Investment in Training and

Development in Times of
Uncertainty
-ANEERBAN ROY
-DEEPENDRA SINGH
-MOHIT KUMAR GAUTAM
-KRISHNAPRASAD RAJASEKHARAN
-JIT SENGUPTA
Background

 2008 : Global economic Crisis.

 In a 2009 survey by the Institute of Directors (IoD; United Kingdom), 80% of
Directors reported that their organizations had either maintained (51%) or
increased (29%) investment in T&D over the past 6 months, with just 20%
reporting they had been forced to reduce this investment.

 2013 survey findings was that median training budgets and training hours per
employee had both declined.

 These findings suggest that despite firms’ initial intentions to sustain T&D
investment, ongoing uncertainty and weak economic growth may have forced
initial plans to be revised
Scope of the Study

 how environmental (macroeconomic) and product

market (microeconomic) uncertainty in the immediate
aftermath of the 2008 crisis affected changes to T&D
investment over the period 2009/10-2012
 Focus on General uncertainty and product specific
uncertainty
 Focus on General T&D and Firm specific T&D
Hypothesis

 Hypothesis 1: Negative Relation between macro &

product specific economic decline and T&D
investment.

 Hypothesis 2: The expected negative association will

be greater for (a) general T&D compared with (b)
firm-specific T&D.
Findings

 Overall T&D Investment

 Declined in 51.3% companies
 Increased in 43.5% companies
 Stayed same in 5.2% Companies
How uncertainty Affects T&D

 In “high uncertainty” category, their overall T&D

investment fell by 19.3%, with a fall of 27.8% in
general T&D and 12.5% for firm specific training
 In “low uncertainty” category, their overall T&D
investment increased by 5.3%, with an increase in
general T&D of 10.5% and firm- specific T&D by
4.8%
Take Aways

 HRD Managers need to try and preserve General T&D

during financial turbulence
 Lackof effort towards General T&D shows lack of
commitment towards employee’s development
 Change Accounting of T&D costs as investment rather
than Expenditure
Scope for T&D Evaluation

 There is scope for Phillip’s ROI methodology to

evaluate returns on T&D Investment

 Provides common methodology that can be replicated

across various companies and can be validated
Advantages

 Get a dataset/reference on various T&D activities

 takedynamical decisions about various T&D activities

based on prevailing economic conditions
Disadvantages

 High consumption of time and resources during

economic turndown

 May not be feasible for large number of T&D

programs (max 10%)
Suggestions

 Carry out analyses and invest in T&D with higher ROI

view scant resources

 A dynamic as well as flexible HR System should be

developed where Investment should be made to T&D
activities during uncertainty
Suggestions

 Train/sensitise
Accountants in HRD evaluation and
change the accounting to Investment rather than sunk
cost.

 Sensitise management on gains from General and skill

specific T&D especially improved employee morale
and efficiency.
Suggestions

 Increase Investment in Skill based T&D programs that

promote critical thinking and innovation, solution
finding.

 Create training environment conducive to exploring

new ideas without risk of censure
Replication for Indian Scenario

Include PSUs/Private Companies for comparison

Interview
at 6 levels to enable better understanding - MD,
CFO, Marketing Head, Operations Head, HR Manager and
Line Manager.

Virtual
meetings in view of COVID protocol and online
questionnaires can be used to collect quantitative data from
representative samples.
Variables to Consider

 InControl Variable- Size of the Company, capital

Investment, Sales per Employee, Trade Union Density
along with Environmental (PSTEL) and Demographic
Factors or Region centric variable (Perception, attitude,
Style of working etc. etc.) should be taken into account
keeping economic condition (GDP) constant.

 Forother Part of the study i.e. measures of T&D

Investment and Hypothesis Testing - no change is required.
Thank you