The Secret Ingredient to Thriving in a Recession? Employee Training
The economists agree: An economic downturn may be coming in 2023. While that’s not exactly good news, there is a silver lining. Moments of economic turbulence can also give our organizations opportunities to shine — if we know how to seize them.
According to a recent brief from Bain & Company, organizations stand to make more dramatic gains during slowdowns if they play their cards right. Bain’s research found that there are 47 percent more “rising star” companies during downturns than during stable economic periods. (Rising star companies are defined as those companies that move from the bottom quartile to the top half in their industries in terms of operating margin percentage.)
So what can an organization do to become a rising star? I’m glad you asked. Bain highlights a few key actions, including smart cost restructuring, pursuing M&A opportunities, and — perhaps most importantly — maintaining a strong customer focus. If we can remember, these are the same key attributes of many companies that thrived during the early days of the global pandemic.
Remaining focused on customers means continuing to invest in things that are proven to drive customer satisfaction — things like employee retention and engagement and environmental, social, and governance (ESG) practices. Training programs represent a powerful way to influence engagement, ESG, and customer satisfaction.
It’s no surprise that we believe investing in training and employee learning during a recession can help your organization become one of the downturn’s rising stars. But it’s true!
Training Drives Engagement and Engagement Drives Customer Satisfaction
Customer churn tends to increase during a recession. Customers are feeling the economic pressure, and that spurs them to reassess their spending. But that churn isn’t inevitable. As Bain notes, customer loyalty can be lost or earned in a downturn. You just have to prove your products and services are necessary, valuable, and worth the price, even in hard times. The people—your employees—delivering your products and services are critical to making that case.
According to Gallup, employee engagement is directly and inextricably linked to customer satisfaction. On average, the most engaged teams have 10 percent higher customer ratings, 22 percent higher profitability, and 21 percent higher productivity than the least engaged teams. And training is one of the key drivers of employee engagement. According to researcher Bob Nelson, career development opportunities are second only to employee recognition in terms of their influence on employee engagement. In a very real way, investing in employee training means investing in your customers: training leads to engagement, engagement leads to customer satisfaction, and customer satisfaction leads to loyalty.
Unfortunately, training budgets are often among the first things to be slashed during downturns. While companies may have to tighten the purse strings , history suggests it’s a mistake to do away with employee development entirely. As Barbara Dickson, former director of custom executive development programs at Queen’s University’s School of Business, said during the last major recession, “You’ve got to make sure that you’ve got people who are trained and ready to respond to the challenges ahead of them. You can’t just shut down the doors because the economy is bad.”
According to Harvard Business Review, 86 percent of professionals would leave their jobs for a company that offered more development opportunities. On the flip side, according to Deloitte, a strong learning culture can boost retention rates by 30-50 percent. Not only would losing some of your star players hinder your company during a recession, but it can also set you back when the recovery comes. So, put simply, continued training boosts employee engagement and ensures your people have the skills they need to continue serving customers at a high level during a recession. On the other hand, deprioritizing training may leave people ill-prepared to handle the inevitable speed bumps of a downturn — and it may even cause some of your top talent to leave.
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ESG Drives Purpose During a Recession
Environmental, social, and governance (ESG) initiatives are another area that organizations may be tempted to cut during a recession, but that would run contrary to Bain’s recommendations on maintaining a customer focus. ESG, like employee engagement, is tied to customer satisfaction. According to research from PwC, consumers are more likely to buy from companies with strong ESG commitments, and those feelings have only strengthened since the pandemic. Seventy-six percent of consumers also reported to PwC that they’d stop buying from companies that treat employees, communities, and the environment poorly.
Consider how maintaining a commitment to ESG during the early days of the pandemic paid off for companies like Target, which increased hourly employee pay, expanded paid sick leave, and even gave high-risk employees 30 days of paid time off. When many organizations were hurting, Target saw store sales increase by 20.5 percent, digital sales grow by 118 percent, and same-day pick-up and shipping services grow by 235 percent.
Research also suggests companies that remain committed to ESG initiatives during recessions fare better than their competitors. As Martin Whittaker, CEO of JUST Capital, points out, studies show that “high sustainability” firms outperformed their counterparts between 1993 and 2010, including during downturns.
Companies that maintain ESG efforts even in the face of a downturn have a tremendous opportunity to win customer loyalty and make an impact on the world — and training can help these ESG initiatives succeed. With the right ESG training, companies raise awareness of their efforts among employees and enlist their assistance in furthering ESG goals through the everyday activities they take on behalf of the company.
Effective Training Doesn’t Have to Be Expensive
So what kind of training are we talking about exactly? Varying kinds of training may be important for your business during a downturn: technical training to ensure your people have the hard skills they need, business and leadership skills training to equip your people to respond to new and unexpected challenges, and compliance and ESG training to enable your people to stay safe and support your company’s mission. But how can an organization continue to deliver such a wide array of training to employees if a recession forces spending cuts?
That’s where a solution like Skillsoft can help. Skillsoft offers a broad range of content — covering technology and developer skills, business and leadership skills, and ESG and compliance topics — all in one digital, on-demand, AI-powered platform. Skillsoft enables companies to have a much more cost-effective option for trainings than trying to source all that training separately.
Skillsoft’s expansive content library means that no matter what a company’s business and ESG goals may be, employees can find relevant courses and learning experiences. That’s especially salient for ESG topics, which are often highly unique to each business. Skillsoft’s compliance library covers more than 500 legal and safety topics like business ethics; diversity, equity, and inclusion (DEI); and environmental health and safety.
And our content is proven to drive results. According to a new study from Forrester Consulting, organizations using Skillsoft’s compliance training portfolio have cut their company risk ratings by as much as half. Employees are more engaged in the training and able to retain more of what they learn, meaning they’re better able to adhere to safety standards and support ESG efforts. As one technical learning and development specialist said, “From a compliance perspective, the industry average engagement is about 50-60 percent, but we consistently fare above 80 percent.”
According to research published in Harvard Business Review, the companies that win recessions are the ones that “master the delicate balance between cutting costs to survive today and investing to grow tomorrow.” Skillsoft can help you keep costs low while engaging employees and supporting robust ESG commitments. That, in turn, drives higher customer satisfaction and stronger company performance, no matter which way the economic winds are blowing.
Learn more about how Skillsoft can help your people and your organization grow together. Request a demo today.