"If you think training is expensive, try incompetence."

This is a paraphrasing of a much-used phrase taken from the world of education (if you think education is expensive, try ignorance).

As business people we would all claim to understand the value of training (and of education), but perhaps we should ask ourselves how much we really understand its value. This question is particularly relevant during a recession, when businesses are doing much to control and reduce costs in order to protect profits.

In our experience, a typical approach to cost cutting goes something like this:
- Which areas of our overheads can we control more tightly? Answers generally include travel expense, waste, energy, stationery, telephone costs, etc
- Where do we have cash budgeted that we might not need to spend? Answers almost always include training

So, when a business is looking to protect profitability by controlling its overheads, it will often decide to forgo some or all of its budgeted training spend in order to make the numbers better. Is this a mistake? We'll take a look at this question from a number of different viewpoints, and you can form your own conclusions.

Staff morale

When times are tough, people know about it. They see the news and read the papers, and they know that there are likely to be difficult times ahead. Staff training should always be properly planned, and options developed in co-operation with individual employees. If this is the case in your business, then the cancellation of training will be obvious to your staff.

Recession is the very time when a company needs to demonstrate commitment to its staff. Cancelling training can have a very negative effect on staff morale. Ok, you say, but staff morale is not an easy thing to measure... and how much will lower morale really cost the business. Here lies the problem of comparing hard numbers (company profitability) with 'soft' measures like staff morale. So, is it a mistake to cut training to protect profits?

Productivity

If staff morale is difficult to compare against profitability, then how about comparing productivity against profits? In a business setting, all training should have a specific aim - and one of these aims is to increase the 'productivity' of people in the company.

In many cases better productivity equals higher profits. For example a manufacturing company might train some staff in how to reduce the set up time on a particular machine. Success means that the machine will spend less time being set up, and therefore more time in production - giving a higher average output per hour. This in turn will give a lower cost of manufacture, and therefore an opportunity for greater profit.

In other examples, the effects of increased productivity are less easy to relate to profit. Take an insurance office as an example. Let's suppose the office staff are trained to use their computer systems more effectively and this reduces the time taken to process an application from 25 minutes to 17 minutes. Will this increase the profitability of the business? Not necessarily. So in this instance is it right to cut training costs to protect profits?

Sales revenue

What if you have some staff training planned for your marketing and sales people - and the aim of that training is to bring in more sales revenue? Would you cut out that training to protect your profits? That's a more difficult question. And the answer comes down to whether or not you really believe that the training will result in more sales. In this instance you should be tying the training costs to a planned increase in sales revenue, and you should then measure whether or not you get good return on investment (ROI) from the training. So, would you cut this type of training in order to protect profits? Our research indicates that most companies, if they could see a good ROI, would go ahead with this type of training.

A conclusion

One conclusion from this thinking is that each type of training (and its associated costs) should be reviewed on a case-by-case basis. If you can see a firm ROI that will increase profits, then the training should go ahead. If you cannot see the ROI, then the training should be postponed or cancelled.

But the real question is - what do you think?