Employee Development: To Cut or Not to Cut?

“Time’s are tough,” Roger shrugged. “We simply can’t afford to spend as much this year on employee development.”

It’s a refrain I hear quite often, and my response is usually to just sit silently and let the leader stew on this thought himself for a bit.  The impact is usually quite revealing.  The confident, assured look turns a bit uneasy….and then the justifications begin.  Still, I sit quietly until the last of the explanations as to why investing in their workers is not “in the budget” this year.

Why make coaching clients twist and turn in the wind, you might ask?  Quite honestly, two things come to mind.  First, I have really never understood the perspective that any strategic leaders would ever forego adding value to their workforce in lieu of any other budgetary demand.  And second, most execs worth their weight in gold realize through the course of their own justification the error in this thinking.

Let’s be clear here. Expense ratios are a significant challenge to any organization.  With thinning profit margins, the operating costs of any business become increasingly important to manage.  But it’s just that…it’s management, not leadership.

If one looks at the number of organizations actively cutting development budgets, it appears that leaders have forgotten the benefit, dare I say the necessity, of making long-term investments in their business.  What other explanation could there be?  I prefer to think of it as well-intentioned forgetfulness, rather than foolishness, neglect, or irrationality.

In weighing the necessity of continued (if not increased) funding of employee development, keep the following in mind:

Employee Engagement

Clearly, there is an obvious tie between funding someone’s development and their level of commitment and engagement to you and the organization.  Although hardly a quid pro quo exchange, the symbolic gesture on behalf of any company that screams “we care about you” to all workers.  And with the understood correlation between engagement and productivity, companies dare not ignore this benefit!

Long-term vs Short-term Investment

Typically, employee development is viewed as a long-term investment, hence why it is often on the budgetary chopping block.  “We’ll just take a year or two off, and then we’ll start developing our employees again.”  But this type of thinking is extremely shortsighted.  In fact, strong arguments could be made that any gaps in developing one’s workforce puts the organization at a significant, and potentially deadly, strategic disadvantage.  Unless every one of your competitors similarly stop developing their workforce, you dare not play the development prisoner’s dilemma.

The notion that development is primarily a long-term strategy is similarly antiquated.  In the course of my doctoral journey, my employer stated a fear that if they continued funding my degree, I would finish and leave.  Here’s a prime example of this misperception of investment potential.  First of all, this rationale assumes that if you cease funding, your employee will be unable to proceed toward this goal (which raises additional questions about your perceptions of your employees), thereby trapping them in their service to you.  Second, it presumes true value only in the eventual sheepskin framed on the wall, ignoring the value of learning or the specific knowledge gained and applied by the employee with every pass course.

A Culture of Learning

A quick glance at the Harvard Business Review on any given week reveals an endless stream of blog entreaties on the topic of innovation.  Foremost in these insights is an organizational culture of learning.  Those companies that embrace and promote a strong heritage of continuous learning are those with long-standing competitive advantage.  Such a heritage goes beyond tuition assistance programs and education courses offered to engender excitement and expectations of individual, team and organizational development.  Not annually or even once a quarter, but as an integral aspect of weekly and daily responsibilities.

So, before you consider chopping development dollars this year, look first to whether your strategy is really aimed only at short-term operational savings.  For if you do opt for this type of “expense diligence,” understand the long-term ramifications for your employees and the entire enterprise.  The result may, in fact, may be much costlier than you intend.

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