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Cutting That Training Budget Is a No-Brainer, Right?

Cutting That Training Budget Is a No-Brainer, Right?

By Kevin Oakes from i4cp

June 23, 2009

Reduce the budget now! It’s a fire drill almost every company is either currenty immersed in or has already gone through. And when this fire drill happens, it’s typically a time when corporate training and development get a lot of attention. After all, conventional wisdom states that when times are tough, the training budget is one of the first – and easiest – to slash.

However, conventional wisdom may not be so wise in this case. Cutting the training budget might just be cutting into your organization’s future success.

Companies are definitely hacking into training, according to a soon-to-be-released study from the American Society for Training & Development (ASTD) and i4cp. Many survey participants reported that they’re seriously slicing into the resources used to support learning, and nearly seven out of 10 said that, in these tighter economic times, their organizations are to a high or very high extent, taking a close look at their learning budgets.

And why not? As President Obama rails on Wall Street for doling out bonuses of a mere $18 billion, that figure pales in comparison to what companies spend each year on training alone. According to ASTD (2008), the training industry’s best-known association, U.S. organizations spent $134.39 billion on employee learning and development in 2007. This amount reflects direct learning expenditures such as the learning function’s staff salaries, administrative learning costs, and non-salary delivery costs. Nearly two-thirds of the U.S. total ($83.62 billion) was spent on the internal learning function, and the remainder ($50.77 billion) was allocated to external services.

To a CEO or CFO, on the surface it is probably an easy decision. However, dig a little deeper and you’ll find that eliminating training is typically not the answer to surviving in a tough economy.