Training Times

A Recession is Coming: Seize the Opportunity!

Everyone is bracing for the recession, which may already be here. According to the Boston Consulting Group, more than 50% of executives believe the recession has already come (article). Companies naturally respond to recessions by tightening the purse strings and the training department is often one of the hardest hit. I run an IT training company, so before I say what I’m about to say, I’m going to admit that it’s very self serving. OK, now I’m ready:

In a recession, buy more training!

According to Hal Sirkin, global leader of BCG’s Operations practice, “In a recession, everyone feels short-term pain. But companies that successfully approach a recession as an opportunity have the potential to realize long-term gain.” (article)

I was in the training business in 2001 when training budgets were slashed left and right. One result was that training companies reduced their prices like crazy. They were so desperate to get a butt in a seat that they were offering 75% or more off of their prices. But those reduced prices didn’t help much because nobody was buying at any price. Classes weren’t running, trainers were laid off, offices were closed, and companies went bankrupt. On the buying side, training departments were hit hard too. It was a horrible time for everyone in the training business.

But some companies saw a great opportunity. An article published in 2003 in T+D called “Recession Survivors: Training to the Rescue” documents how several companies came out of that recession ahead of their competitors in large part due to their refusal to cut their training budgets.

So, here are my thoughts.

1. Understand the Opportunity

Business is about competition. To succeed, you have to do things better than your competitors. In recessions, companies tend to lose focus on everything but cutting costs. Among other things, they stop thinking about customer satisfaction, which obviously leads to customer dissatisfaction. This gives you the opportunity to capture market share.

To keep your customers satisfied, you must continue to deliver great products and services, which means continuing to build your employees’ skills. Your competitors are likely to cut back on this. By not cutting back, you get ahead.

=> Your Higher-skilled Employees

=> Your Happier Customers

=> More Business for You

=> Your Competitor’s Lower-skilled Employees

=> Your Competitor’s Unhappy Customers

=> More Business for You

And that is the opportunity.

2. Use Downtime to Build Skills

When you are busy with a lot of projects, you often need training to help you complete those projects, but it’s hard to schedule that training because, well, you are too busy. Arghh!

A recession can result in less work for your staff. If your clients aren’t buying as much then your staff may experience fewer demands on their time. They may end up spending more time on lower priority jobs or just doing nothing. Your best employees, the ones who most enjoy being productive, are likely to become bored and unhappy. Rather than have than sitting around doing nothing (or surfing Monster.com), give them the opportunity to use their downtime to increase their skills. Although training is expensive, it’s not nearly as expensive as losing good employees. And when the projects come back, those employees will be able to do them better and quicker, creating opportunity and saving you money in the long run.

3. Look for Good Deals, but Not Too Good

In the recession that followed 9/11, many training companies were offering exceptional discounts of up to 75% off of the listed price on pre-paid classes. But companies who had prepaid for large amounts of training to take advantage of the low prices often found that the deals weren’t so great after all. Training companies often canceled their classes due to low enrollment, so there was little opportunity to actually cash in on the training. Worse yet, many of these training companies closed their doors, leaving their clients out in the cold.

There will be some good deals offered during a recession, but be sure that the vendors who offer them are in a position to survive the recession. If the deals are too good, they may be given in desperation. Buyer beware. If you’re going to make a large commitment to a long-term deal, don’t be afraid to ask for vendor financial information. You want to be sure that you’re not just loaning money to a dying business.

4. Don’t Skimp on Quality

Training providers vary. If you want your employees to have terrific skills, you better provide them with terrific training. What message does it send your staff if you stick them in a room for five days with an ill-prepared or under-qualified trainer. Insist on a 100% money-back guarantee. Any training company worth its salt won’t hesitate to provide it.

Recessions have a way of weeding out the weaker companies. On the flip side, if you do things right, you can come out of the recession a lot stronger than your competition with more customers and more opportunity.