The Economy, E-Learning, and the Bottom Line

While cutting costs in training programs may provide temporary financial relief, there is considerable evidence it can be a very serious mistake.

• By Mike Sawchuk
• Nov 01, 2012

While the economic downturn has certainly caused considerable pain for millions of people and scores of businesses throughout the United States, it also has had surprising benefits. In an effort to trim costs, many businesses and other organizations have learned how to streamline their business operations, learning how to function profitably while also reducing operating costs.

However, streamlining must be done carefully and selectively. Some distributorships and other organizations have made serious cutbacks in areas such as training and education, only to find this can have negative impacts for the company, both in the short term and for the future.

According to Stephen Burnett, associate dean of Executive Education with the Kellogg School of Management, it is often learning and business education that suffers the most when companies experience tough times. "Worse, when companies are most unsure [about economic directions] and stop investing in management training, it simply makes the situation worse," Burnett added.

His comments are supported by Kim Taylor-Thompson, a New York University professor of law and chief executive with Duke Corporate Education, a leading developer of corporate, sales, and executive training programs. She believes that, instead of being eliminated, training programs should be in even greater demand when businesses encounter tough economic times. "If the learning is enabling [your staff] to develop new capabilities, then it has value," she said. "If the learning can help your people develop the capabilities they need to change their mind-set and create opportunities that might not otherwise have happened, than it has value for them and their company."

Seeing Education in a Different Light
Unfortunately, for many businesses (including distributorships), training and education programs are invariably the first things to get "the ax" during prolonged economic downturns and/or times of financial uncertainty. This was even borne out in a study conducted by a British nonprofit organization called Common Purpose just as the world economy began to falter in 2008. The study questioned 937 training and development professionals at scores of global companies about whether their organizations were planning to cut, increase, or simply maintain their current training budgets. They found that nearly half of the respondents were anticipating training and education budget cuts beginning in 2008 and extending into 2009.

While cutting costs in training programs may provide temporary financial relief, as mentioned above, there is considerable evidence that over the long term, it can be a very serious mistake. The Common Purpose study found that more than half of their respondents stated that "the short-term benefits of training cuts will have long-term negative consequences." Giving this even greater impact, fully 97 percent of those surveyed said this conclusion was based on their own previous experiences during past economic downturns.

However, in those organizations where education and training programs were maintained or even increased, studies indicate that once economic conditions improve, the better-educated and better-trained workers were invariably more able to take advantage of the improving sales environment. The studies indicated the educated workers typically had much higher morale, greater productivity, and felt they had the support of their companies -- all as a result of training programs.

So why do companies cut back on training programs when times are tough? There is no one answer to this question for all organizations. But for many companies, including distributorships, the decision almost always has to do with the attitude these organizations have regarding education and training programs, especially for their sales people. Many companies view such programs as little more than an expense. And when a distributor or operations manager views something as an expense, he or she usually looks for ways to eliminate or reduce that expense. This is true in both financially difficult and profitable times.

When decision-makers view education and training as an investment, however, they see it in an entirely different light. Why? Because like money in a savings account, an investment has what can be called a "positive income result." In other words, putting money into something now makes more income or growth possible in the future. This is what can occur as a result of investing in education and training programs.

An Inexpensive Way to Learn
While education and training programs should not be defined as an expense, it cannot be denied that such programs can be costly. However, one way distributors can keep these costs down and still provide an investment in quality education and training programs for their staff is through e-learning programs specifically designed for their industries.

E-learning is a very broad term addressing just about any type of learning program that is computer-based. This type of education is not new and was actually founded on mail-based education called "correspondence courses" or "distance learning" that date all the way back to the late 1800s. These education systems became popular as mail delivery grew more dependable in North America and parts of Europe. They made it possible for people to receive training and education even though they could not afford schooling, did not have the time to attend, or did not live near conventional brick-and-mortar schools.

E-learning programs also have evolved significantly over the years. At one time, such programs were costly and were typically delivered on disks or similar media mailed to the participant. Today, some of the more effective e-learning programs are surprisingly cost-effective and can be delivered over the Internet. Very often, they also offer a degree of interactivity and include not only text, but also animation, graphics, and online tests. They also may include interaction and collaboration with other participants taking the same course.

The key benefit of this type of learning experience is the flexibility it offers. Students or participants can take (and retake, if necessary) the courses when it best suits them -- at two in the afternoon or two in the morning. They also offer another degree of flexibility in that they are able to offer a wide variety of courses on scores of topics, all available upon demand.

A good example of this is the e-learning courses we developed for janitorial distributors. It consists of more than 175 training modules broken into 75 courses in five key areas, covering such topics as:

• Facility cleaning challenges and solutions
• Advantages, features, and benefits of various cleaning products
• Sales skills development
• Improving sales prospect development skills
• Territory management
• How-to training for specific cleaning tasks and systems
• Green cleaning
• Sanitizing, disinfecting, and decontamination training

Because such courses can be so cost-effective, e-learning can help take the expense out of education so that distributors and other organizations can view it as it should be: as an investment. This is especially true during difficult economic times. Developing sales skills and other knowledge can help workers maximize their performance and reach their full potential once the economy rebounds. There is another benefit to employee education, as well. Employee loyalty often improves when companies invest in their staff. This can turn out to be one of the most significant dividends of a corporate training and education program.

Marketing and the Budget Cut
Along with cutting back on education and training programs, marketing departments -- which are designed to attract customers to a company and drive growth -- are at the top of the budget ax list during difficult economic times. But as with employee education, studies going back to the 1930s have found that those companies that maintained or even increased their marketing budgets during the Depression were in a stronger position once the Depression lifted.

One example that is frequently cited and studied is that of cereal manufacturers Post and Kellogg's. Before the Depression, Post was far larger than Kellogg's. But during the Depression, Kellogg's increased its marketing budget while managers of Post decreased theirs. Since that time, Kellogg's has always had a larger market share and has been the larger and more successful of the two companies.

This article originally appeared in the November 2012 issue of Occupational Health & Safety.