Preparing to catch the second wave and succeed

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In a recently commissioned report, Dr Emma Parry of the UK based Cranfield School of Management concluded that, ‘Training your staff during a recession is one of the most valuable decisions you can make. It brings increased workforce loyalty to the business and its customers and develops skills to help your business thrive’ as we pull out of this recession.

‘When the
economy catches a cold, airlines are in intensive care’

Dr Perry continues from the report, ‘It’s important for organisations to nurture their talent regardless of the economic situation. What we do know when we are in economic downturn such as we are at the moment, it is even more important that they keep training and keep developing their employees’

The first thing most companies do in a recession is slash discretionary costs. What we often see is that training is the first thing to be rationalised with marketing budgets following closely behind. However training staff, in most cases, is a much cheaper option than recruiting staff. Training is a very valuable way to keep bringing skills into the organisation in a cost effective manner. In fact according to Andrea Nierenberg, president of consultants The Nierenberg Group in New York City; ‘training and marketing are exactly the two things you need: advertising to let people know you’re still there, and training to hold onto your people and update their skills,” she says

In a brutal economy, few industries have suffered like airlines. However, US-based Southwest Airlines has a spectacular recovery record during the last 2001 recession.
Southwest executives resisted the temptation to slash the training budgets even when the economy was at its bleakest. According to Southwest’s University for People former director Rita Bailey; ‘We actually increased the amount of training that they were giving our staff and cut recruitment’. This allowed Southwest to sustainably improve moral. Bailey goes on to say “It’s our crown jewel, a place to come and feel inspired. I’d put the programs we developed against any others out there.” Within the organisation, Southwest has not only maintained their skills levels and managed to spectacularly survive the recession through using a Nurturing Talent strategy.

We know that nurturing talent by developing people internally can help an organisation by saving money. This saving is usually manifested in reduced recruitment costs, lower induction costs and lower overall employment costs.

In a recent article, David Jackson reports on Professor Geoff Bick, academic director and associate professor of marketing at Wits Business School. Bick says that in the US, for example, there has been a counter-cyclical trend in which the economic downturn has been followed by an increase in MBA’s. The school usually has one full-time and two part- time intakes. Says Bick: “Last year, we saw a swing away from full-time to part-time MBA study and the trend was for students to hold on to their jobs, in order to be paid while studying. Around 50% were paid for by their companies.’

It has been said ‘when the economy catches a cold, airlines are in intensive care’. “Any [airline] can fly 737’s to different cities,” says Southwest spokesperson Ed Stewart. “Our secret weapon is people, so we still had to invest in them.”