Despite staff cutbacks, many companies are still committed to training

In tough times, you'd think the first thing companies would cut back on is training.

Nationally, $210 billion is spent by U.S. firms for employee training, money that could be spent elsewhere.


But instead of cutting their training budgets, many major companies, even those reducing their staffs, are keeping training budgets intact. Some are even increasing them.

The reason: to keep abreast of rapid technological changes and competition from global markets.


In a survey by the American Society for Training and Development of 220 senior human resource development executives at the nation's top companies, 70 percent reported their budgets are the same as last year.

Of the 80 percent who described their companies as being hit "very hard" by the recession, 40 percent say there has been no change in training budgets, 30 percent report an increase and 30 percent report a decrease.

The largest budget increases, the survey shows, have gone to fund new programs in quality management, management development and computer training.

Among the companies focusing on quality management while undergoing major staff cuts are Aetna Insurance, Amoco, Federal Express, IBM, Unisys and Xerox.

And, when the recession ends, 71 percent of the executives expect training dollars to increase, 20 percent say budgets will remain the same and 7 percent predict a decrease. (Two percent could not make a prediction.)

"Even companies undergoing major cutbacks are using training to drive the changes they believe necessary to compete more successfully," said Curtis E. Plott, executive vice president of the American Society for Training and Development.

Mr. Plott notes that in the 1982 recession, "training was cut disproportionately because it was less valued by executives. But now they are getting the message that a highly skilled work force is an integral part of helping a company compete in a changing marketplace."

Training once was confined to company superachievers, but that, too, has changed, Mr. Plott says. "It's an enlightened CEO who recognizes the value of upgrading the skills of the entire work force. The new technology and the new way of organization of the workplace drive a constant need for upgrading the skills of employees at all levels."


The importance of continuous training and development programs -- for employers and employees -- is apparent at Household International Inc., a financial services firm based in Illinois.

The company, which owns Household Finance Corp., specializes in consumer finance and banking, commercial finance and life insurance. It has 11,807 employees in 650 locations.

Although profits have fallen this year, not only has Household's training budget held steady, but it also has impressive plans for expansion of development programs.

It is starting an electronic, desk-top job posting system for all employees. It is expanding its computerized data base of skills of each employee. And, in November, Household will open a $3.2 million training center.

"We could take a narrow, short-term view and pull back on training," said Steve Gonabe, director of management development and training. "But we see a strategic, competitive advantage in spending money on training, even in difficult times. "

Mr. Gonabe's management training division has a budget of $500,000 and a staff of nine and keeps adding courses. Emphasis on training also affects retention of employees, he notes.


"In 1990, the overall turnover was 33 percent; in 1991, it was 31 percent; and, in the first six months of 1992, it's at 12 percent," he said. "That saves money in outplacement, severance, hiring and retraining costs."