Fewer MBA students, training providers under pressure and cautious spending... it's been a tough year for business education. A modest recovery is underway but employers are more demanding, calling for courses linked to commercial goals

The coalition government's cuts in support for education and training could be teaching business a hard lesson. Companies may need to get more from less if they want to invest in the skills of their workforces. During the past year, learning and development budgets have fallen in 52 per cent of companies, according to a recent survey from the Chartered Institute of Personnel and Development. Worse still, only 11 per cent of businesses expect budgets to rise over the coming year. Numbers signing up for MBAs fell last year and it is rumoured that private sector training providers have seen business fall by anything from 25 to 40 per cent since the credit crunch started, although most won't admit to it.

But Jane Massy, chief executive of abdi, the UK arm of the ROI Institute, notes: "We hoped that lessons would have been learnt from previous downturns and that training budgets wouldn't have been slashed, but it has happened." Over the summer, though, she has seen signs that training is forcing its way up the agenda again.

"Spending has started to creep back-and in a slightly more sophisticated way," she says. More employers are linking training explicitly to business goals; but too many still hand a training budget to departments and tell them to get on with it.

"Boards should be asking for more reports on what they're getting for their training money," she argues. They tend to get statistics about how many people have been on courses. What they should be asking
for, she says, is information about how the training has helped the company move towards its objectives.

The key issue is that when times are tough, directors should spend more, not less, on training their staff, according to David Pardey, head of research and development at the Institute of Leadership & Management. "In the tough business environment, employers are looking at increasing the leadership and management capability of their workforce," he says. "They want to enhance their managers' skills to enable them to perform in a tough climate, improve their efficiency and that of their teams, as well as the ability to analyse and respond to change."

Pardey says improving the quality of leadership and management is one of the most important challenges for business. "Our own research shows that 60 per cent of managers did not choose to move into their role-they are reluctant managers," he says. "These people need to be encouraged to develop the skills and purpose to make a difference in this crucial role."

But if this is going to happen, trainers need to provide courses that chime with the mood of the downturn. Richard Brown, managing partner at strategy consultancy Cognosis, says that business schools need to put more effort into making their courses seem topical. "Education should concentrate on developing leadership skills—how to lead people through the period of ambiguity that follows the recession," he says. "So far, they are neglecting the psychological impact of the recession and the recovery on people."

Brown suggests that business schools could provide more forums and problem-solving sessions for, and between, organisations. "Most business schools offer learning circles for chief executives, but these need to be expanded if they want truly to achieve more with less."

Stephen Archer, a director at Spring Partnerships, a business improvement and strategy consultancy, agrees that leadership is a critical training imperative. "What we are seeing is an acute focus on leadership and performance. As times have become tougher, so any weaknesses in leadership quality have become apparent," he says. "Performance by teams and functions is, in large part, a by-product of good leadership and it is not surprising that behavioural training is now seen as more crucial than the hard skills, such as technical training.

"We are seeing a number of companies where there is an urgency to work on the effectiveness of their leaders and the nature of their culture. A modest investment in these areas can bring about huge returns and efficiencies that are sustainable and that will be of great value when the recession properly ends in a few years' time."

The problem most companies face is achieving this with reduced budgets. But Jane Scott Paul, chief executive of the Association of Accounting Technicians, one of the UK's largest trainers, believes this could be an opportunity in disguise. "A more radical way would be to develop a market-based approach, which encourages individuals and businesses to invest in themselves by contributing to their own skills development."

Scott Paul says that the AAT has seen this approach working well in less prosperous countries, such as South Africa. "It helps put a stop to learners signing up to courses that add little value to their employability while wasting company time and money," she argues. "We already adopt this approach to paying for university provision and such an approach to training would encourage a more ambitious and better-qualified workforce to face the challenges of the century ahead."

Given the need to keep training and cut costs, it's not surprising that more companies are turning to e-learning and other technology-based approaches. "Today e-learning is used for all topics and all sorts of training," explains Steve Fiehl, who leads programme content and deployment at CrossKnowledge, a provider of learning content for business schools and large companies. "One of our customers reported a 75 per cent decrease in costs by switching from classroom training to e-learning while still delivering on the same training objectives."

Tesco is among the larger companies that have moved in a big way into e-learning for leadership, management and operational training. Its Academy Online delivers a range of training materials to staff in 14 countries. The company says the move has helped it to develop training materials using a common standard and approach.

Yet it's not only larger companies that are pioneers in these difficult times. Many smaller and medium-sized companies kept spending on training during the recession and found they were able to accelerate faster out of it, stealing a march on competitors who had slashed training budgets when times got tough.

In 2009, Empiric Solutions, a finance and IT recruitment specialist with only 10 employees, hired a permanent professional learning and development specialist, Clair Milligan. She started a programme of bespoke learning that included coaching and mentoring. Since then, £15m-turnover Empiric has tripled its employees and become the third fastest-growing company in the Virgin Fast Track 100.

Meanwhile, Chazbrooks Communications, a £500,000-turnover PR agency based in Guildford, Surrey, has demonstrated that it's possible to make a small budget go so far that even your staff think you're spending more.

"We are always looking at the most effective way of delivering training, and we link any plans directly into our business plan," says Olivia Chute, operations director. "We draw on internal resources to deliver a range of soft skills, PR and on-the-job training, and we target funding opportunities to pay for external training, or offer PR services in exchange for business training. This has meant that our budget has gone a long way. And because we have been able to bring in direct business benefits from any training that we have done, it has paid for itself and brought in new custom."

She adds: "A spreadsheet records, among other things, how much time we have spent on training and costs, based on an hourly overhead cost. It also records the feedback from staff for every event using a simple grading system. We can, thus, match our business objectives with the personal training outcomes."

With less government cash around to support training programmes, directors must come to terms with the fact that they will need to find the funds from their own budgets. That's going to mean putting more emphasis on value for money and outcomes that clearly support business objectives.

"The UK is brimming with talented people and untapped potential," says Pardey. "But we must raise awareness levels of the management development options available. This means we need the skills system to adapt, business incentivised to invest in skills, and a change in attitude towards training and qualifications."