According to The Australian Institute of Management's National Salary Survey 2009, there are mixed signs with regard to expected training spend over the next 12 months. A notably lower proportion (33.7%) of organisations expect to increase training budgets (as compared to 45.7% in the 2008 survey), while the majority (52.5%) of organisations expect their training budgets will remain the same (up slightly from 48.4% in the 2008 survey).
HR and L&D professionals may be slightly perturbed by this news, as it's difficult to build skills capabilities on a limited budget. Or is it? When considering L&D it's useful to divide it into two buckets: one is the formalised L&D programs, seminars and courses; the other is on-the-job development.
The results of research conducted by The Centre for Creative Leadership on what has the most developmental power, specifically relating to leadership development, might challenge pre-conceived notions. According to the survey, only 10% of what people learn in terms of how to lead teams effectively comes from formalised L&D. The other 90% comes from two main sources: on the job challenges, the actual job assignments themselves as well as hardships at work; and other people - in other words, role models, coaches, mentors.
"When people talk about cutting the L&D budget they often feel this means they can no longer send people on courses. However, they should be looking at ways to make the work itself a source of development," says Lenorë Lambert, director, Exit Info.
"Is it dangerous to slash L&D budgets? Only if it gets in the way of people feeling like they are developing their skills and careers. I would argue that L&D resources spent wisely with a small budget could potentially still provide some powerful learning experiences for people internally. If a large percentage of learning comes from hardships, I don't think we'd have to look too far in businesses at the moment to find some difficult situations to get people working on."
Why people leave
The belief that on-the-job L&D is perhaps more effective and highly valued by employees is reinforced by exit interview research conducted by Exit Info. This data indicates that lack of support for formal L&D is rarely featured in the top five reasons for leaving a job. However, lack of interest or lack of enjoyment in the work itself features heavily in the top five. "Lack of challenge or stretch in the job and lack of appropriate opportunities for career development is frequently cited. This is entirely consistent with the fact that it's work itself which is a developmental experience," says Lambert.
Lambert argues that the most effective organisations develop learning cultures where learning is ingrained into all aspects of corporate life. This is easier said than done. Lambert notes that of the 67 competencies that leaders need at some point to be effective, the one at which they are least proficient is developing direct reports and others. "The focus for L&D should really be showing people leaders how to develop the people who are working with them," she says.
Research shows that there will be a small portion of people who have such a strong desire for growth and have high learning agility - which is one of the strongest predictors of leadership performance and promotion potential - so if they are thrown into the deep end they will learn in their own way.
Indeed, a personal desire for growth has a significant impact on how effective L&D experiences are. This is where the competence of learning agility comes in. "Learning agility is about your willingness and ability to learn new competencies in order to perform. It's about learning new things to deal with new situations. This should be a key part of a retention strategy for those people who have that strong desire for learning. If they don't get that learning experience, they will look for it elsewhere. For those who don't have such a high desire for growth, then it's about making sure they are proficient enough to do their job well," says Lambert.
This willingness to learn is easy to spot. A manager who takes an interest in their staff will be aware of how they respond to new things, how they respond when they make mistakes, and the extent to which they ask for feedback.
Cost effective learning
On-the-job training and coaching and mentoring are ideal options for developing people-related skills: influencing and negotiating, conflict resolution, inspiring others through direction, encouragement and empowerment. These elements count greatly towards business effectiveness once technical skills are nailed.
Lambert provides a prime example of using work itself as a learning experience for employees. She cites a client in the professional services sector that has deliberately avoided retrenchment as a strategy during the downturn. Unsurprisingly, they also have a headcount freeze. As part of dealing with this, the company has started to increase the mobility of professional staff within the firm. In order to meet client demands, they are moving staff across geographical groups and fields of practice.
"While it's early days, the feedback from staff so far has been very positive. From their point of view the broader exposure to different parts of the business and different types of work is good developmentally and it keeps them stimulated and challenged - which builds their kitbag of competence. From the firm's point of view it allows the firm to service client demand without taking on more staff and helps keep turnover low as a result. Then there are the fringe benefits of relationship building across groups and a greater ability to deploy skills responsively where they are needed in the future," she says.
However, there will always be a need for formal learning, indeed some professions demand it. Professional services firms - lawyers and accountants for example - must tread carefully if budget cuts to formal programs are in the pipeline. "Many of these larger firms take on quite large groups of graduates as their future skill base. In law firms, continuing legal education [CLE] forms almost a psychological contract with these grads: when you come and work for us we'll teach you how to be a lawyer. Cutting that would potentially be dangerous because it's part of a very important aspect of lawyers developing the technical skills to be able to be competent in their profession," says Lambert.
HR professionals also need to be wary. They are often so engrossed with the upskilling of the wider workforce that they forget about their own skills.
"You would hope that HR and L&D professionals would value learning enough that during the good times they've taken care of their own. I would say HR people who haven't upskilled themselves in coaching, negotiating, and influencing are probably behind the eight ball. In most cases they can get resourceful and find internal people to mentor them through these challenges. Most organisations have someone who's good at it and it doesn't have to be someone senior. A mentor really should be someone who has the skillset that you want to develop and it doesn't matter where they are as long as they have it and are willing to share it," says Lambert.
HR's special requirements
However, the skills required in this recession perhaps run deeper than a good mentor can provide. It is vital that HR professionals understand their organisation's business issues, key competitive challenges, industry trends and market sensitivities so that they may adapt their HR responses accordingly - for example, by reviewing total reward systems to share the sacrifices.
Helen Ormond, MBS Mt Eliza program manager, believes HR professionals must also become genuine strategic partners of managers, 'trusted advisors' or, as David Ulrich suggests, "credible activists" on people and business issues.
"They also need to master cultural change and employee engagement, to help their organisation to create the culture and supporting processes that will drive the business strategy, and then navigate change intelligently. Workforce engagement is a key issue in a recession; indeed a global survey conducted this year by the Corporate Leadership Council* found that the number of highly disengaged employees has jumped from 1 in 10, to 1 in 5 since the first half of 2007, and that lifting engagement was deemed the highest priority for HR managers in the global sample.
"The survey also found that intent to stay remained at the same level for three years while the number of employees expending discretionary effort dropped by half. Therefore, and to use an economic term, 'deflation' becomes a key risk. Employee deflation can affect operational performance and customer service, just as economic deflation leads to stagnation," Ormond explains.
HR professionals face a daunting list of challenges, some of which can be met head on by on-the-job experiences, and also from formalised learning. In some cases, both are required. Change management is a good example. For many HR managers, this is their first experience of managing in a financial crisis. The late 1980s and early 1990s were periods of significant turbulence that changed organisations, the employer/employee relationship and working habits. The present downturn is set to do the same, dismantling structures and prevailing practices in ways that are difficult to foresee.
"HR professionals can enhance their role by becoming a trusted advisor to their business on people issues as long as they have a deep understanding of market conditions and the range of impacts on their organisation," says Ormond.
They can also add more value to their business by applying practical strategies to address business issues, including building compelling cases for change and communicating these with impact.
"The academics of the world have pushed forward our knowledge of what good change management is over the last couple of decades and there is a certain amount of technical knowledge that is worth having if you have some serious change to manage. Having said that, there's the knowing-doing gap - it's fine to have completed the course and know you must have your quick wins and champions of change and everything else, but to then be able to put it into practice is another thing," says Lambert.
Lambert believes this is where a learning culture is important. Alongside a good basic technical understanding of what elements are needed in order to make a successful change, it's also important to have a team of people undertaking it who have established norms and processes for effective learning.
"By it's very nature change management occurs in a very dynamic situation - change is happening all the time. The important practical skill is to be able to have very fast and effective feedback loops from when we go out and do something - is it working; are we taking notice of the right channels of feedback to find out whether what we've done has worked; if we've done something and it hasn't worked, how do we correct it? It's learning agility skills on a team level," she says.
Partnering with L&D providers
Dr Roslyn Cameron, HRM academic and consultant within the Faculty of Business & Law at Southern Cross University, believes the key to effective formal learning is to form a good relationship with education providers, whether they are in the vocational sector or the higher education sector. "Begin conversations about how you might partner with them for L&D activities. These may involve components of accredited training but could also involve customised and tailored L&D activities that could form pathways into more formal qualifications," she says.
"Invest in relatively low resources and activities to encourage innovation and creativity within the workplace where staff are able to interact in 'creativity spaces' to brainstorm both minor and major improvements or changes to products or services," Cameron adds.
In many cases, the educational institutions themselves are moving with the times. Mt Eliza, for example, provides a specific program for HR managers, 'Leading HR in Turbulent Times'. This focuses on financial management in a downturn and includes a 'bootcamp' on macroeconomics and organisational financial management to help HR managers understand how the GFC impacts their organisations and regions, as well as how their own company measures and reports performance.
"It is now more important than ever for HR managers to understand the business issues facing their organisations so that they can provide credible advice, and influence organisational change. The program is centred on the current challenges and on enabling HR professionals to become genuine strategic members of their management teams," says Ormond.
Southern Cross University offers an array of qualifications targeting HR professions, including The MBA, Masters in Human Resources and Organisational Development (MHROD) and the Graduate Certificate in Recruitment, Placement & Career Development (online delivery completed in one year).
"As course coordinator of the Graduate Certificate, I've seen growing interest in the course from those professionals who maybe working in broader HR roles or related HR roles wanting to gain and upgrade their skills in HR and to also have the 10 to 15 years of experience in industry recognised through the graduate certificate and its links to professional standards. The graduate certificate offers four units, one of which is strategic HRM. This unit provides the capstone to the other three units, including Recruitment & Performance Management; Career Development Studies and; Contemporary Issues in Labour Market Behaviour," explains Cameron.
HR professionals, like all managers, have greater accountability for performance in an economic downturn. Armed with the right skills, they can enable managers to change their organisations and respond to current challenges. To achieve this, HR professionals must build technical mastery while earning the trust to become trusted advisors or credible activists to managers in their organisations.
"This is an active role, an influential role, an externally focused role. It is not about talking the language of business with colleagues, but about partnering with managers to mobilise workforces to change," Ormond concludes.
*Improving Employee Engagement and Performance in the Economic Downturn, 2009
Why HR needs to upskill
There are many new issues facing the HR profession:
new skill sets like the green skills and green jobs
technology is changing the nature of work and occupations
the demographic tsunami of the ageing workforce
increasing rates of international mobility
global talent management
critical skill shortages especially in trade and engineering and the health and allied professions
"Workforce planning becomes paramount and the need for this to be strongly aligned to the strategic vision and plan of the organisation is vital. HR metrics or workforce analytics are essential for the HR professional no matter what the economic climate," says Dr Roslyn Cameron of Southern Cross University.