You’ve Cut the Training Budget, Then Cut Employees…Now What?

By Dean Prigelmeier, President of Proactive Technologies, Inc.

Layoffs are a traditional business solution to cutting costs in response to a softening of the market or unexpected erosion of the underlying economy. But anyone who has implemented a layoff or survived in its aftermath can tell you, layoffs often do not really make business sense; they seem like an act of desperation.

According to Elizabeth Flood, Associate Editor of CFO Dive, “Layoffs may cause organizational drag.” “Layoffs can erode shareholder returns, with expected savings from workforce reductions offset within three years by unforeseen consequences such as reduced employee morale, turnover and loss of customers,” according to recent research from Gartner.

“The first thing to recognize is that there is an immediate upfront cost to layoffs as a business will need to reorganize itself around a smaller group of employees and typically incur costly upfront severance payments,” Vaughan Archer, senior director, research and advisory in the Gartner Finance practice, said in a statement. Businesses will likely see an increase in both “costly contractor hiring and demands for increased compensation from remaining employees who are now under a greater burden,” he said.

Even if an organization avoids a “vicious cycle of employee turnover,” eventually, the business cycle will turn, leaving the organization scrambling for staff, the report said.”

Employers – especially their financing department – have been conditioned to believe that layoffs are the only option to rapidly turning conditions. This is an extension of the widespread neglect of worker development and worker management. Human resource management professionals have convinced themselves through a sort of “groupthink” that their only role is hiring, firing and management of benefits. This has been reenforced by college curriculum to become a “Human Resources Generalist” – very popular today as a way to lower the costs for HR management. This has further institutionalized the mistaken belief that the worker development process, starting at hiring, is “organic” and will take care of itself; once an employee is hired the HR department’s job is done (until an employee is returned to HR with the conclusion from deep analysis, “I don’t think this guy will work out”).

CEOs and Operational Managers have overlooked this paradox, probably for fear of asking questions for which even the internal “experts” have no answers. The internal experts perpetuate this condition either because they are not taught a better way or they rely too much on trade groups that echo this universal neglect, “understandable” and reasonable to its herd. Also, CEOs and Operational Managers shouldn’t have to get involved with worker development, having a department to take care of it…unless it is a barrier to operations, growth and sustainability.  Then they need to intervene.

No metrics, no standards, no training process or direction leads to a substantial underachievement in every worker’s capacity. It is no wonder that all that is known about an employer’s workforce is that productivity is lower than expected, work quantity and quality are not what is needed, compliance with engineering, quality and safety requirements is disappointing. The net effect is labor is viewed as a “cost,” not as the investment it should be. Leaders should be at least curious as to how their products get produced and services get delivered, and if the level and quality of output all that their workforce can deliver…at a minimum. Then how do the employees feel about their role in the operation and do they feel they could offer more.

None of this is the worker’s fault AND it doesn’t have to be this way. Each employee will evolve and go where leaders lead them. It may surprise many leaders, though, how much a little attention given to a worker’s development will add to the operation’s overall capacity and effectiveness.

And for many who read this and have doubts about their own organization’s worker development strategy, the evidence is there. It may even be long past time to explore other options and develop workers right. Why rely on hyped AI solutions – untested, unpredictable and costly as the investment might be – if the organization has already failed to develop their human investment to its full potential?

Simply by establishing a structured on-the-job training system, employers can:

• transfer expertise faster and more completely to each new-hire or cross-training worker;
• measure each worker’s capacity development and better understand each workers “return on investment;”
• reduce the internal costs of training and realize more visibly training as the investment it should be;
• realize a higher collective level of worker capacity, work quality and quantity, productivity and compliance;
• create a culture where training is valued and what an employee can do for an employer distinguishes them from their peers;
• establish pathways for advancement and credentials for recognition – invigorating employee morale and sense of purpose.

Layoffs are not the only option. Treating worker development as any other system and investment in the operation has demonstrated itself to be the “missing link” to avoid unnecessary, uncontrolled operational degradation.

If you recognize these challenges and have shed your fear of even looking for other solutions, check out Proactive Technologies’ structured on-the-job training system approach to see how it might work at your firm, your family of facilities or your region. Contact a Proactive Technologies representative today to schedule a GoToMeeting videoconference briefing to your computer. This can be followed up with an onsite presentation for you and your colleagues. A 13-minute promo briefing is available at the Proactive Technologies website and provides an overview to get you started and to help you explain it to your staff. As always, onsite presentations are available as well.