There's No Better Time for Investing in People

When times are hard it is easy to start the cost cutting with staff development budgets. However, this overlooks the opportunity of investing in people at precisely the time when it can bring the greatest returns.

13th June 2009 published by Michael Nicholas

How often have you heard people say that their employees are their greatest asset? Often, is my guess.

These are such easy words to say aren’t they, but unfortunately, as the saying goes, “actions speak louder than words.” Many businesses claim to recognise the unique and irreplaceable value of their employees; however, the true test is how they behave towards them in practice.

Unfortunately, companies in which staff are actually led and managed in a way that is reflective of their vital importance to the success of the business are somewhat rarer.

The problem is that it’s so easy to slip into treating people physically that same way that they are recorded on the balance sheet; i.e. everything tangible, and sometimes even the intangible, is recognised as an asset – except the people! It is also taken for granted that almost all business assets depreciate over time and that regular investment in them is therefore essential. Once again, people are often handled differently – even though few would fail to recognise that this approach will not work over time.

There are so many companies which are prepared to immediately cut HR budgets as soon as corporate profits are under threat. Whilst totally understandable in some respects, this action seems to miss the rather obvious fact that the only route to improved results over the longer term is to have a team that is better able to create value.

Reducing staff training a survival-oriented approach – but a focus on survival never creates great results. Ultimately improved performance and growth on a sustainable basis is only achieved by people who are learning and growing.

The findings of a study in 2007 graphically illustrate this point. Researchers looked specifically at the business benefits of investing in skills. And the results? Employers who don’t invest in training were found to be two-and-a-half times more likely to fail than those who did!

It’s also worth noting that this study was done when the economy still looked to be in great shape, with businesses everywhere booming. I’d hazard a guess that the differential is even greater right now.

And there is a further benefit of investing in building new skills. When the economy does begin to recover, those who have taken the opportunity to fully prepare themselves now will be in pole position to take full advantage of it. It is said that more millionaires per head of population were created in America during the great depression of the 1930s than at any time in American history.

Learning from this previous experience it is easy to see that the strategy that works is one of investment and innovation.

When markets are shrinking it is the commitment and motivation of staff that will define who remains competitive. And as the economy recovers it will be those companies that prepared in advance by developing the skills of their workforce that will be in a position to take full advantage of the many opportunities that will most certainly be presented.