond thoughtfully. Ask them to help prioritize how development dollars get spent. Such discussions often yield surprising and valuable insights.

Set the Stage for Increased Competitive Advantage

Recently, Personal Decisions International conducted a survey of human resources professionals and other business leaders around the globe to uncover organizational approaches to retention of key employees in the slowed economy and what tactics they have found to be most successful. Among the 530 respondents, 93 percent said retaining key employees is even more important during an economic downturn.

Perhaps counter intuitively, the survey found "accelerating the development of key employees" to be a more effective tactic to retain these individuals than "competitive pay and benefits." These responses offer real-world evidence that employees want development opportunities and will stay with the company that offers them.

Skillful learning and development leaders can foster a common vision of what it looks like to be successful, even in a recession. Those who do so will mobilize and focus energy across their organizations, both for today and tomorrow, as they become catalysts for action and learning.

Author: Marc Sokol
[About the Author: Marc Sokol is the senior vice president and global practice leader of development solutions at Personnel Decisions International. ]

ECONOMIC MELTDOWN- THE NEW GLOBAL PERSPECTIVE

The ripple effects of global credit crisis has hit the world economy hard triggering global credit recession. As the world enters what many see as the worst economic crisis since The Great Depression, several factors begin to interfere with our daily life.

Before understanding the genesis of the recession let us basically know what is recession......

WHAT IS RECESSION AND TRADE CYCLE....?

The downturn of economic activities or a constant fall in demand is termed as recession. As observed the trade cycle boom precedes recession and depression and ultiamately recovery succeds recession.

THE MAJOR GREAT DEPRESSION

The Great Depression of 1929 was a worldwide economic depression that lasted approximately 10 years. On October 24, 1929, “Black Thursday” 12.9 million shares of stock were sold in one day, triple the normal amount prices .This great depression ended under the supervision of U.S President Franklin.D.Roosevelt.

THE CREDIT CRISIS OF 2008......

To understand the genesis of the current financial meltdown we need to start with the U.S housing market, a $22.5 trillion major economic driver larger in size than US stock market. Ratio of home prices to household incomes were at an all time high and appeared unsustainable as the home prices increased by nearly 85% overall with a per year compound rate of 12% between 2000 and 2005.

The idea that the housing prices would only appreciate caused US banks and mortgage companies to loosen their credit standards and start lending to families with no credit history and only tenous ability to service their mortgage. SUBPRIME lending , which in the us context meant lending to credit histories, grew rapidly during he housing bubble.

The first death knell for sub-prime mortgage holders was the increase in oil and commodity prices, which pushed up inflation and the all important interest rates. Unable to meet the higher payments, sub-prime borrowers began defaulting on their mortgages in large numbers. In various cases home owners walked away from the debt, ultimately resulting in sub-prime crisis.

Though this type of situation was encountered in the past, what makes the current crisis unique is its severity and global reach.

THE CRISIS SPREADS

It took nearly a year of falling home prices and subsequent mortgage defaults to leak into larger economy. $56 billion 'New Century Financial Corporation', one of the largest sub-prime lenders was one of the first banks to fall. Two investment banks, 'Bear Sterns' and 'Lehman Brothers' filed for bankruptcy. After the 158-year old Lehman Brothers failed, the floodgates opened for insolvencies. Most of the investment banks failed as unlike retail banks, they typically do not have capital. When the news spread that banks were in financial difficulties, the loss of confidence caused a run on several institutions, and mainly banks in Europe and USA became insolvent. Not surprisingly the US markets began a long and unchecked downward slide, eventually loosing 40% of its value.

IMPLICATIONS FOR INDIA……

Due to the sub-prime crisis, property prices have appreciated much more rapidly. India has opportunity to learn from America’s mistakes. With the whole American industry in recession it is likely that India's export may take a downward trend affecting the manufacturing sector thus resulting in loss of jobs. We are already feeling the pinch. Many IT professionals may also lose their jobs. The government of India with the assistance of RBI has taken measures to combat the recession effects in India, by cutting CRR rate, repo rate and interest rates.

For India to be unperturbed by the recession, a well functioning disclosure and regulatory environment, an infrastructure that supports clear communication to the investors and high quality audits are to be followed by India thus leading itself on the path of growth and making itself an economic superpower.

Suggested HR Strategies to Reduce Effects of the Crisis.

Communication.

Dedicate time to positive reasoning. Hold town hall meetings involving staff and management on ways to tackle the challenges of the downturn. Hear the staff out. Take time to listen to the employees for confidence building. During such engagement, declare immunity to cover all staff, in which any staff that offers to critique the organization is insulated from witch-hunting sanctions and victimization. This gives room for sincere invectives and inputs, which may turn the organization around for good. Staff should be encouraged to objectively give their assessment of where the organization was, where it is and where they believe the organization should be and what should be done to survive the recession. After listening to the staff, thank them for valued contributions and promise to work with their inputs. Reiterate the vision and mission statements of the organization. Appeal to staff to do everything possible to actualize the goals and objectives of the organization. They should show more personal and collective commitment, loyalty and dedication to the organization for improved productivity. Seek their support for the strategic action plans. At the same time, strengthen the two ways communication process and dedicate time to feed backs.

Positive team culture.

Stress shared vision, strategies and belief in team culture, improved symbiotic team spirit because of the positive value addition of synergy. HR Managers should at this time radiate and give hope and lift their staff from negativity to positivity. A positive team culture stresses collectivism, and symbiosis. Do well to stress the importance of every team member.

Learning.

Learning is the key that opens the individual employee to knowledge beyond his/her immediate reach. It helps to bring a strong barrier against failures and landmines that may bomb the organization out of existence. It assists the worker to open up to new initiatives, ideas and best practices. Design programmes that put the organization on top of the pack and enable the organization have a competitive edge. Staff may not necessarily be moved from their places of work because of the innovations in as e-learning and intranet services are becoming a way of life. Encourage staff to participate in workshops and conferences to enable them compare notes on experiences and learn from others. Where only a few staff can attend, those who attended should be given an opportunity to share their learning experiences with their colleagues at a forum.

Leadership focus during the downturn.

1. Transparency.

2. Accountability.

3. Courage to effect necessary changes.

4. Training.

5. Proactive strategy.

6. Sacrifice.

7. Incremental changes.

8. Address issues of insecurity.

9. Credible leadership.

10. Mentoring.

11. Coaching.

12. Nurturing.

13. Sifting down process between the effective staff.

14. Walk-the-talk.

Performance incentives..

General Motivation techniques: Positive and negative sanctions.

Performance Incentive Bonus (PIB)

Review of organizational structure and procedures.

1. Reduce complex structure to a simple structure.

2. Increased autonomy to improve decision making process.

3. Concentration on core areas.

4. Elimination of tribal, political and racial considerations in the appointments of chief executives and recruitment processes.

5. Review of recruitment policies. It is a well known fact that in most parastatals of government in Nigeria, there are periods of employment freeze, unfreeze, refreeze and retrenchment at the fiat of the executive arm of government.

6. Review financial management procedures to optimize profitability.

7. Improve cost culture and asset utilization.

Redefinition of business value system.

This is a moment to re-examine the organization’s business value system, goals, roadmaps, strategies and practices to align with the anatomy and physiology of the organization. The vision of the organization should be cascaded down the ladder so that there will be a total buy-in; into the new ways of achieving the vision even at these difficult times. A shared vision sets the tone for the conscious will power to achieve the impossible.

Succession planning.

The chief executives of many parastatals of government are removed and replaced at will. The high turnover of the top management is the bane of poor performance of some organizations. It makes planning difficult, truncates strategic plans processes and kills any organization’s initiatives to achieve a well tailored succession plan, which is a Sequa-non for organizational success. There should be a reversal of this unwholesome process.

Attitudinal change..

Paradigm shift in work culture and values.. Stop the attitudes of being busy doing the wrong things. The aim is to change from busyness to effectiveness as being busy does not connote effectiveness. Being busy and working hard without focus does not translate to results the organization needs to be effective.

Job rotation.

Temporary postings to areas of unsaturated staff.

Equal opportunities.

Redeployment.

Pre-retirement seminars.

Pre retirement workshop.

Incentives for early retirement (discourages swearing affidavits to cheat on age).

Personal income management.

Almost all staff are now very heavily indebted to the banks with slimmer income. It is often said that the “take home pay of workers no longer take them home”. Staff of various organizations have found themselves in this conundrum in Abuja because of the need to purchase personal houses in other to avoid the cut throat high rents in the FCT.Engage external consultants to talk to staff on personal income management and the need to prepare for retirement. HR managers should help enforce the one-third rule of loans over which a staff cannot approach the organization for loans so that staff will be able to maintain and cater for their immediate families at this critical time.

Proactive HRM.

1. Application of emotional intelligence strategies.

2. Fair HR practice in the use of the carrot and stick approach.

3. Assessment of the competencies of employees and productivity level. Do not wait for the end of year.

4. In-plant knowledge sharing forum should be enthroned to encourage staff to share their knowledge in an in plant workshop. This will assist the organization to source for and maintain a knowledge pool in the organization.

5. Change management. Change will be effected in bits and not radically so as not to further stress the staff.

6. Review the organization’s customer management processes.

7. Enthrone an integrated research and development processes.

Performance evaluation.

Enthrone an effective performance management system.Performance evaluation should focus on:

1. The organization.

2. Departments.

3. Customer service.

4. Teams’ performance.

5. Processes.

6. Individuals. .

• Solutions to challenges rather than sanctions, condemnation and the blame trade..
• Seek to be understood before seeking others’ understanding..
• Expectations should be mutually agreed using basic standard benchmarks..
• Consider individual strengths, experience, priorities, inner motivation (is he a loner, extrovert) and confidence in assigning tasks..
• Acquire the skills to align the staff skills and competency to align with the organizational objectives..
• Monitor performance (don’t wait until the end of the year).. Reward top performers and ascertain collateral damage if any.. Investigate and sanction poor performance.. Watch out for the aftershocks of performance evaluation.

Any of the following models could be used to address the performance challenges that organizations may face during the periods of financial crisis:. between short, medium and long-term objectives. The BSC is a tested tool change processes..

Ulrich model.

Ref: http://louisbrownogbeifun.com/?p=55