As we see the economy tighten up in many areas, companies need to be strategic and prudent with expenditure to ensure long-term effectiveness. So often one of the first budgets to get cut is the ‘people development’ budget. But is this a smart move or not?

There is little doubt we need to respect commercial realities, and if the business is not generating revenues at the business end, then it is pointless to argue for increased training spend. Yet, as Covey suggests – author of the ‘7 Habits of Highly Effective People’ book – P/PC balance sits at the heart of both personal and organisational effectiveness.

Not the PPC of the modern digital world, where we are told pay-per-click is the answer to our marketing woes – but where P/PC = Production x Productive Capacity.


Effectiveness v Profit

Coveys’ focus is on effectiveness, not profitability. He argues profit is only focused on ‘production’ (the first ‘p’ in the equation) and can be achieved through short-term cost cutting. This becomes a one-time only trick, and once the financial benefit has been realised in the here and now – the long-term impact can cause significant damage.

Effectiveness is about balancing short-term need with long-term need – be that for the organisation or the individual. In order to thrive long-term, organisations and individuals must always be aware of the need to invest in their ‘productive capability’ (the ‘pc’ of the equation)– i.e they must be constantly investing in the development of themselves and their people. After-all for many, our people are our most expensive, and important asset.

Planning for People Development in the tough times

So, if your ‘people development’ budget is coming under pressure consider these three simple steps to help rationalise your spend and maximise your impact:

Align: identify the key strategic initiatives that are running across the business, or sit at the heart of the business plan – and prioritise the training elements which support these initiatives. Sometimes you need to feel the pain of cutting the ‘nice to do’ initiatives – to preserve budget for the strategically important initiatives. Such alignment to key strategic objectives is likely to carry more weight with the CEO/FD.

Prioritise: the budget on those with the greatest need or the greatest potential. Remember the training is to support the long-term effectiveness of the business so focus the budget on training those whose skills/capabilities are a barrier to achieving the strategic objective, or those who are going to be key to the long-term success of the strategic initiative. The broader training plan can be revisited when the economic and financial environment eases.

Focus: on R.O.I. as opposed to cost. Choose interventions which you think will provide the best ROI, be they the tried and tested ways of old, or even new to the business. Look at ‘in-house’ solutions be that things delivered by people internally, or running an in-house course as opposed to sending people on public courses – you may just get more ‘bang for your buck’. If you need to address skills gaps, or help unlock potential consider options such as coaching and/or mentoring – the annual 2015 L&D survey by the CIPD found that over 75% of the respondents considered coaching & mentoring as a key intervention in their business.

P/PC Balance

Tough times require tough decisions – but try to ensure short-term financial constraints don’t cause long-term pain through simply failing to reinvest in your organisations or your personal productive capability. Remember Covey’s 7th habit was ‘Sharpening the Saw’, which is his nod to lifelong learning and constantly looking to invest in the development of yourself and your people

It seems obvious to say, but so often I see companies make decisions driven purely by short-termism. Indeed, I myself have fallen victim to this historically too. Often when our backs are against the wall and the pressure is on – our thinking becomes one-dimensional, and we make short term decisions in the absence of long-term logic. P/PC is a principle which sits as a simple reminder that the development of our people, and ourselves is a pre-requisite to both short-term and long-term effectiveness – and that investment in their, and your own development is of strategic importance in itself.

After all education is often the best form of defence!

P/PC – The Balance at the Heart of Organisational & Personal Effectiveness

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