Friday, November 6, 2009

The recession's real cost to training and development methods


While the US's third-quarter GDP figures suggest the recession is over, ongoing cutbacks in training and development methods could signal a stark warning for the nation's long-term prospects.

Last week, reports showed the economy growing at 3.5 per cent annually - breaking a string of four consecutive negative quarters. With the release of such positive figures, many economists heralded the news as confirmation that the recession is over.

However, there are concerns that official statistics don't pick up on cutbacks in so-called "intangible investments," which include business spending on research and development methods, product design and worker training - thereby distorting the actual state of the economy.

Cost reduction

Training and development methods have already taken a severe knock from the recession. There is myriad evidence that suggests businesses, in an effort to reduce costs and boost short-term profits, are removing training and development methods from their budget - the theory being, there just isn't room for that kind of spending.

The concerns, however, are twofold. Firstly, as the data that investors, policymakers and corporate executives use to evaluate the economy fails to take such cutbacks into account, it may be creating a distorted vision of the actual outlook of the economy - in other words creating a false sense of relief as the US continues to battle against the recession.

What's more, when the recession does finally rebound and long-term investments, the war for talent and retention strategies once again take precedence, there is a serious concern that the lag in training and development methods will lead to grossly negative implications.

Development


As such, while companies remain a great amount of pressure to cut costs by reducing training and development expenditures and deferring other crucial intangibles, HR managers need to remain aware that training and development methods continue to be a critical part of business success.
Training and development methods

US statistics for instance show that while employment overall has fallen by 4.1 percent over the last 12 months, employment of US scientists and engineers - those who create the next generation of products and make the US more competitive in the long-term - have actually fallen by a significantly largely 6.3 percent.

Experts warn that this is a serious issue, largely because the output of well-trained workers becomes an increasingly important part of dealing with a recession.

The fact is, the training and development methods used to help employees grow is tantamount to building future leaders. And, in an shrinking economy, making the most of the workforce you have is the most important part of business success.

What's more, if businesses are really going to beat the recession and hold onto the best talent, training and development methods need to act as a guideline to employees as the recession goes on - regardless of whether a recovery is imminent or otherwise.

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