Danger!  Economic Recovery Ahead.

by J Hruby, Director of Marketing

I hate to pile more bad news onto what has essentially been two years of almost constant economic bad news, but here it goes: We could be on the verge of an economic recovery.

Bad news? Isn’t a recovery what we’ve been waiting for?

There’s absolutely nothing wrong with an economic recovery. At the same time, like any economic event, those who are most prepared will reap more of the benefits. How many leaders of learning organizations, or leaders of any other area in business for that matter, have spent any time at all preparing for an upcoming economic recovery?

As Shakespeare’s Hamlet said, “Ay, there’s the rub.”

Over the past two years, an inordinate amount of time and energy has been devoted to planning for and reacting to an ever-deepening recession. Learning-related groups on social networking sites like LinkedIn and LearningTown have been filled with discussions about how learning, training, and development professionals have been handling the recession.

Yet as the recovery looms ever larger, there’s been a severe shortage of discussion about how to plan for a recovery. There seems to be a planning disparity whereby a recession is an event that prompts specific thought and strategic planning, but an economic recovery is supposed to take care of itself.

The question of how to respond to a recovery that’s gathering steam will be a very real business problem as we progress through 2009. True leaders are built for change. Dr. John Kotter, author of the bestseller Leading Change, puts it this way in his book What Leaders Really Do:

“Management is about coping with complexity. … Leadership, by contrast, is about coping with change. Managers promote stability while Leaders press for change; and only organizations that embrace both sides of that contradiction can thrive in turbulent times.”

As with any change in business, the best time to have a plan in place is before you need to act on it, and planning takes leadership. It might seem especially counterintuitive now, after so many months of bad news, but the best time to plan for the learning organization’s role in the coming recovery is now—while we’re still in a recession. Why? Follow me.

A brief history of hard times

To understand why planning for a recovery is worth thinking about now, we need to look at the history of recessions and the signs of recovery. Like economists, history can’t give us an exact answer to the question of when the recession will end. But if we combine the historical view with recent signs of a coming recovery, we can make a strong case for better times being on the horizon and therefore the recovery planning clock is ticking.

First, the historical view. According to those who have the dubious distinction of tracking everything recession-related—The National Bureau of Economic Research (NBER)—the current recession officially began in December of 2007. So the Great Recession is now about 17 months old.

This begs the question, how long does the average recession last? It depends on what period of time you consider, of course. If we look at recessions from 1900 to present, the NBER data show that the average recession lasts 14.4 months. So this recession is worse than the average for the past century, but it’s still not even close to the Great Depression, which lasted for 43 months. Despite the dire predictions from cable news pundits over the past year, there is a strong consensus that we are not destined to repeat the Great Depression. At least not this time.

Taking a step beyond just historical averages, there is a case for optimism because consensus is building that the end of the recession is in sight. If the recent news is still not exactly good, then at least it’s becoming not-as-bad. The view of Federal Reserve chairman Ben Bernanke is that the current recession will begin to ease in late 2009. This has given Wall Street a boost, the crisis in the banking and financial sector has begun to stabilize, the gloomy real estate market is showing signs of life, and job losses have slowed.

Interpreting these events is still an exercise in reading tea leaves, but the doom-and-gloom is gradually being replaced with a view that even if we aren’t yet on the upswing, at least we’ve found the bottom.

Regardless of whether you believe the end of the recession is two, six, or ten months away, that still leaves the fact that like a recession, an economic recovery is a significant business event and deserves careful planning. As a leader in the business of learning, do you have a plan for when happy days are here again?

Ready for recovery?

Unfortunately, during recessions training and development groups tend to take their share of the hit. These cutbacks come in the form of reduced headcount, reduced budgets, reduced training offerings, and reduced external spending—or a combination of all of these.

According to the Learning Resources Barometer survey conducted by The MASIE Center in March 2009, 62% of learning organizations have experienced budget cuts. The same survey shows that 36% of respondents say the size of their learning group has decreased, while only 13% have seen their group size increase.

For companies who serve these learning groups, the news isn’t any better. A full 60% of respondents say their organizations have reduced spending on external services either moderately or substantially. This means the pain has been shared by everyone who has a stake in the business of learning and development.

During tough economic times the discussion centers on what to do to preserve the training function and minimize the impact of the recession. There have been countless articles and endless time given over to discussions of the what-to-do-during-a-recession variety. The general advice centers around becoming part of the strategic planning process, working on high-profile initiatives linked to helping the company through the tough times, staying visible, and demonstrating the value of training in terms of business results.

In our post-recession relief, we need to grant equal time to an equally important discussion: what should learning leaders do to help their organization respond to an economic recovery?

An upturn for learning

The response to an economic upturn will be different for each organization, but as you begin to build your recovery strategy for learning, consider the following questions:

How will the organization’s overall strategy and key priorities change when the recovery starts?
Of course, the related question for the learning leader is how will your group’s priorities be aligned with these changes? The clear alignment of business and learning priorities is always important, but it takes on even more significance coming out of a deep recession.

Are your learning group’s priorities “shovel ready”?
It’s likely that just as there is competition for the organization’s attention and resources in lean times, there will be an equal amount of competition as the recovery takes hold. Resources may become less constrained, but there will be lots of competition in the form of pent-up demand.

Having a clearly defined strategy and set of priorities, as well as having the business case ready for these priorities, will help speed the process of obtaining the resources your group will need to scale up to the demands of more prosperous times.

What should your learning organization look like after the recovery?
There’s no way to dance around the unfortunate reality that this recession has decimated many learning organizations. As difficult as that reality has been, it presents both a challenge and an opportunity for leaders who are faced with rebuilding a hard-hit learning organization.

For some learning groups, the goal will be to simply rebuild what they had before, but for others this will be an opportunity to evaluate the future needs and bring in skill sets that are better aligned with the new direction. This is another reason why planning for the recovery is important. To make strategic hiring decisions, you first need a strategy.

Own or rent?
This isn’t in reference to real estate — it’s about staffing your learning group. While you’re deciding what your new organization will look like, ask yourself these questions for each role you’re considering staffing:

• Does it really make sense to have an employee doing this?
• Would it be done more efficiently and effectively by outsourcing it or by bringing in specialized staff on an as-needed basis?
• Is it likely that I’ll be able to hire someone with the skill set I want and at a salary that I can afford both now and in the future?
• What do I do to fill the need while I conduct the search?

For some roles, it may make sense to set aside the model of having your learning group be comprised solely of employees. Skill sets like LMS administration have become highly specialized and technical while at the same time being prone to workload peaks and valleys. It may make more sense to contract for this skill set on an as-needed basis rather than make it someone’s full-time job.

Time to get (re)organized?
This also may be the time to take on the difficult battle to either centralize or decentralize learning functions within your organization. Neither of these reorganizations is an easy transition, but they won’t get any easier as the pace of the recovery quickens and the focus turns from cutting costs and headcount to maximizing sales and profits.

Does it still make sense?
For some initiatives like cutting costs and maximizing efficiency, the answer will still be a resounding “yes.” If you embarked on a mission to replace a travel-intensive, high-cost classroom training curriculum with virtual classroom and eLearning offerings during the recession, why stop now? Qualities like efficiency and effectiveness never go out of style. If you had a good strategy during the recession, the new strategy shouldn’t involve a total overhaul. Some good ideas are independent of the prevailing economic wind.

Did you remember to remember?
Hopefully, the coming recovery will lead to a long period of economic growth. Just how long, however, is anyone’s guess.

Make a commitment to writing down the lessons learned and the things you wish you would have done during this recession, so you can refer to them or share them with others during the next period of challenging times. Experience is one of the most valuable tools that leaders have, and unfortunately this recession has taught us many tough lessons. These will be the lessons most worth remembering.

The recovery starts now

This issue of planning for the recovery should take on even more urgency because this recovery will certainly not be like past recoveries. Many industries have seen massive consolidation and the competitors that have survived will be hungry. They could also be in a stronger competitive position due to acquisitions, consolidations, or other factors. There will also be many changes to the legal and regulatory climate in many industries. The financial sector, for example, will have to adapt to new regulations for years to come, and training will certainly need to be a part of that process of change. Essentially, the only thing we really know about the coming recovery is that for most organizations it will not be simply a matter of resuming business as usual.

Just as a recession presents challenges, so too does a recovery. Having a planned response ready in advance will always be an advantage. Learning organizations that are (or want to become) a part of their company’s competitive advantage will need to quickly transition from survival mode to a position where they can rapidly engage in helping their organization make the most of the recovery ahead.

Now let’s hear from you. Post your comments, questions, or other feedback on this article to the Learning Leadership Summit blog.