Lessons Learned from the Last Recession: Don’t Cut Management Training (For Long)

Twelve years ago, when the Great Recession hit and money got tight, businesses had to make cuts. And what was one of the first things to go? Management training and development.

The COVID-19 economic crisis is going to tempt business leaders to do the same thing, and I’m here to warn you: don’t repeat the mistake.

How do I know it was a mistake? Because for the last 7 years, my entire business has focused on helping companies pick up the pieces from slashing training budgets long ago.

Here are the types of companies who call us:

“Turnover has gotten worse year after year despite my efforts.”
“A positive, team-based culture isn’t thriving like we envisioned.”
“I can’t pinpoint exactly why people are leaving.”
“My company’s bottom line is suffering and we need to find a solution.”

As my team and I work with business leaders to diagnose the root cause of their increasing turnover, one common factor almost always surfaces. Most will admit that at some point, they cut management training and development for their supervisors at nearly all levels and then promoted people into those positions without giving them the tools to be successful.

Their reasons for cuts are all similar:

“We’ve got to reduce costs, and training is not essential right now.”
“Training takes people away from doing their jobs and our staff doesn’t have any spare time.”
“We take the ‘sink or swim’ approach. Good managers who get promoted will figure it out.”
“Our managers don’t need training — we just need employees with a better work ethic. These new hires just don’t want to work. Retention was fine until they got here.”

Any of these excuses sound familiar?

Why you need to keep management training

But there is another factor to consider. In fact, it’s the one reason you need to keep management training in your budget (or bring it back asap):

The #1 cause for unnecessary employee turnover is poor management.

Companies might save a few bucks by cutting their managers’ training now; but ultimately, they’ll spend much more in employee turnover costs that inevitably follow. Studies show that the total cost of losing an employee can range from tens of thousands of dollars to 1.5-2X of an employee’s annual salary.

Today, I’m petrified for so many businesses not simply because the pandemic has wreaked havoc on many budgets, but because what I’m hearing again is, “We’ve got to cut training and development this year” – at a time when managers and supervisors need more support and resources than ever.

Many managers don’t know how to manage remote workers or train new hires virtually. Some still avoid conflict and aren’t comfortable being transparent with their team. It wouldn’t be a surprise if a majority of managers are burned out and don’t know how to help themselves or their team members through this difficult time.

Now is not the time to cut management training

You need strong managers and must develop many to get there, or you will continue to watch talent you can’t afford to lose walk out the door.

Keep in mind, staff (and future candidates) will remember how leaders treated them during this difficult time, and the companies that will come out ahead in the end will be those who invested in their leaders’ abilities. Communication, trust, and leadership aren’t “soft” skills. They’re “critical” skills and they’re developed over time – much faster with effective training and coaching.

Depending on your industry, you may be busier than ever — you may be struggling to pay bills or you may simply be trying to hunker down and weather this storm. No matter the status, keep developing your employees. Continue providing resources, whether it’s free valuable articles or videos you can share or continuing more comprehensive planned leadership development programs.

And if you must cut the training budget for now, be sure there’s a plan to reinstate those committed dollars for future years. Make the case for investing in your leaders in order to stabilize staffing and maintain your productivity and profitability long term. Otherwise, you’ll be right back where all my current clients were when they called — wondering what happened and wishing they hadn’t cut one of the most critical components of their success. Or worse yet, closed for good.

Are you looking for free resources to help improve your management training? Check out this white paper, "Empowerment and Trust: The Keys to Employee Engagement."