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Roundtable: Tackling Recession

This article was originally published in TheHRDirector.

A gathering of UK executives stressed the importance of training and development through the economic downturn

The message was clear at the HRDIRECTOR Roundtable: the importance of maintaining training and development during the economic downturn. This discussion included delegates from many different sectors, HR directors and seniors, as well as representatives from business bodies and education. All were of the mind that no organization can afford to put training and development on hold.

Introducing the tackling recession roundtable delegates:

  • Ruth Spellman OBE
    CEO, Chartered Management Institute
  • Ian Iceton
    HR Director -- Volkswagen Group UK
  • Paul Kennedy
    HR Director -- New Balance
  • John Attree
    Skills and Olympics -- London First
  • Imogen Astley
    HR Business Partner -- LV=
  • Richard Oyen
    Director of HR and Talent Management -- Sum Total
  • Linda Thompson
    European Director of Operations -- Gallup
  • Tom Keeney
    Director, Employee Relations -- BT Group
  • Andrew Castle
    HR Director -- Bosch
  • Martin Dunford
    Chairman -- Association of Learning Providers and CEO Skills Training
  • Ioan Morgan
    Principal -- Warwickshire College
  • Paul Head
    Principal -- College of North East London, the Director of Skills and Employment
  • Steve Crabb
    Strategic Adviser -- CIPD
  • James Rapinac
    Director of Marketing, Europe -- Gallup
  • Jason Spiller
    Editor, The HRDirector.com

This roundtable event was dedicated to promoting the importance of training and development through the economic downturn, and the agenda encompassed key business leadership and human resource issues such as planning and contingency; skills needed by employers now; training and development needs of the remaining workforce; and the role of training and development in engagement, retention, and motivation. The debate also covered the future skill needs of the economy, the role of colleges and learning providers in supporting employers, and the importance of partnership, plus the need for leaders and champions to maintain the training agenda throughout the economic storm.

Jason Spiller: Businesses are faced with some tough decisions. Training and development could easily be targeted as a nonessential requirement. What is the best advice to HR directors faced with this issue?

Ruth Spellman: Organizations now need to get serious about their skills base. If they weren't before, it's an absolute imperative now. And I don't just mean looking at the immediate skills -- you need to get the goods out of the door. I mean looking at your organization and skills capability; do some assessment of where the weaknesses are and where the strengths are. Look at your balance sheet and remind yourself what you spend on your people overall. What are you getting back? How do you get more? How do you maximize the return from your investment in your people? And how do you get the kind of flexibility which goes with looking at skills and the development of staff so that you can develop the people within your organizations and develop your business?

If you can create that win-win formula while other people are clutching their heads, you are going to trade and be successful. Learning is key, and it's particularly relevant now.

Jason Spiller: As a player in the hard-hit motor market, Ian, you are well qualified to give us an insight into the realities of the recession. What is your current training and development agenda?

Ian Iceton: We've got two parts to the training agenda that we've talked about. We have our direct employees who work for us in our head office, which amounts to about 600 people. But we also take a very significant interest in the training and development of our retail staff. Although they are all independent businesses, they are very closely aligned to us, and that's about 20,000 people across the country.

So we have made, in the last few years, quite a significant investment both in terms of capital and revenue in terms of that requirement of the training and development for the network. We spent 8 million GBP [13 million USD] on building our own training school and provide up to 300 delegates per day of training. So it is a big issue for us.

We take the training of our network very seriously, and one of the challenges is that a lot of those businesses are relatively small ones. In our industry, the small businesses are the ones that are struggling most at the moment. They've become quite short term by necessity in terms of the way they are addressing things, and there's an understandable reluctance for them to invest in training -- not so much the absolute cost, because we tend to subsidize it, but just having people out of the business for a period of time. Right now, it's become quite a challenge for many of those smaller businesses, so we are seeing a drop off in immediate take up of the training provided.

In terms of our own business, we're not, thankfully, having to be quite so short term, so we are maintaining our profile in terms of training and development. But perhaps in response to some of Ruth's points, what we've tried to do, thinking about our agenda for this year, is really think about the areas that we most want to focus on. So yes, we're probably going to spend less this year, but we are going to get the most bang for our buck.

Jason Spiller: Older business leaders seem to be looking for a swift exit, younger managers have no memory of past recessions, and businesses seem paralyzed. It's not good, is it?

Steve Crabb: Last year's PWC [PricewaterhouseCoopers] survey on chief executives around the world found that people-management issues had become the most pressing concern for chief executives, ranking alongside the deteriorating economic conditions of last spring and summer. Chief executives were saying [that] our future leadership pipeline was a pressing concern.

We have had it easy over the last decade. This is an enormous test of our leadership character and quality.

endquote

To an extent, we have had it easy over the last decade. This really is an enormous test of our leadership character and quality. Employee engagement is critical to business performance, and that is built through investing in people and through line manager behavior. These two things are absolutely critical. It's the relationship that's at the heart of the nuclear reaction that delivers performance in organizations. And if we stop investing in those individuals -- if we press the panic button and move away from investing in skills -- then we will break that engagement chain, and we will stop performing. It is as simple as that. The psychological contract will be fractured.

And data that CIPD [Chartered Institute of Personnel and Development] has collated, and also things like the DTI [the former Department of Trade and Industry, now the Department for Business Innovation and Skills] review from some years ago, show that management deficiencies in this country can account for as much as 10% to 15% of the productivity gap that we currently have. Only 37% of employees believe that their manager currently helps them to improve their performance. And 90% of respondents to the CIPD's last learning and development survey said that management and leadership skills were the most pressing issues and the most pressing shortfall facing their organizations, in terms of delivering business objectives. It's not going to be fashionable and win lots of friends to stand up and say that in the face of a downturn like this.

We have to continue investing in management and leadership development. The centrality of the line manager relationship, the way in which they reflect the organization's values, communicate the organization's vision, and explain to ordinary employees why they come to work -- why it matters -- is absolutely central. And if we don't invest in that, then we're not just going to fail to trade our way out of the current recession, we're going to be storing up problems for generations to come.

Jason Spiller: Ultimately when businesses are against the ropes, the focus is bound to be on survival and little else, forget CSR [corporate social responsibility]!

Martin Dunford: When persuading employers to engage in government-funded training, and especially with the economy where it is, we never talk about corporate social responsibility, it's always about the ROI [return on investment], the bottom line. However in March, we will still deliver 200 jobs; on average, it's 250 a month for long-term unemployed people. So there are employers still recruiting, and we're working with some companies with their people who've been made redundant -- they're under notice of redundancy -- and we're training them for their next career and getting them qualified, particularly in management leadership and customer service.

Jason Spiller: ROI and CSR aside, how can anyone prove that training promotes retention and motivation? Can organizations benchmark when it comes to efficacy in training and development?

Ruth Spellman: You'll never be able to prove cause and effect in retention. It's a number of things that need to be done more or less simultaneously that actually makes the difference. If you pick and choose, do one thing and just train 10% of your workforce, I'm not sure it's going to produce a return on investment. However, if you embrace the philosophy and actually look at development needs across your organization -- really audit how they work and look at your capability -- if you systematically address capability issues and have a sustained commitment, you will be able to track return on investment.

Jason Spiller: Are there statistics to prove or refute that training and development really retain key people?

James Rapinac: As a business metric, employee engagement is a leading indicator of future performance. Business leaders are including this metric in their strategic analyses to help answer the question: Are our training and development initiatives helping us to keep our best people? Do they help engage people and enable them to become more productive and happier in the workplace? And I think that it is both increasingly important and possible to prove the business case, to demonstrate whether training and development are truly having a beneficial impact on the performance of an organization -- because that's really what is needed right now in these difficult times.

Jason Spiller: Paul, what can be learned from the last recession, in terms of keeping training on track?

Paul Head: There's no stored knowledge base of what you need to do in a recession and what works and what doesn't work in terms of the keys to survivability. . . . Businesses that maintained their apprenticeships through the last recession thrived when the boom came because they had trained workforces. People need to realize that the firms that kept the investment in people going during the last economic downturn became the high performers. I think that's a really important lesson that we need to try and put across.

The UK no longer has a strong manufacturing base, so we have lost skills.

endquote

Jason Spiller: Apprenticeships are in vogue again. Where does that leave university graduates? Is there any value at all in a degree in, say, media studies?

Ioan Morgan: If the government is truly demand-led, it never heard that request, because it didn't come from industry. What industry was asking for were [National Vocational Qualifications (NVQ)] Level Three technicians, and they're still asking for Level Three technicians. So you've got a well-resourced school sector and you've got a very well-resourced, questionably performing higher education sector. And right in the middle, where you need all the work done to stop people going into the six-month spiral of unemployment, where you want to turn tax-eaters into tax-makers as quickly as possible, there's no resource. And that's a big issue.

What do employers need? I think what they need are young people, particularly, who are at a reasonable level of numeracy and literacy [and who] have excellent employability skills and flexibility that the companies can shape and hone.

John Attree: Our members talk in terms of behavioral characteristics and attitudes and, to repeat the phrase, employability skills -- and certainly not in the same language as government, which talks in terms of percentage penetration of [NVQ] Level Three, Level Four, Level Five.

John Denham [British Labor MP for Southampton Itchen and Secretary of State for Communities and Local Government] will advocate the merits of 50% of the population reaching a Level Four university degree level of qualification. The big employers in London are receiving 300, 400 graduates applying for every post. Do we need more graduates? Hardly! Are the post-1992 universities getting a look in? Not at all for those applications, because any rational employer in that situation will try and manage down on the number of applications. Is this really what government wants us to do?

Imogen Astley: Our recruitment is about attitude first. Having the right attitude is more important to us at LV= than being a graduate or not. So we ensure that we are recruiting for attitude based on the LV= values.

Martin Dunford: Agreed, the specific qualification someone might be working toward might be in IT or basic skills. But apart from that, it's about behavioral employability skills. Apprenticeships now aren't the same as they were before. The most successful that I've encountered and delivered is customer service, because it relates very much to behavior in the workplace. We need a qualification as a currency to make it work, but in the eyes of most employers, it is about employability as opposed to anything else.

Tom Keeney: The UK no longer has a strong manufacturing base, so we have lost skills. The global economy also means we have been able to access many skills elsewhere. It is important we do not become protectionist, but looking solely at the UK, there is a challenge for industry leaders and the UK government to upskill and reskill.

I think the government is beginning to make the right moves certainly on existing and future skills. If industry and the government can work together, then we can keep people in employment, paying tax and national insurance, and not becoming unemployed. This approach will take time to find its way through, but there is a responsibility on employers to deal with these challenges.

Paul Kennedy: We've had to accelerate a lot of our investment in terms of our learning and development programs to equip our leaders to face today's reality. People are uncertain about their jobs and their futures. The leadership you need in tough times is very different to those leaders who've been on the crest of the wave over the last decade. And I think organizations face a real challenge to make sure they've got those leaders in place and make sure that they're totally engaged so they're able to translate engagement to the workforce.

We're still manufacturing shoes in the United Kingdom, and we've got an aging workforce; people who've worked with the company 25 years, they're coming up to retirement, and finding people to come in as apprentices -- who are going to be the shoemakers of the future -- is tough. You have to make it attractive to people to come into what effectively is a lifelong environment in this day and age.

There is a new focus on the role of regulation in the western economy. We could be on the verge of a profound shift.

endquote

Steve Crabb: We need to recognize that we may be going through a paradigm shift and entering a whole new world. There is a whole new focus on the role of regulation in the western economy. We could be on the verge of a profound shift -- as profound as the one we saw during the Thatcher/Reagan era of free market economics. And you never see these things coming; they just suddenly hit you.

A generation has grown up thinking, well, actually, I'm going to go for the quick money, I'm going to go into the media, I'm going to go into the city and look down their noses at apprenticeships. So this is an opportunity to actually make them think again.

Ruth Spellman: There are businesses, like BT, that are prepared to put long-term structures and processes behind their commitment to training. We need to have corporate role models in every sector of our economy, look at what they're doing, capture that data, and look at those case studies.

Getting back to the university sector, there's an awful lot we could do to improve the employability of graduates. I actually believe universities have got to change their approach; they have to take a wider view of what they're equipping people to do. Yes, they want them to get first-class degrees, but they also want them to be employable.

Jason Spiller: So university degrees are no longer the great differentiator when it comes to recruitment?

Ian Iceton: We stopped doing graduate recruitment two or three years ago because we couldn't differentiate at the entry level. When all candidates have A-stars, you would have to wait until they'd actually worked for two or three years to see whether they had employability skills, let alone leadership potential.

I think we have to address attitude, motivation, and potential at 12 and 13 years old, not from the ages of 18 to 22. That is a job for educators, rather than focusing on beating qualification targets.

Jason Spiller: If we can focus on vocational skills and on-the-job training, how can you avoid it being seen as a distraction from the job of keeping the organization operational and competitive? A personal view, I did an NVQ in the mid-1990s, which was unpopular, a distraction to the business, and ultimately was dropped by the employer.

Martin Dunford: I think if you did NVQs in the mid-1990s, it will have colored your view of vocational training. In more recent times, the adult learning inspectorate and Ofsted [Office of Standards in Education] have provided a set of standards. We have had to overcome people's past experiences and natural prejudices over the years regarding training and development, and it's about an approved and accredited supply side. The Learning Skills Council now has 1,000 contractors in the training sector, whereas 15 years ago, there were about 4,000.

Ruth Spellman: Many people have this dumbed-down view of what vocational training is all about. It's a status issue, and I think that it's the social attitudes we have to combat. Then it's the quality of delivery and making sure that we make every experience of the NVQ system a good one. I still think we're quite a way off that, although there are massive steps being taken to improve it.

Quite simply, qualifications do matter to people who have them and don't matter to people who do not. I can see no problem with people pursuing qualifications. On a personal level, it's a good way of saying, "I've achieved something." There's nothing wrong with that. If we can enable more people to acquire qualifications that mean something, then I think that should be a direction of policy. The issue comes when the whole system is so massively complicated and where you're actually not assessing the practical knowledge and skills that people require to do the job. So it's looking at the methods of assessment, making them as non-bureaucratic as you can, and doing as much in-situ as possible, so it's economical from the point of view of the employer.

Business must have the vision about what type of people they need in the organization to go forward and build programs.

endquote

People have different learning styles, different learning abilities. Some people learn a lot better than others. A lot of evidence is that most adults learn most of what they learn at work. So why don't we follow that and actually then look at what are we providing at work? How can the provision really reinforce in helping employers create a learning environment which is suitable? And at home, which is where people are actually going to be accessing their computer -- what kind of packaging can we put together that enables that to happen?

Paul Head: We work with Metro Line buses, providing learning centers in the workplace designed to really fit in with work commitments. Every year, there's a ceremony at the Transport Museum where people in their 40s, 50s, and 60s pick up their certificates, and the program works very well. It's important not to overemphasize "the qualification" and more celebrate the achievement.

It's easy to criticize government, but I think initiatives like Train to Gain are working. Employers have got to have training providers running alongside, be flexible and innovative. For example, we have been holding training classes for Royal Mail workers at 6:00 in the morning. Significantly, businesses should be more evenhanded and make sure that limited training budgets are not solely for rising stars and future leaders.

Paul Kennedy: In the past couple of years, we've used vocational training as a mechanism to equip our workforce with some skills that potentially they didn't have. A large percentage of our workforce that are employed in the factory don't have access to a computer at home. So one of our successful programs has been to provide onsite IT training with a qualification. It has been fantastic, with people going home to their families and saying, "Look what I've achieved." Providing skills for life, as opposed to just training that is applicable to their work, is hugely rewarding, and this feeds back into performance and engagement.

Imogen Astley: Agreed, training and development is a key driver for employee engagement. We are focused on future leaders, so we've developed five levels of in-house leadership programs, which we have begun to explore the possibility of accreditation by the Chartered Management Institute. Our employee surveys reveal that career aspiration is of key importance. Pride in achieving qualifications is a very underestimated engagement tool.

Jason Spiller: Surely all business leaders are interested in right now is ROI? Forget the feel-good factor and CSR!

Richard Oyen: Employee costs are 60% to 70% of overall costs for some companies, depending on the industry. HR controls that cost, and where HR can add value is training the workforce, developing them and keeping them engaged. Eventually we will get through this down cycle, and the time and money spent engaging and developing employees will contribute to an organization's ability to emerge on top.

Paul Kennedy: Business must have the vision about what type of people they need in the organization to go forward and build programs. Access to the financial resources provided by government and the physical resources to accelerate that program are key, and this information needs to be more readily available.

Jason Spiller: Employee empowerment is important. But the business must drive the training and development.

Tom Keeney: I agree that identifying the correct training needs is really important. In BT, we do this through employee survey information, using performance management information, and, really importantly, by listening to our customers. Where the gaps are, we use these sources of information to come up with interventions which will help the employee and enhance the experience for our customers. That is where we get real value in training.

Highly engaged employees are going to get us through this.

endquote

Linda Thompson: It is highly engaged employees who are going to get us through this. I'm in my tenth year at Gallup, and I'm still classed as new. There are people who have been working here for 20 to 25 years, and the key to keep on building talent, strengths, and experience is through a strong relationship among peers and managers, mentors and enablers. Perhaps we sometimes overcommunicate in an effort to maintain the strength of these relationships, but that is the nature of our organization.

Jason Spiller: Do businesses in general really understand their skills needs and what training and development is required to achieve that?

Paul Head: Companies that come to us with training needs analysis, driven by a sense of management vision and strong employee engagement, are most likely to achieve their objectives. Those that say: "I know there's all this funding around, what can you do for me?" -- most often it's a short-term relationship, and it's often unsatisfactory, both for the people doing the training and the employer. Our repeat business comes from employers that have got this strong sense of vision and investment and a strong sense of what they want already.

Paul Kennedy: We set out about a year ago on a journey to double our size globally, in terms of our sales revenue. And within that, our manufacturing capacity also had to keep pace. We had to develop a blueprint of our manufacturing facility that was going to double its size and its output -- and then, within that, define the types of leader or leadership you need in place to manage that journey and to aspire to that goal.

I say to HR professionals, get out and speak to people. You can do it on surveys, you can do it on e-mail, you can do it electronically, but you'll never, ever replace face-to-face dialogue. You have to give a percentage of your payroll to training initiatives. And employees expect it. So there you have a great opportunity. You are required to spend that money, and employees expect it, and they're given the time off to go and train. You have a great opportunity there to upskill your workforce in a very coordinated way.

Jason Spiller: Businesses are looking to cut costs; that's a fact. Training is costly, and businesses can ill afford disruption to the operation. HR has to be increasingly innovative to maintain the T&D [training and development] initiative.

Ian Iceton: We've come away from most of our external providers in the last 12 months and are doing nearly all of our training in-house, taking people who are recognized in-house experts and actually using them to deliver the training. It gets us a double benefit, because they get development out of having to think about and learn how to deliver the training. And it's gone down really well from a credibility point of view that people in the business can deliver the training. We've introduced breakfast briefings and lunchtime learning -- one-hour sessions over breakfast and lunch when people can come and get snapshots of learning from people without it interfering massively in the day.

James Rapinac: Above all, businesses must maximize and focus their training and development resources on customer-facing employees who are in a position to [have an] impact on the strength of customer relationships.

Imogen Astley: We continue to focus on training soft skills, and we also develop entrepreneurial spirit and flexibility.

Martin Dunford: We have examples where businesses are downsizing and where we are training the people who are under notice of redundancy to achieve a qualification. I know we've talked about skills versus qualifications, but I would imagine those employees would see that the company is doing something positive and that they're going to gain something. The employees who aren't being made redundant, who we hope to extend the training to, will also see that as a good thing.

Steve Crabb: The leaders who I think will be successful in this downturn are not the ones who think they know everything and are highly directive, but those who are humble, ask questions, enable the people around them, and create coalitions of the willing. And that doesn't come naturally to a lot of people, because we grew within that "command and control" paradigm.

If you stop learning, you stop leading. You need to be engaged with your learning all the way through your career. And I think if they are facing acute market pressure, as we all are of various kinds, then it actually means the people at the top need to be fitter. They need to be better, and the only way you can secure that is if they're actually learning.

A diverse work environment tends to be more engaged, which in turn actually engenders greater diversity.

endquote

Jason Spiller: Would you say there is a positive trend at the moment in terms of upper management understanding?

Ruth Spellman: You can get the ostrich mentality. It is very important to me that I carry on learning. I think if you're in that sort of position, you can actually negotiate that as part of your contract, and other people will follow your lead.

. . .

Imogen Astley: It is all about focusing on the content and on the individuals you're going to train rather than trying to make one size fit all.

John Attree: The training provision industry has been sized for a growing economy and, of course, we're now into a declining economy, so it's a buyer's market for people who are looking for training and development. You should be able to get some very good value for money.

Ian Iceton: When you're in an industry that is contracting significantly, you have a number of providers that are typically set up to provide services of various kinds, not just training but other things within an industry. If all of their customers are contracting at the same time, there's some real challenges. You have to be careful not to push them too far in terms of trying to extract extra value for money at this time, or else you can tip providers over the edge. So we've got an interesting and delicate balancing act.

Linda Thompson: It really is about the pool of talent. This is what we need for the future of business. As long as you're meeting the future needs of the business and raising the capability of people, the budgets have a habit of working themselves out. As employers in 2009, it will be interesting to observe whether there will be any particular challenges with regard to inclusion, equality, and diversity in the workforce and the level of engagement of people in training and development.

Jason Spiller: How strong is the link between training, diversity, and engagement?

James Rapinac: There's a very strong positive correlation between engagement and diversity. A diverse work environment tends to be more engaged, which in turn actually engenders greater diversity. But it also works in the other direction in that more diverse workgroups and work environments tend to foster higher levels of engagement. So, in effect, diversity drives engagement, which in turn positively affects talent retention and other important outcomes.

Jason Spiller: What effect is the recession having on employees' ambitions for training and development?

Richard Oyen: Generally, the longer an employee remains at a company, the more likely his or her level of engagement tends to decline over time. Yet the longer an employee remains at your organization, the more experience, market knowledge, and connections he or she has. As employees gain experience and value for the organization, the more engaged you want them to be. Training and development are essential to reverse the trend and keep these valuable employees engaged.

Jason Spiller: Is there a specific age/gender group that responds most readily to training, from an engagement point of view?

Ian Iceton: We have older workers who continue to learn and develop, typifying what is a good role model for this. We've got people going on training courses now who are over 60 in our business. We wouldn't stop them at all.

Imogen Astley: Obviously, it's very important to understand what the engagement drivers are for your company. We find that those employees who have worked between three and five years are our highest engaged employees. As well as tenure, we look at gender and age demographics and analyze these to better understand our people. The results are interesting, but it is really a vehicle for communication and discussion in order to improve employee engagement.

Ruth Spellman: Training, development, and mentoring is a way of bringing people out of silos and building engagement. You need to put older experienced heads with younger people; you need the blend of experience, as leaders and mentors. Younger people will query the way things are done and will be willing to challenge, and then the older ones will impart invaluable experience. Training and development underpins the benefits of a truly diverse organization, from the top to the bottom of the business.

This roundtable was conducted by The HRDirector in conjunction with The Department for Innovation, Universities and Skills. This article is adapted from one originally published in theHRDirector. Reprinted with permission.

Gallup


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