With the economic downturn in full swing (assuming, that is, that downturns can swing) and training budgets as ever looking vulnerable as the first candidate for cuts, I’m beginning to hear once more that well-honed argument that training should be regarded as an investment and not an expense. As if that was all there was to it! "Oh, please accept our apologies for this misunderstanding," say the senior management team in unison, "how much money is it that you want?" Some chance.
Let’s leave aside for a minute the accounting argument about what actually constitutes an investment, and just use the term in its everyday sense. Surely most forms of expenditure incurred by an organisation could also be viewed in this way:
- accounting is an investment in future financial security;
- customer service is an investment in customer loyalty;
- marketing is an investment in future sales growth;
- research and development is an investment in new products;
- and so on;
… which means that learning and development is not really that much further along the path in securing funding than all these other departments.
Technically, it’s hard to see how training could be seen as an investment in the accounting sense, because employees (other than professional footballers) are not assets that can be sold – in fact they can leave anytime they want, and frequently do. At best, they can be regarded as one of an organisation’s intangible assets, contributing to the ‘goodwill’ of a business. But no-one has ever dared put employees on the balance sheet, and they probably never will.
But let’s just go with the idea that training can be seen by senior management as an investment. Is that enough to open the purse strings? I think managers might have a few questions:
- What sort of return can we expect on this investment?
- How long will it take for this return to occur?
- How confident can we be about this return?
- Would other measures (hiring and firing, mergers and acquisitions, new incentives and disincentives, better working conditions, improved tools and equipment) yield better returns in terms of performance improvement?
- Would we get a better return if we just left the money in the bank (assuming we can find one that’s safe enough)?
Very few organisations have so much money that they can respond positively to every request for funds, so the process of budgeting is inevitably competitive. Unfortunately, being competitive is not something learning and development departments have historically been very good at. They need to learn and quickly.
Source: Clive Shepherd