Training in troubled times

THERE’S no denying that things are tough for many businesses in the North-east just now.

Even with oil prices “recovering” to around the $45 mark, the drop over the past two years from the seemingly now heady heights of $100+ has forced many to look carefully at their cost base.

And it’s not just the oil and gas sector – the ripples extend outwards to those who share a geography or are in some other way connected.

When it comes to cost cutting, external costs are usually the first targeted – they are viewed as the low hanging fruit of any cost review.

There’s usually minimal contractual obligations and the impact is quickly realised; so we turn our gaze to agency costs, marketing campaigns … and training.

After all, it represents a cost that doesn’t directly impact on output or headcount.

Or does it?

Well, it depends – there are some considerations:

  • Compliance: Consider the costs of missing out on your compliance requirements – whether that be in respect of Health & Safety, HMRC taxation and duties, or other regulatory requirements. These can carry the risk of fines and additional charges, and easily wipe out any benefit achieved from reduced training costs.
  • Performance: there is the old dilemma of “efficiency versus effectiveness” – what would you rather have? Efficiency means that everyone is “busy” and doing things “right”. Effectiveness, on the other hand, means doing the “right” things “right”. An “efficient team” may therefore be doing the “wrong” things. Developing skills in personal and team effectiveness can ensure that focus is maintained on those factors which directly improve the bottom line.
  • Recruitment: It is a standard cost-saving approach that in tough times ongoing recruitment campaigns are shelved – but what happens if your key people leave? Do the staff who remain have the skills and the experience to handle any additional duties without it impacting on their existing responsibilities? And what if they do not? Do you risk them failing or do you try and bring in a new team member who will require a period of settling in? If you do, recruitment costs alone could be anything from 10 to 25 % of the annual salary of each and every new member.
  • Culture: The culture of an organisation can change during a downturn. Activities and behaviours that were acceptable in the good times may now be deemed extravagant and wasteful. It’s important that a culture of valuing staff is not cut away as perceived fat. As Sir Richard Branson said, “Train people well enough so they can leave, treat them well enough so they don't want to.”

Cutting training budgets will reduce costs, but only in the short term, and the benefit of these savings are likely to be lost through the exposure to the additional costs referred to above.

I’m not saying it’s an easy decision.

It takes nerve and courage, but we are talking about short-term gains at the expense of long term survival.