Does the fall in student development spend demonstrate an ability to find efficiencies or a new period of austerity in budgeting? ISE’s Tristram Hooley investigates.

Over the last year organisations have reworked their approach to student development and training substantially.

In response to the pandemic and the lockdown, this year’s ISE Student Development Survey shows learning and development programmes as well as management and mentoring shifting online. One consequence of this shift has been a substantial drop in the amount that firms are spending.

In last year’s survey ISE members reported that they were spending an average of £5,739 on the development of every new hire that they recruited. This year the figure had plummeted by over £2000 to a more modest £3,054.

Now, it is important not to over-react, there are all sorts of reasons why this figure could have dropped, and the new figure is still a substantial training budget, but it is worth considering why this has happened and what it really means for the long term.

Why are employers spending less?

The 2020/2021 cycle was a strange and unusual time for all of us. Overall, we saw student recruitment levels declining, staff being put onto furlough or made redundant and a complete transformation in the way that work is organised in many businesses.

Any of these factors could have shifted both the need for and the capability of providing meaningful and useful training and development.

Almost half (42%) of respondents to the survey reported that Covid had seen them spending less than they otherwise would have done on student development and training. They reported that the main reasons for the reduction in costs were the:

• decline in the overall number of staff recruited resulting in the need for less development;
• making some existing staff redundant;
• reduction of venue and event costs;
• reduction of travel and accommodation costs for both early career staff and trainers;
• cancellation or postponement of development programmes;
• cancellation of outdoor learning activities;
• loss of a social programme for early career hires; and
• loss of the possibility of international secondments.

On the other hand, organisations also invested in new digital approaches to delivering learning and development.

Many of these reasons for the reduction in spend point to increased efficiency, or at least to lower costs. A lot of the things that we thought were essential to effective development programmes (e.g. pastries at the start of the day and travelling to a nice training facility) prove to be at best a ‘nice-to-have’. The shift to digital has shown that in many cases organisations can achieve similar outcomes with student development and training organised differently and at a lower cost.

But, there are also some worrying sign in the survey. Some respondents reported that their organisation or their department was under increasing financial pressure as the business environment deteriorated. In a period when firms are furloughing or laying off staff it can be difficult to argue for investment in student development.

Does this matter?

A slimming down of large organisations’ training budget is unlikely to garner many headlines. ISE members are still putting their money where their mouth is and investing in student development and training. If the pandemic has led to innovations that have resulted in cost-savings, that is probably a good thing.

A lot of firms have been sitting on under-utilised e-learning technology for years and Covid-19 has finally forced them to figure out what to do with it. Many respondents to the survey highlighted the benefits that new, digital approaches had brought to their student development programmes.

Training and development has become more flexible, new opportunities have been opened up for online communication and collaboration and savings have been found both in terms of student development spend, but more importantly in terms of the time of early career hires, their managers and the learning and development departments that support them.

But, there are also some big question marks about what this means for the long term. Training and development is often an easy cost-saving to make, but disinvesting can damage an organisation’s long-term prospects.

Trimming development costs may help when budgets get tight, but it is ultimately a reduction of the human capital that an organisation has available to help it to climb out of periods of recession and take advantages of the opportunities that renewed growth will bring.

What is particularly worrying is that a series of short term, expedient decisions to cancel venues and deliver online during the 2020/2021 cycle may be used to define the budgets necessary to deliver training and development in the future. But, as we all know, the last year was an anomaly and so it could be dangerous to base long-term budgeting on it.

Once again, the pandemic offers us both opportunities and pitfalls. Covid has undoubtedly driven innovation in development programmes, but organisations should be cautious not to move forward into the new normal with a cut-price approach to learning and development.

Read more analysis on the ISE Student Development Survey 2021:

ISE Survey – Skills: Are students ready for the Covid workplace?

Sneak preview: Student Development Survey 2021

ISE Student Development Conference 2021: delegates can access the session recordings for two weeks after the event.