Making Your L&D Budget Recession Proof: 7 Strategies to Take Now

Unfortunately, when it’s time to reduce budgets, learning is often the first budget to go.

By Patti P. Phillips, Ph.D., and Jack J. Phillips, Ph.D.

There has been much talk about a recession. Most experts predict it, but the reality is that the recession discussion is a detriment to the economy, creating anxiety across organizations of all sizes. Executives react as if a recession is imminent by cutting budgets, delaying projects, deferring expenses, and reducing staff. This environment leads to scrutiny of all budgets, including the learning and development budget. That's already underway in most organizations.

The dilemma with the L&D budget is that learning is actually the best solution when there is a problem, at least from the executive perception. They often say, "If something is wrong, train them." However, when it comes time to reduce budgets, learning is often the first budget to go.

We have collected data from more than 1,000 L&D respondents about what is causing this, asking them if they mostly agree or disagree with certain statements. The summary of that survey is frustrating. We have not done a good job of showing the value of L&D programs with data that executives want to see.

The number one measure they want to see is a business impact. Number two is ROI. We admit that most learning is wasted. Not used. Also, we rarely have data that shows that we make a difference with learning programs. To make a difference means that participants must use the content and have an impact.

On top of that, most executives see learning as a cost, not an investment. When this is the case, they cut costs to save resources. So, what can you do? Here are some actions to take to try to protect the budget.  

• Align your programs to the business. Business alignment is needed at the beginning of a program, and follow-up evaluations are needed to connect programs to the business. We suggest at least half of the programs be connected to the business, and 10- 20 percent of them should be evaluated in follow-up. This is possible, and many L&D teams have achieved it. Collect data to see the program’s business connection by asking participants a simple question about the extent to which this program has influenced certain business measures. The key is to select the business measures that the executives are focused on.
• Convince executives that L&D budgets should increase during the recession. Yes, you read that correctly. A recession is a time to increase the expenditure on learning —not reduce it. During a recession, our best skills are needed to face the challenges of the recession. Some employees may take on new responsibilities and need training. Also, you need high-performance teams, employees to do more with less and great leaders. You get the picture. Keep reminding your leaders that this is the time to invest more, not less.
• Identify high-risk programs and prepare a defensive strategy. The programs at risk usually fall into one of four categories. The first is the expensive programs because they are a good cost-cutting target. Next are soft skills programs, often considered “fluff” by the executives. Remind executives that the highest ROI comes from soft skills, not hard skill programs. Programs with long-term focus and strategy or culture change are next. The final category is programs that can easily be postponed, including new initiatives or those supporting new projects.
• Rally your supporters. Budget decisions are not made alone. Although the top leader may have final approval, other key executives will influence that decision. Think about the major projects you have successfully conducted with different functions of your organization, such as operations or marketing. That success positions you to ask those department leaders to support L&D funding in the budget meetings. Call in all your favors.
• Collect impact data now. Sample current programs as described in strategy number one and secure data on how the programs are delivering key business measures. That will grab the executive's attention.
• Buy yourself some time. If you have a budget cut request, ask for time to prepare the actions outlined in this article. Most executives will allow you time. It is rare to enforce a budget cut without some discussion and analysis. Use that time to prepare your defense.
• Learn how to forecast ROI. There won't be extra money during a recession, and you may have to show a credible ROI forecast to secure funding. If you can convince an executive they will get more out of a project than they put into it, you may be able to obtain the budget. We’re happy to share a sample case study.

So, there you have it, seven strategies to take now to try to keep your budget from cuts and freezes during a recession — or at least during the discussion of an economic downturn.

This article was originally published on December 22, 2023 at CLO.com