In tough times, a company should preserve training budget

University Park, Pa. -- Companies that slash their training budgets during economic slowdowns are penny pinching in exactly the wrong place, according to a Penn State researcher in several recently published studies.

"We have all heard that training is the first thing to be cut in bad times, "says Dr. William J. Rothwell, professor of workforce education and development. "But training is not an employee benefit or a reward for hard work that should be cut back when times are tough. Instead, it helps people qualify for their jobs, keep their skills current as technology changes what they do, and prepares individuals to take more responsibility as large numbers of people prepare for retirement.

"Perhaps most importantly, training improves productivity," Rothwell notes. "An emerging trend is to use training to generate new ideas about markets to serve, products to make, and companies to found. It thus becomes a research and development function rather than a way of teaching people what the organization already knows."

Rothwell; Dr. Wesley Donahue, director of Penn State's Management Development Programs and Services; and Dr. John E. Park, associate director at Management Development, conducted a study on in-company sales training, a significant factor in getting consumers to buy and thus spark the long-sought economic recovery. The complete study results appear in the book "Creating In-House Sales Training and Development Programs" (Quorum Books, 2002).

Using surveys, focus groups and interviews, the researchers gathered information from 350 sales managers. The study revealed that the top three reasons why organizations sponsor in-house sales training are to increase sales professionals' productivity and effectiveness, contribute to accomplishing the organization's strategic plans, and improve the organization's ability to respond to change. Key success factors for sales training included aligning development programs with strategic business plans, providing support to sales professionals, and monitoring and evaluating the development results of sales professionals.

"Study participants indicated that sales training is more often delivered through on-the-job coaching and in-house customized sales training programs than by trendy methods such as online learning, and that the participants in most sales training programs are recently-promoted to sales," Rothwell says. "The most important selling behaviors identified in the study were `knowing how to close sales and provide follow-up' and `effectively communicating with and actively listening to clients and others.' "

In a second book, "What CEOs Expect from Corporate Training" (American Management Association, 2003), Rothwell reported the results of research that probed CEO perceptions and expectations of in-house training, working with his co-researchers to conduct in-depth interviews with 28 CEOs from large organizations and 50 CEOs from multi-facility health care institutions. Rothwell's co-researchers and co-authors, then Penn State doctoral candidates, were John Lindholm, compensation manager at the University of Massachusetts Medical School and Dr. William Wallick, assistant professor of human resources and human resources development in the department of health administration and human resources at the University of Scranton.

"An important goal of our study was to discover what some CEOS think about training," Rothwell explains. "Their perspective is particularly critical at a time when CEOs might be tempted to cut costs by eliminating or reducing training expenditures. Our study results take on added importance at a time when the stewardship of CEOs is under intense scrutiny after many widely publicized business scandals.

"CEOs repeatedly said in the interviews that training should be directed toward helping employees understand how business challenges drive change in the organization and that training programs are crucial in communicating that change and preparing the workforce to meet the new challenges," he adds.

The results of the study revealed that CEOs were most concerned about six key issues facing their organizations: financial health, global competition, recruitment of a productive labor force, customer satisfaction, technological change and innovation, and the knowledge explosion.

"The CEOs who were interviewed repeatedly emphasized that, for training to be most effective, it must focus on helping organizations cope with all six of these challenges," Rothwell adds.

Last Updated March 19, 2009