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ATD Blog

The Importance of Continuing to Invest in L&D During Economic Downturns

Friday, September 9, 2022

We have all seen it or been impacted by it: The economy starts to dip and budgets get cut. Tough decisions must be made regarding where to keep funding and where to cut—and more often than not, learning and development (L&D) is on the chopping block. Many programs, departments, and employees can get cut overnight. These sweeping decisions are made, at times, with very short-term thinking and without looking at the long-term risks, costs, and effects that leave a lasting impact. These decisions typically come back as a huge pain point once the economy rebounds. For that reason, continuing to invest, in some way, in L&D during economic downturns, is incredibly important to a company’s bottom line, long-term success, and ability to quickly rebound.

How to Retain Talent During Hard Times

The number one thing a company should want to do during a downturn is to retain its top talent through the hard times. Afterall, leaning heavily on your best employees when you are limited in resources and helping them continue to drive results are key to weathering an economic storm. According to a recent study conducted by TalentLMS in conjunction with SHRM, employees are 76 percent more likely to stay with a company that offers continuous training opportunities. Cutting these opportunities for highly driven and high-performing employees can cause them to feel like they are not getting the benefits, growth, and value out of their jobs as they once did.

When this happens, it can result in attrition either during the economic downturn or when the economy starts to rebound and the job markets become competitive again. Essentially, by removing the opportunity for them to continue to grow in your organization and cutting one of the top-rated benefits of the job, loyalty can be affected. This can be both crushing to company morale and costly to the bottom line. Experts estimate the average cost of replacing an employee is around 150 percent of their annual salary, so these short-term cost-cutting measures can affect the bottom line in the long term.

Another huge impact of cutting L&D programs is the impact on the morale of the company. Opportunities for professional and personal development are benefits that make employees feel valued by their employers. When companies take a training-centric approach, they are continually investing in the individuals they hired, growing positive morale, empowering highly skilled employees who oftentimes develop an affinity for the company, and building strong loyalties that are hard to break. When L&D programs that allow these individuals to grow, change, and develop are cut, the results oftentimes lead to morale issues within the company. It can be very hard to understand, even in an economic downturn, why a company would cut the very programs that are providing the most value and growth.


When the economy does bounce back and hiring picks up, companies that have previously cut either L&D programs or full departments find themselves behind the curve. They are left with no onboarding programs for new hires, no role-specific training for key roles in profit centers, and no product training to make sure sales, support, and product teams understand the intricacies of a product to successfully sell, support, and evolve the product. All the money, time, and effort that once was put into the L&D program seemingly went up in flames when the program was cut or stopped being supported. This can create a huge impact on a business that is trying to hire back the best talent and land the best-fit clients without the infrastructure to onboard, train, and implement these personas.


Things to Consider When Budget Cuts Are a Must

So, what can companies do if they inevitably have to cut programs but don’t want to face these long-term impacts? Here are some steps companies can take to limit the effects of economic downturns on their L&D departments:

  • Continue to invest in some way in L&D by researching and being thoughtful about the long-term effects of disinvestment.
  • Figure out how to continue investing in the department, even if it is not on new curriculum or hiring.
  • Look at where you can cut costs and shift the way you provide experiences to accommodate.
  • Forgo in-person training and instead move to virtual or e-learning.
  • Laser-focus on creating learning that provides high value to a large audience instead of side cases and programs.
  • Make sure that the learning programs align with overarching company goals, and help your employees grow and work in ways that will achieve those goals.

Find tools that will help you become more efficient in the way you develop, implement, and release content so you can do more with less, including platforms that solve for multiple feature sets. Authoring solutions such as MadCap Software allow you to single source content, so you only have to update it in one place instead of several. Anything that allows you to create efficiencies around your process will allow you to do more with less. This is also a great time to gather learner feedback to iterate and improve your existing programs, so that when the market does turn around, you will be ready to hit the ground running.

While L&D seems like an easy cost to cut during hard times, the long-term effects of doing so prove that continuing to fund it and keep it alive during this time will minimize the much larger long-term impacts that come with cutting or underfunding these programs and departments.

About the Author

Andrea Maliska is an award-winning learning and development professional with over 15 years of experience in the field. She has built several learning and development departments in a variety of industries and relishes the opportunity to build from the ground up. Andrea currently owns her own consulting company, Rebel Learn, located in Denver, Colorado. Combining her experience in L&D and product management, she approaches strategy and program design with a unique and thoughtful approach.

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This is a profound piece and I found it so inspiring that I re-read it weekly as a reminder. I spent the height of the pandemic doing radically different work in a new way, so I appreciate your call to reflect on how we elevated during a rough time by breaking down barriers we thought were immovable. I've forwarded this to multiple partners who I worked with during this time, and they have all had the same positive reaction. Thank you for lifting us up!
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