"Leading figures, including Sir Mike Rake, chairman of the BT Group, Sir Stuart Rose, chairman of Marks & Spencer, Richard Lambert, director-general of the CBI, and Brendan Barber, general secretary of the Trades Union Congress (TUC), said in an open letter to national newspaper editors this week: 'Now is the time to keep investing in the skills and talents of our people. It is the people we employ who will get us through.'" (Human Resources Magazine, 24th October 2008)

So how can we at OPP help you, our clients, help your organisations keep talent management and development at the top of their agendas?

Q. Aren't HR directors capable of promoting the importance of developing talent, especially in tough times, to their peers in senior management?

A. According to the Harvard Business Review (October 2008), there has been a dramatic decline in the number of HR directors on the corporate boards in the last five years. In 2003 in the UK, FTSE 100 companies had 18 HR board members; in 2007, they had just five. In the US in 2003, 81% of HR senior executives reported directly to the CEO, down to just 63% in 2006. This means that the voice of HR may not even be in the room when decisions about cost savings are being made.

In SMEs, responsibility for HR often rests with the finance or operations directors, who are also more likely to see training as discretionary spend, and something that can be temporarily 'iced' with minimal consequences. So, unfortunately, HR often depends on other functional heads, or manager groundswell, for the security of its training budget.

And we believe that it's incumbent on us as partners to give you ammunition in the battle for budgets, too.

Q. So if we need a financially based argument to save our development spend from cuts, where do we turn?

A. There is a wealth of data on the economic benefits of training from a raft of studies. It's probably unhelpful to talk about return on investment when it comes to training - increasingly, there's a sense that trying to apply this measurement to human development is missing the point. Besides which, linking training to things like customer retention and satisfaction is probably a bad idea during a recession, as there are so many other variables (negatively) affecting these results.

More relevant is the data on engagement. According to Watson Wyatt, companies with engaged employees have been found to outperform others by anything between 47% and 202%. What is the strongest determinant of engagement, according to most studies? The quality of managers has proved to be a key driver. So organisations that cease to invest in the quality of their leadership risk missing their numbers as well as their competitive position.

A 2008 study from the Best Companies programme reveals that in organisations that did not achieve accreditation, the number of staff who felt there were limited opportunities to learn and grow (37%) was almost double that of accredited companies.

Q. Will people really vote with their feet and seek jobs elsewhere because they are not receiving training (or proper leadership)?

A. The CIPD's Recruitment, retention and turnover 2008 survey showed that 80% of employers experienced retention difficulties this year (up from 69% two years ago). 41% of organisations had seen staff resign because of a lack of career development opportunities. This tells us two things: first, that many companies will still have unfilled positions, some of which may be essential, so streamlining and rigour in selection become critically important. And second, that people will jump ship when they are able if companies ignore their development. It may not be now, but perhaps when a company needs them most, when better times arrive.

On the topic of engagement, again, according to a study by the CEB and supported by Gallup data, engaged employees are 87% less likely to leave their jobs. Best Companies estimate that accredited companies have 13% less turnover than unsuccessful applicants. At a cost of approximately 1.5 times an employee's annual salary, recruiting into new positions can have a significant impact on a company's bottom line at a time when they need most to shore it up.

Q. What are some of the less obvious consequences when organisations revoke their commitment to people development?

A. Many organisations just expect their people to understand that cutting or capping development investment when times are hard is a necessary evil. But does this show respect for employees as 'the company's best asset'? Or does it, in fact, breed mistrust, cynicism and even resentment that their development has come to be viewed as a disposable expense, rather than a sustained commitment and a demonstration of loyalty?

This issue of respect is key in relation to leaders securing employees' discretionary effort when businesses most depend on it. Because there is likely to be less investment in the business in general during tough times, leaders will need to achieve more with less. If employees are disgruntled, they may time waste, clock watch, feed grist into the rumour mill and complain to their friends and family outside work. All of these things undermine the most meticulously built employer brand in the long term - as well as making for weaker performance right now.

Q. If companies have to make people redundant, isn't it inappropriate to spend money on training for those that remain?

A. An excellent study from Cranfield, from the last recession of the 1990's, explores this issue exhaustively. The authors explain: As a result of downsizing, employees are asked to take on a range of responsibilities for which they do not have any formal training or practical experience. [...] Downsizing generates a 'new breed of people', ie 'survivors', who are expected to work in a significantly changed and relatively hostile environment [...]. It also creates a motivational paradox: organisations downsize in order to work more efficiently and effectively. People are expected to perform a range of new tasks, be more creative, flexible and innovative but at the same time work in an alien organisation with work overload and increased job insecurity [...]. Under such circumstances, employees are unlikely to sustain high levels of performance and this results in decline in productivity. At the same time, customers are also becoming more demanding about the quality of goods and services. To enhance quality, one basic ingredient is high morale, the very element missing in an organisation that has downsized.

So, in fact, the evidence is that in the face of redundancies, there is a powerful financial rationale for training those who remain, as well as to preserve market share. People are stepping up to new responsibilities; they will simply have to do more; their success or failure will have a huge impact on the organisation and its customers.

"A new report suggests that when times are tough, it's even more important to develop internal talent...

"Nearly half of the companies who invest in staff training end up saving money, according to a new report by Cranfield School of Management, on behalf of government body learndirect. On the flip-side, the Sector Skills Development Agency says companies that don't bother with training at all are 2.5 times more likely to fail."

Management Today,
4th November 2008

Q. Surely successful leaders don't have to do anything differently in a downturn?

A. Guiding a business successfully through economically strained times requires skills that may not have been honed in the last 15 years of growth and global expansion. For starters, of course, providing clarity of purpose and vision are always important, but they become particularly important when a focus on a few key priorities, and on uniting the organisation behind them, is needed.

But it's getting to and sticking to these priorities that is so difficult for most leaders, and then not being distracted by them to the extent of becoming wholly focused on the task rather than the people and relationships around you.

Hard times need soft skills. When the innovative and exciting new opportunities that growth ignites are in short supply, leaders need to motivate and energise their staff with plenty of coaching and a strong sense of team - and frequent communication. Of course, data-driven decision-making, fiscal caution and tight resource management also remain essential. But coaching and communication skills may not have been used much when times were good, the momentum of growth and shared success compensating somewhat for their absence. Ignoring their importance now means accepting gradual slippage in morale, productivity and ultimately, profit.

Q. What happens when the 'bust' turns to 'boom'?

A. There is one thing that all economists agree upon - that this current climate is part of a cycle, and it will not last for ever. When buoyancy returns to the stock markets and consumer spending lifts again, the companies that have remained loyal to their people will reap the benefits. The respect paid to employees will run full circle back to the organisation. Wouldn't most CEOs want theirs to be among these 'good' and trusted companies?

In the last recession, cuts were made to the mid-level management tier, and to development at this level, which created some of the succession crises experienced by many global organisations - one of the reasons that talent management has been on every company's declared agenda since. The boom in executive coaching is also partly a consequence of this; people are finding themselves in senior positions without the core management skills they should have learnt on their way up in the last decade.

Companies that cut training in a downturn will be much slower in bouncing back when markets pick up. Market agility as a business and ability to respond to emerging customer needs depends on having appropriately skilled, well-motivated people who want to do their best for your organisation.

Q. What can HR do to keep the development momentum going?

A. Of course, HR must champion the interests of all employees in a way that's aligned with the newly focused interests of the organisation. So if, for example, the business has decided to focus on improving customer service to retain and grow its customer base, HR must not allow managers to stint on training in the required skills, and must ensure the right resources are available.

More than this, HR people must 'get their hands dirty'. Becoming qualified in one or more psychometric instruments enables HR professionals to deliver hard-hitting, situationally relevant and low-cost training interventions for a vast range of needs and applications. For example, the MBTI instrument will give them the tools to run teambuilds, resolve conflict, perform group coaching and enhance communication skills.

The FIRO-B® instrument will arm them to perform credibly in front of senior teams to ensure optimal performance when everyone is under pressure, as well as providing a powerful way in to one-to-one coaching discussions with its members. Speaking of which, either tool will equip them to help employees and leaders to manage stress and boost their resilience in times that are as testing personally as they are professionally.

The 16PF® will help HR professionals ensure that selection decisions, when they are needed, uncover potential and are future-proof, as much as satisfying present role requirements. Providing a good insight into the value of 'the whole person' can contribute positively to an organisation that might be at a low ebb. It will also provide the basis for L&D professionals to maintain high-quality, focused development support for 'high potentials' and future leaders, keeping the talent pipeline alive.

Best of all, these uncertain times present a real opportunity for HR to firmly establish a reputation for being business-focused and innovative, and for adding lasting value in a very visible way. Keeping the momentum of development (and good selection practices) going now is something your senior managers - and all your employees, alike - will thank you for both now and for years to come.