Cost-cutting in lean times – and when it doesn’t make sense

When revenue slows or decreases it’s natural for businesses to think about reducing costs. In fact, it’s logical. Increased sales impact on your profit while cost savings will go straight to your bottom line.

But given that customer experience and employee satisfaction are inextricably linked, leaders and managers need to consider carefully where they cut costs and the message it might send. Neither customers or employees want to be involved with a ‘sinking ship’, whether that’s the reality or not.

Training is one of those expenditure areas that seems discretionary and is often one of the first budget lines to be cut (or worse – cut out) when times are tight. Training however is one of the key area’s businesses should maintain or better yet increase spending in, even in lean times. The well-planned spend here could result in savings and other benefits elsewhere.

The research is clear. Employees who are trained are more engaged, and employees who are both trained and engaged provide better customer service and higher levels of productivity. If there is limited business out there, the organisations that are top-of-mind and provide great customer experiences will be the ones that get the lion’s share.

They are also less likely to leave, saving you money on recruitment.

Investing in training at the entry-level:

  • supports future cost savings
  • addresses current and future skills needs, and
  • supports succession planning within your workforce, both directly and indirectly.

Waiting until the market is in full upswing before investing in training will likely cost you more in the long run, add additional pressure to the business as things transition, and even mean potentially missing out on business opportunities as they emerge.

Training for your own current and future skill needs through apprenticeships and traineeships means that you not only save money in the long run, but you build resilience into your business and enable it to ride out these economic cycles.

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