Training of personnel in crisis conditions, or bulls and bears of HR business
“To be a leader!”, “To win positions!”, “Always first!” – for many years, companies chanted beautiful slogans and achieved their goals. But what to do when everyone is against the company? What to do when there is a global financial crisis at the throat? More than one round table has already been held on this topic, more than one article has been written and more than one hour of smoking discussions has been spent. We are not going to say common phrases. Instead, we will consider one of the subtle issues that often remain behind the most popular topics of discussion.
What’s the status of staff training?
It is no secret that staff costs in Russia have been growing at a very high rate over the past few years (primarily due to the growth of PHOT). According to HR-benchmarking – AXES Monitor research, AXES Management companies spend from 7.6% (FMCG) to 24.7% (banking sector) of their revenue on personnel. Expenditures of companies may vary several times even within the industry.
It is easy to see that companies that have built an optimized system of personnel costs will be able to survive the financial crisis more easily than their sluggish competitors (with the same return on costs of the former lower).
One of the most important business processes in the company is personnel training. Let an untrained employee sell the company’s products or manage a branch and you can easily predict losses, both direct and from missed opportunities. But personnel training is very expensive and requires its own, often considerable budget.
According to AXES Management, 40% of companies are going to reduce staff costs by 14.1%, including training. The overwhelming majority of companies expect to abandon the services of external providers.
Over the past few years, training costs have also tended to decrease (per employee), mainly due to the optimization and efficiency of the training system, but in the situation we are considering, we are talking about a reduction in training activity as a whole, which cannot but affect the company’s results. In the current situation on the market costs will be reduced, first of all, due to the expensive и\или non-core training, i.e. a kind of buffer reserve is used, due to which the reduction of training will have the least impact on the company’s performance. On the other hand, any reserve is finite and in conditions of a protracted crisis one cannot count on permanent reduction of expenses for personnel training.
Training for the bulls.
A company that strives to retain most of its personnel, together with them, retains most of its costs. Giving up training costs is also not a logical decision, as in this case employee development will not only stop at the existing level, but also go in the direction of degradation. Indeed, the efficiency of company employees without a corporate training system decreases over time. This is caused both by the absence of an additional motivating factor for development and by “moral aging” of available knowledge.
From the point of view of anti-crisis management, a company should minimize costs and concentrate on the most efficient areas of its activity. The most balanced solution for the company in view of the above factors is to use a training management system.
Indeed, with a large number of personnel (here we are talking, first of all, about companies with a large number of employees, specialists and managers of junior and middle level) it makes no sense to invest the entire budget in full-time training because of its high cost in terms of one hour per employee (before the crisis, the cost of one full-time training day reached 200 thousand rubles!).
On the other hand, for company functioning (now we speak about possibility to survive with the minimum losses – i.e. to provide that minimum at which the company can not lose the positions), first of all basic skills (knowledge of products and techniques of sales for employees of front-office; knowledge of software products, bases of office work and internal regulations for administrative services, the formalized knowledge of technology for employees of industrial divisions etc.) are necessary.
There is one more additional factor that speaks in favor of e-learning in comparison with face-to-face. The knowledge received on face-to-face forms of training belongs to the employee and does not remain in the company with his leaving. Thus, if the company “invests” in the employee (and, certainly, keeping him thus in the company till the end of crisis), there is a great risk to lose the invested means right after stabilization of the labor market. Imagine the following situation: the company pays the last employee to keep an important employee in the IBA program; right after the end of the program, the employee jumps sharply in price and, in order to keep the employee from leaving, the company either raises his salary (again costs!) or pays him additional training (again costs!): Once again the increase in price, again expensive methods of keeping him… – a closed circle. And when the company doesn’t want to continue investing in the employee, he just leaves and the knowledge goes with him.
In case of introduction of the knowledge base in the company, the intellectual asset of the company does not decrease with the employee’s departure, and the expenses for his training will be really minimal (the cost of course development and purchase of the e-learning system remains the same for any number of students, and the costs associated with the loss of working time can be minimized by the possibility of training at the workplace and in free time).
Thus, by applying e-learning tools in a company seeking to retain its staff, it is possible to significantly reduce the risks of unsuccessful investment, reduce costs and maintain staff efficiency.
There is no point in investing in “global” learning for “bears”. Let’s consider retailing companies as an example. According to Evgeny Gontmakher, head of the Center for Social Policy at the Institute of Economics of the Russian Academy of Sciences, the financial crisis will hit retailers the hardest: “Most likely the situation will result in lower wages. It will lead to the fact that the population will have less money to go shopping, therefore, there will be a severe crisis in retail”. An additional argument is the fact that retail has invested heavily this year and now owes a lot to the banking sector.
As a result, we have a very deplorable budget situation. In addition to this, retail companies traditionally have the highest turnover rate. The period of relevance of knowledge about a particular product for sellers is also very short (as a rule, from three to six months).
Thus, for such a “bear” to invest a lot of money in one employee is both pointless and not affordable. However the most part of profit of such companies depends on level of knowledge of employees of offered products that does not allow to refuse training completely. The optimal option in this situation is to create your own training system from the training management system, the author’s means and a team of professional authors. With the help of the author’s tool, the company’s experts can independently develop short product courses. In a few days all the company’s employees can pass such on-line on-the-job tests. This simple approach will ensure timely training of employees at minimum cost.
According to a study by AXES Management, personnel costs account for an average of 10.9% of the company’s revenue. At the same time, companies spend up to 1.6% of all staff costs on training. At the same time, history shows that if the above 0.1-0.2% of revenue is used incorrectly, the company may lose leadership, market share, best employees or the very possibility of further existence. This is especially true in difficult situations, in crisis situations. Each company should think about how effectively it uses its training budgets and whether it is ready for the financial crisis to knock on its door as well.