Half of organisations looking to cut L&D costs amid economic difficulty, survey reveals

Experts urge organisations not to halt developments and to ‘be more proactive’ with learning investment

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Three quarters (75 per cent) of senior HR leaders believe economic uncertainty is impacting their company’s learning and development (L&D) strategy for 2023, with many looking to cut training costs as a result, research has found.

The study, conducted by strategic skills partner Corndel, revealed that half (49 per cent) of organisations with an L&D strategy in place will be spending less on their programmes this year as a result of the economic downturn.

This could have knock-on effects, as the survey of 500 senior HR leaders and 2,000 employees also showed that two thirds (60 per cent) of workers were more likely to choose a role with a career progression plan over an identical job with a higher salary. 

Majority of employees say L&D is a ‘vital’ factor in choosing an employer, survey finds

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Building the case for L&D in a recession

Some 83 per cent of employees surveyed said professional development at their workplace made them feel more ‘valued’.

Michelle Parry-Slater, learning and development director at Kairos Modern Learning, said that while it is “typical” for a training budget to be cut during an economic downturn, companies should be more proactive with their L&D investment. “Standing still in an economic downturn has the real-term effect of moving backwards, as competitors with committed learning cultures overtake,” she said.

Parry-Slater added that building a learning culture “primes an organisation with critical thinkers, creatives and innovators, and it is these skills that will enable such organisations to find new ways out of an economic slump”. 

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“As a result of developing people there is loyalty, and a feeling of self-worth and that their employer cares about them, which feeds the resilience and motivation to survive,” she said.

On the survey’s suggestion that employees would prioritise career progression over salary, Anna Lundberg, consultant and founder of One Step Outside, said there had been a shift in workplace culture, as the “promise of climbing the ladder” with promotions and wage hikes was previously “enough to motivate an employee” to stay loyal. 

“That’s simply not the case today, as Gen Z enters the workplace with very different expectations, and it's not just the younger generation,” said Lundberg, adding that employees wanted to feel “valued” and to have the “flexibility to balance the needs of their family and home lives”. 

The Corndel findings revealed the main areas that have a shortage of expertise are management (36 per cent), flexible working skills (35 per cent) and data and digital skills (34 per cent).

However, Gary Parsons, chief executive at Talk Staff, insisted that budget cuts have not had a negative effect on L&D. “We're seeing more investment in employees – not only in leadership, but across the board,” he said. 

“Cuts to development initiatives hinder an employer’s ability to attract and retain top talent. Budget cuts present HR with the opportunity to embrace creativity, by thinking strategically about team investment and knowledge sharing.”

As People Management previously reported, the vast majority (83 per cent) of employees see L&D as a ‘vital factor’ behind their choice of employer.