28 July Cost Control in a Stable Business (...ounce...)

[Paul Terlemezian]

The assertion here is that in order to maintain profitability that a company must assure that it can decrease costs as revenue decreases.

 

The problem for the training industry is that when times are good - companies are too busy to be trained and that when times are bad they do not have the money to be trained.

 

Taking the "problem" a step further - what happens if in fact the problems are related to shifts in the business that require training to be implemented. I've seen the following"

 

1. Training is cut and the company continues a downward spriral as the most talented people leave (it's easier for them to gain employment because of their talent.)

 

2. The size of the workforce is reduced and some of the associated reduction in cost is invested in providing training to some portion of the remaining workforce.

 

3. Everything is "frozen" (hiring, discretionary costs (e.g. travel and training), firing, marketing) and a zero-based budgeting approach is taken towards approval of exceptions.

 

What other ideas could be implemented? Would any of the following work?

 

1. Create "Corporate Training Savings Accounts" that would allow for corporations to set aside funds during good times (i.e. "shelter" current profits) that would allow the funds to be used in future periods only for employee training.

 

2. Redesigning training with an emphasis on immediate results. The focus on the activities would include i"in class" application of skills and measurement of results compared to those that were not participating. For example; A class on sales prospecting techniques that would include a period of actual prospecting activities and a comparison of immediate, short term and long term results to the past performance of the employee as well as to peers.

 

3. Classification of training programs as expenses (near term results) or investments (long term results.) Near term investments would need to be substantiated by proof of results. Long term investments could be capitalized.

 

Your thoughts?