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Training: A Way to Navigate through Economic Recession

Updated on October 29, 2016
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Economic Recession - a Bird's Eye View

The last Great Economic Recession of 2007-2009 in the Unites States of America was attributed to subprime mortgage crisis and the resulting popping of the housing bubble. The following chart shows the drop in the median price of new homes from about $260,000 in 2007 to $200,000 by 2011 (23% decrease). The impact on the real estate market, the economy as a whole and the common populace was devastating. Economic recessions often bring about a paradigm change, if not a tectonic shift, in people's thinking about everything they do. Beginning with evaluating how we spend to whether we pursued all opportunities we can, we tend to gravitate toward major life changing decisions in a 'paradigm shift' such as one that occurs during an economic recession. Thomas Kuhn coined the term paradigm shift to represent life-changing and often uncomfortable transitions to a new way of thinking.

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Small shifts in your thinking, and small changes in your energy, can lead to massive alterations of your end result. - Kevin Michel

The Impacts

According to the Economic Policy Institute, during 2008 and 2009, the US labor market lost 8.4 million jobs or 6.1% of payroll employment. Economists opined that the average family incomes dropped, many lost health insurance and poverty levels rose sharply. The following chart from the US Department of Labor shows the drop in civilian employment-population ratio from 63% in 2007 to about 58% by 2011. The fewer discussions by watercoolers at offices, partly due to fewer employees and those remaining hard at work to sustain their jobs, used to be centered around employment uncertainty and lowered prospect for any pay increases. Clearly, the average worker was deeply concerned about what could come down the pike.

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Necessity is the mother of invention.

So What?

During an economic downturn, does it make business sense for companies to invest in their employees? Kris Mailepors approaches this issue in The Dilemma of Training & Development in Times of Economic Recession, with a note that the benefits of these programs outweigh the benefits from cutting them. Thus, a sustained strategy to continually train employees is a bold step and a worthy exercise for pursuit by any organization. From a job security perspective, some employees begin to invest in themselves, possibly through training and capacity building offered either by their employers or on their own. Industry experts and training organizations often recommend that employees and employers stay abreast of skill-building frameworks, especially when the economy begins to show concerning trends.

Training or Startup?

As noted earlier, when we undergo a paradigm change, we tend to look for options to survive first, sustain next and excel later. When our paradigms begin to change, Maslow's Hierarchy of Needs process begins to take effect, where our physiological and safety take precedence over the highest level of self-actualization. For some of us, while training could fall into the safety and self-esteem categories, for the most accomplished and those willing to move up the career ladder, training opportunities open the doors for self-actualization. As such, from a job security and employment perspective, while some look for skill enhancement through instructor-led, computer-based or other training methods, other individuals venture out in search of business opportunities that make sense, especially during an economic recession.

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As seen from the following video, an energy savings startup may make sense. Yet, such an initiative also requires a potential entrepreneur to be trained, more so than as an employee who may work in such a business enterprise.

The Decision and Process

After making a tentative decision, people often wonder about what they should get trained on, how they should approach the issue and what they should look forward to. Anecdotal evidence points to people deliberating over an extended period of time and procrastinating long enough to eventually lose interest. Hence the reason for people to make a quick decision and choose a training path that best fits their interests, prior experience and potential opportunities. Michael J. McGinnis, in his work Understanding your Training Process, provides an excellent method to an outcome-based training effort, once a decision is made by the employer or the employee.

The figure below shows the approach. After determining the best methodology for new hires, existing staff or the leadership at a company, this approach suggests answering the question about developmental needs. If such a need does not exist, then a training plan with basic input and resources would suffice; however, if it is determined that developmental needs indeed exist, then a more comprehensive instructional design needs to be prepared. In either case, a good evaluation and post-training feedback would be essential to ensuring that the trainees gain the most benefit in return for the investments made in them. In additional to several assessments, the need for certification or re-certification should be considered for achieving maximum return on investment (ROI).

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Return on Investment

As noted in the following video, and according to the American Society for Training and Development, organizations in the United States spend more than $109 billion each year on employee learning and development. Therein exists the expectation by employers to see the maximum possible ROI, as well as from motivated employees who want to experience a return in the form of personal success and professional growth. The video presents scenarios and ways to calculate the productivity gains as a result of training offerings.

Any ROI calculation requires numbers, and that translates to a good measurement system. Thus in the absence of performance measurement systems, investments in training initiatives cannot be evaluated, thereby making ROI calculations impractical. However, in some scenarios such as with the performance of middle and senior management, there may not be directly available quantitative measures. In such instances, the Human Resource Manager will need to rely on more subjective metrics such as the improvement in customer response or new initiatives by the trainee after the completion of a training program. Regardless, good measurement systems when juxtaposed with performance monitoring can yield tangible results.

What gets measured, gets done.

Being SMART

Any training initiative, be it by an employee or an individual for personal growth or job success, or by an employer with an ROI expectation or a genuine consideration for its staff, training efforts should go SMART, i.e., the programs should have specific goals, measurable outcomes, achievable objectives, realistic expectations and time-bound targets. Navigating through economic recession in fact requires that we remain vigilant throughout our careers with an aim toward continually enhancing our knowledge base, skill set and competence building. Availing training opportunities when offered by the employer is a great place to start, for in most instances, they do not cost the employee anything. That said, a motivated individual seeks out opportunities and prepares proactively, even if training is available elsewhere. The few who pay for themselves eventually are investing in their careers, and if properly managed, such personal initiatives usually lead to a great ROI.

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    • Raj Venkata profile image
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      Raj 10 months ago from Florida

      Great points Carolyn. Appreciate the insights. Indeed, ROE is a concept being discussed by HR folks, and I believe is central to non-quantititative aspects of managing people.

    • Carolyn M Fields profile image

      Carolyn Fields 10 months ago from the USA

      I agree that calculating the ROI of training can be very tricky. That is why I recommend ROE (Return on Expectations). In a nutshell, you have Management clearly identify their expectations for the training in behavioral terms. Then you compare pre-training behavior to post-training behavior, and describe the difference. For example, in a Customer Service class, you would measure pre- and post-training experiences of your customers, in terms of the service that they receive from your staff.