The financial crisis which has been stamping on the world for the last couple of years has also pulled down the training market. Companies have cut costs on the human resources side, including training costs. For a short period of time, this restrictive measure can be useful, but on the medium and the long term, it can be dangerous. What could training mean for a healthy company focusing on profitability?

Training employees is one of the main sources of profit of a company, next to clear organizational culture, strategies, coherent policies and performing management. Company managers should be aware that the results of a training session aren’t immediate but, as part of professional and high quality human resources policies, training can lead to productivity improvement and, consequently to profit. To support this idea I’d like to focus on a concrete example: the professional training in the banking system.

A few years ago, in the good old financial times, banks used to spend a lot of money on training. The good part of it was that it started to create a new, modern and well educated banking staff. Technical and the soft skills training developed the professional and behavioral components of the banking employee. The main problem was the lack of coherent training policies, but, the training programs did provide useul new insights for the banking sector.

Along with the financial crisis, at least something else alarming happened in the financial system: a decrease in quality of the banking staff which generated, along with other factors, of course, a drop in bank profitability. The weak quality of banking staff is a result of a group of factors but, among them are the dramatic cut in spending on training. Banks cut training costs almost completely and the staff lost the opportunity to develop professionally. Ultimately, banks focusing on the profit per se gave up focusing on those bringing the profit. The effect is day by day more visible. Take for instance the new banking scandal which involves 16 banking branches from various banks demonstrated at least the lack of professional training of the staff in technical and legal fields as well as in banking ethics.

If the banks want to improve their profits, they should focus more on the people bringing profit and they should deal better with the professional and human development of their staff. How can banks do this? They can use this period as an opportunity to train or to encourage people to improve their professional skills, ensuring in this way a better future for companies and their staff. In my opinion, some of the main potential measures could be having a clear and professional human resources policy and career path, as well as making a balanced mix between salary policy, training policy and the performance indicators. Banks could also try to accomplish a real and professional training needs analysis, taking into account the quantity, the quality and the structure of the staff and respecting the strategy of the bank and the market conditions. They should also design a clear and coherent training plan based on the concrete situation of the bank and the market and make sure the staff has proper conditions for personal training and development.

And last but not the least, they should encourage staff to focus on professional and personal development. If banks have clear and coherent human resources policies, then they can lead their employees into being interested in the lifelong learning process and then many of the bank employees will spend their personal resources on learning/training and, in this way, an important part the financial burden will be supported by the employees themselves.

The company will gain at least two things: good staff from a professional perspective and reduced training costs . The only thing needed is to accept the determinant role of the human capital as the main driver of profit in the life of the company.

My example is only one of many. In their fight against the damaging effects of the financial crisis, companies focused too much on cutting costs in one of the most sensitive and seismic areas: human resources. If companies demotivate employees on personal and professional development, it will become visible, in the medium term. They will see a decrease of the quality of their products/activities and worse financial indicators. These cuts will have the reverse effect and to re-build what was destroyed will take more time, more effort and in the end, much more money.

By Mariana Ganea, Guest Writer

(photo source: sxc.hu)