Economic forecasting predicts the UK economy is set to follow the global trend and fall into recession during 2023, impacting people development strategies across all industries and sectors. Our Workplace Training Report 2023 has identified the financial constraints and budgeting restrictions being felt by senior HR leaders and how to navigate skills development strategy during a recession.
Fears of a recession have left UK business confidence worryingly low, and it is understandable that business owners look to find quick fixes when economic uncertainty looms. Recession is upon us, and understanding its impact on your budgets and your people is important to move forward effectively.
Understandably, businesses look to freeze budgets and minimise spending to combat recession. For learning and development teams, that will mean less money to spend and a more creative approach required to meet goals and targets.
Our research surveyed senior HR leaders in the UK, showing that three quarters (75%) have found that the growing economic uncertainty has impacted their companies learning and development (L&D) strategy for 2022-23. More specifically, the main impacts are budget cuts for workplace training (48%), recruitment impacts on not being able to find the right skills or talent (46%) and stretched teams who do not have time to undertake workplace training (39%).
However, our research also shows that L&D is vital to weathering the storm and finding a pathway through the recession. 53% of respondents confirmed that future-proofing employees with new skills is the main way L&D teams can help mitigate the issues caused by recession. Other ideas include developing internal resources (45%), improving employee morale (44%) and developing their employer brand to recruit people with the right skills (37%).
L&D can’t simply cease to exist due to a recession. In fact, by offering training and reskilling opportunities to existing employees, you may avoid the risk of losing your best talent and the costs of a new recruitment drive.
HR departments are also seeing their budgets impacted, with Talent 2 and Ipsos’ research showing 95% of businesses are either freezing or decreasing their annual HR budget.
It is more vital than ever that your organisation offers added value to its employees in tangible ways, such as training and benefits.
A survey by the Money and Mental Health Policy Institute found that 59% of adults thought the cost-of-living crisis was harming their mental health, with 20% saying the pressure was so much they felt “unable to cope”. This stress level is bound to impact employee well-being, making it vitally important for organisations to support their people in any way they can.
Building a company culture around caring for and supporting your employees is an attractive proposition to new hires and means your existing employees are also less likely to leave. Retaining your employees is a key priority in a recession, as hiring new talent is expensive and difficult to do in a time where there are record-high vacancies reaching nearly 31.9million.
Let’s look more closely at how investing in your people is an effective solution for weathering the storm of recession.
Positioning your people strategy for 2023 has never been more important. If you get this right as a business, you will experience employee retention and business growth. Our recent research surveyed 500 senior HR leaders across several topics, including financial constraints. We found 75% of senior HR leaders believe that the growing economic uncertainty impacted their company’s learning and development strategy for 2023, and 27% of these leaders described this impact as significant. Regarding budget availability, 49% have confirmed they will be spending less on learning and development over the coming year.
With less money to spend, it is vital to approach your people strategy creatively, making the most of the resources you do have available to you. You need to build your employee engagement and ensure your people feel valued, motivated and content in their roles within your organisation. PwC research shows UK CEOs are recognising the importance of employee engagement as a method for holding themselves accountable. 74% of CEOs are upskilling their workforce in key areas, reinforcing this resolute focus on talent and its importance for driving your people strategy.
Creating a strategy which gives your people opportunities to develop and build their skills and the chance to progress will motivate them, ensuring they are not drawn away by other potential employers. Managing employee expectations and meeting their needs is trickier with
recession-driven budget constraints, but there are solutions.
Not maximising the value of the Apprenticeship Levy is not uncommon in businesses around the country. FT.com reports that since 2019, employers have surrendered more than £3.3bn to the UK Treasury in levy cash they could not spend. Furthermore, this clawback in funding came at a time when we saw a 72% drop in entry-level apprenticeships in England and a 59% drop in apprenticeship starts in those aged 18 and under.
The Institute of Student Employers 2022 Development Survey found that, on average, respondents were spending 47% of their apprenticeship levy. This is the highest average spending they have ever reported and shows organisations recognise how valuable this funding can be. An accessible pot of funding to boost your development budget is not something any recession-hit business can afford to ignore.
Not using your levy funding will only serve to negatively impact your business. However, we understand that not all organisations have a plan for or know how to effectively utilise their funding. Knowing how to use your levy is just as important as actually using it. We partner with organisations across the UK and manage their levy funding to access the most suitable programmes. Our development programmes are levy-funded and can be used strategically to empower your people and upskill your workforce during recession.
Our award-winning delivery method allows you to use the Apprenticeship Levy to provide your people with the development they crave when budgets may not allow it. Our approach ensures you can access programmes that suit your business and your people, with our personalised, blended delivery model built around learners and designed to fit into work schedules. Programmes in Leadership and Management, Data and Digital and Tech for all levels of competence and skill are designed to develop your existing workforce at scale and be inclusive, so there are options for employees within your business at different stages in their careers.
As the figures from The Financial Times show, if funding isn’t used, it returns to the government’s coffers. In difficult economic times, businesses should act to maximise the value of all funding available.
Levy-funding training programmes ensure your people do not have to miss out on their development opportunities due to the economic climate. L&D and HR managers do not need to worry about the cost or bottom line, and the quality of training remains high.