This week I had a call with five financial services clients to understand the impact of the economic slowdown on their learning, talent, and systems investments. How are HR, talent strategies, and enterprise learning investments being affected by the credit crunch and slowdown in the US financial system?
(The clients included companies in banking and insurance: TD Bank Financial Group, First Horizon National Corporation, BNY Mellon Asset Management, Manulife Financial, and Wachovia.)
I was encouraged to hear that none of these financial institutions is dramatically cutting its talent investments. In fact, each of these executives told me that their top executives continue to understand the need to maintain investments in people as the business slows. Most of these companies are, however, reducing expenses, including a freeze on travel and cutting back on large meetings and conferences. Some systems budgets are being pushed back. But for all these companies, existing staff and program investments are continuing.
A common theme expressed by the group is that these cycles have happened before, and that in every case where strategic talent investments were cut, the impact was dramatically negative. One executive mentioned that during the last slowdown, his company completely eliminated its leadership development program. As a result of this decision, management problems, employee dissatisfaction, and retention problems quickly grew. Today, four years later, the organization continues to rebuild the program. His comment: “We learned our lesson, and we will never do that again.”
Another trend to note is that technology investments continue. In fact, every one of these companies told us that they are working harder than ever to advance and improve the impact of their existing HR and learning technologies. Several of these organizations have large task forces in place (which include IT, HR, L&D, security, and compliance) to develop integrated strategies for online learning and workforce performance support. (This is completely consistent with our latest research on e-learning, and will be a major topic for our IMPACT 2008: The Business of Talent® Research Conference.)
Bottom line: Well run companies understand that business cycles are inevitable. (The financial services industry, which suffers economic downturns as hard as any industry, is one of the most sophisticated industries in talent management.) They have learned that talent and learning investments take years to develop, and these processes and systems create long term sustaining value. Even when business slows, the business must still hire, promote, and reward high performers.
For more information on this topic, please read Five Talent Management Strategies for a Business Downturn, published in February.