THE LEARNING

LEADER’S GUIDE
TO THRIVING IN AN
ECONOMIC DOWNTURN

Doing more with less doesn’t have

to mean reducing or eliminating your CONTENT

L&D budget and workforce. Discover Economic Volatility and Challenges to L&D ..... 2
Why Budget Cuts Are Typical — and Costly .... 3
how you can demonstrate positive How L&D Can Thrive Despite Recession .......... 7
ROI from your L&D investments. A Solution in Degreed . ...................................... 8
ECONOMIC VOLATILITY Don’t Give Up on Learning
AND CHALLENGES TO L&D Continuing to invest in talent development is one key way your
organization can navigate the murky waters and become agile
It’s 2023, and speculation persists about how bad
and resilient.
the economic downturn really is.
Companies are feeling the pressure to do more with less. L&D
By some measures of the economy, we’re well into
teams are too. L&D, at its core, helps foster an environment
a recession. By others, we’re not quite there yet.
of continual growth and learning, so it often suffers during
As economists and politicians debate the details,
an economic downturn, when the focus shifts from growth to
the average worker has heard about or already
survival. This is a critical error.
experienced layoffs and watched warily as the cost
of goods and services rise. Indeed, developing your talent now can future-proof your
organization. It can help you save money, slow the attrition bleed,
Economic volatility seems to be the new normal,
make your company more agile and plug skill gaps for the future.
and we just can’t shake it. The world of work is
Learning investments make your organization more sustainable
volatile, uncertain, complex and ambiguous.
in a volatile market, meaning you can come out ahead of your
To survive, recover and stay competitive, your competitors when the economy stabilizes.
organization needs to be agile and resilient.
As business magnate and philanthropist Warren Buffett famously
said, “Bad news is an investor’s best friend.”
This whitepaper will show you how investing in learning
and development programs can put your organization at a
competitive advantage during the rocky months ahead and
how to gain buy-in for that investment.

Use the data points in this whitepaper to elevate

your leaders’ understanding of the ROI of your
learning programs and the risks in cutting them.
How to Thrive in an Economic Downturn 2
 WHY BUDGET CUTS ARE TYPICAL — AND COSTLY
When the economy takes a downturn, budgets tighten. It’s a natural response, one
seen time and again. Consumers reduce their spending, demand for products dips,
which then forces leadership to significantly reduce or even slash learning and
development expenditures.
Leaders must prioritize net profits. In doing so, many don’t see their people as a valuable
short- or long-term investment, yet employees arguably are the most valuable asset of
any organization.

Sadly, and because of this line of thinking, budget cuts often hit L&D first.

The Disposable Employee

A knee-jerk reaction is to lay off “expendable” people. In fact, the past few decades have
been dubbed “The Era of the Disposable Employee.” Organizations spend a considerable
amount on employees — with some investing up to 70% of their spending on labor costs —
so layoffs seem like a quick fix when times get tough.
Data from the U.S. Bureau of Labor Statistics shows a pattern of high unemployment rates
during every recession since the early 1900s. The two most recent recessions proved no
different. Layoffs peaked during the Great Recession at 2% in April 2009. They soared
to 8.6% during a short-lived recession that occurred in early 2020 in response to the
COVID-19 pandemic.
Unfortunately, layoffs are picking up pace again as talk of a recession continues. The
Forbes layoff tracker reported nearly 125,000 employees were let go in 2022. At the
same time the job report in January 2023 was a positive one, with an incredibly low
unemployment rate of 3.4%. Again, the market seems to be unpredictable and volatile.

How to Thrive in an Economic Downturn 3

 Not all companies lay off employees, and sometimes the results can be
fantastic. Some organizations take Buffett’s note to heart and capitalize
on the economic downturns by going on a hiring spree to get ahead of
the competition.
Layoffs often do not cut
Statistical Analysis System (SAS) Institute, a software company,
costs,” according to Jeffrey acquired talent during the 2001 and 2009 recessions and saw one of
Pfeffer, a professor at its most profitable years in 2009. Commenting on rival organizations
letting people go, SAS CEO and Founder Jim Goodnight had this to say:
Stanford Graduate School of
“People are admitting they don’t know how to manage.”
Business. “Layoffs often do
not increase stock prices,
Costly Recruitment
in part because layoffs can
Think about how much it costs you to hire one person. According to
signal that a company is a 2022 report from the Society for Human Resource Management
having difficulty. Layoffs do (SHRM), the average cost per hire is $4,683, while the average
executive cost per hire is $28,329.
not increase productivity.
However, SHRM also states that employers should budget not only for
Layoffs do not solve what the literal cost of recruitment but also for the time that managers and
is often the underlying leaders spend on hiring as well as the inevitable negative impact on
productivity. These combined costs generally total three to four times
problem, which is often
the salary of a given position. That means total direct and indirect
an ineffective strategy, a recruitment costs for a $50,000 role could reach $150,000
to $200,000.
loss of market share, or too
If your company’s attrition rate is high, these expenses can quickly
little revenue…Layoffs are
add up. Arm yourself with the information above and explain to your
basically a bad decision.” business leaders these costs.

4
Cutting your L&D budget can cause attrition rates to Unsustainable L&D Budget Cuts
soar. Limited resources mean fewer opportunities to
offer personalized learning experiences to motivate In 2020 amid the emerging COVID-19 pandemic, 47% of
and engage your top employees. This can result in a organizations experienced a decrease in L&D budgets,
burnout culture. according to a Brandon Hall Group report. Even as
employees were still adjusting to remote work — and
Laying off employees can also lead to high talent
there was an incredible need for L&D — some companies
acquisition costs further down the road. Companies
decreased their learning budgets. The fear that drives this
often plan to rehire top talent after the economy
approach is not sustainable — for an individual company
stabilizes, but the reality is that might end up being
or the economy.
unaffordable. Astronomical expenses can push your
company backward at the very moment it’s looking to As projects during this time are delayed and often
recover and grow. canceled, there is often more time and capacity for some
to learn new skills, take on stretch assignments or grow
In other words, cutting talent or L&D resources
their already existing skill sets. L&D leaders can take
might cost you more in the long run. Even if a budget
this time to evaluate what skills gaps top talent and the
cut is inevitable, you can still do more with less
organization have and who to upskill and reskill to fill
by acknowledging retention is much cheaper than
those gaps.
recruitment and fighting for your budget with the above
information before your existing top talent leaves. Times of economic slowdown are also the perfect time
for strategizing and evaluating skills that will be needed
for when the economy bounces back. Forecasting what
future skills, like skills associated with effective prompting
See if upskilling and of artificial intelligence platforms, can be set ahead
reskilling can be used as of time and allow for enough learning time during this
slowdown period. If you wait until the economy improves
an alternative to layoffs. to act, your competition will have already taken the lead,
leaving you with long-term repercussions.

How to Thrive in an Economic Downturn 5

With quick, temporary responses like stiffening or stalling Gallup also reported companies with higher engagement
the L&D budget, an organization loses top talent. And scores recovered faster from the 2008 recession. More
the employees that stay are often frustrated and worried findings included a higher earnings per share, higher
about job security. Overall, a decrease in employee productivity ratings and higher customer satisfaction to
development creates a decrease in employee morale on name a few.
top of stalling out skill development.
Without learning programs to support employee
Gallup recently updated its employee engagement engagement, employees are left with low morale and will
research, “The Benefits of Employee Engagement,” and stall out on upskilling. Organizations will see a lowering of
wrote, “Concentrating on employee engagement can productivity and profitability at a time when it needs to be
help companies withstand, and possibly thrive, in tough at its highest. And with sole contributors and lower-level
economic times.” Why? Because those companies with workers shouldering the responsibilities of an entire team,
a higher employee engagement score resulted in 18% burnout becomes a lot more likely. Top talent begins to
higher sales and 23% higher profitability. In these findings, look for work elsewhere — at competitors or even in other
industries where the pinch isn’t as painful.
All these points can help to paint a picture to business
leaders that the short-term reward of tightening
Companies with a higher employee or eliminating L&D’s budget comes with long-term
engagement score resulted in consequences. But investing in your talent is a path to
long-term financial success and growth.
18% higher sales and 23% higher
profitability. In these findings, Gallup
also reported companies with higher Take advantage of lighter agendas
engagement scores also recovered to do more informal learning and
faster from the 2008 recession. learning from others.
“The Benefits of Employee Engagement”, Gallup

How to Thrive in an Economic Downturn 6

HOW L&D CAN THRIVE
DESPITE RECESSION • Be creative about providing learning. Create
opportunities to help employees practice skills
A recession shouldn’t mean less investment
in employees. On the contrary, businesses they will need for the economic upturn.
should devote resources toward expanding their
learning programs, developing a healthy learning
• Have a Curate-a-Thon to produce employee-
culture and improving employee well-being. led content instead of investing in costly
bespoke programs.
The positive results of all this investment can
include improved employee engagement, a • Re-purpose your budget to focus on the
higher retention rate, a shrinking skills gap, and
democratization of learning. Programs for the
a competitive advantage. While your competition
“happy few” are for happy days and sends the
is reeling, you can watch your company adapt
to the changes and thrive. You might even be wrong signal to employees.
like SAS and see one of your best years of
• Beef up your internal trainers program by
profitability yet.
adding an internal influencers program.
If your business leaders are set on cutting
budgets across the board, investing in the right • Collect and analyze your workforce’s skills
L&D programs and solutions can help you do data and gaps to understand where you need
more with less. Investing in Degreed can help to focus development efforts.
you achieve operational efficiencies and reduce
waste. In fact, The Total Economic Impact™ • Stay connected to business leaders and their
Of Degreed study from Forrester Consulting fast-changing needs. A yearly training plan
commissioned by Degreed in 2022 showed a six- probably isn’t enough this year. Be ready to
month payback period by using Degreed. be agile!

How to Thrive in an Economic Downturn 7

 A SOLUTION IN DEGREED
Degreed facilitates employee retention and your ability as a learning leader to do
more with less in many ways. One way is by connecting your people to on-the-job
opportunities within your organization. Another is through the Degreed Skill Insights
feature, which helps you understand the supply and demand for skills across your
organization and make intelligent decisions about how to develop your workforce.

Problem Solving

Project Management

Data Analysis

A Solution in Degreed 8
Opportunities
Degreed connects your people to
internal opportunities and empowers
them to chart their own career paths
within your company. By putting the
control in the hands of your workers,
you can help them become motivated
and engaged. You can help them grow
new skill sets or deepen those they
already have — so they’re less likely to
look for a job at another organization.
The intelligent Degreed LXP connects
employees to more than vetted
learning content. Experiential learning
is imperative for deep skill building,
and the Degreed Opportunities feature
helps your employees discover on-
the-job experiences essential to your
company’s success — so they can
apply and stretch themselves in new
roles and projects. This sets the stage
for your employees to become more
invested, loyal and productive —
helping them give your organization
a competitive advantage.

A Solution in Degreed 9
 Do you have enough skills to meet future demands?

Degreed Skill Insights Most Needed Skills in Open Opportunities

Feb 2023
As your employees are learning new skills,
Leadership 225
Degreed provides you with complete
visibility into unbiased and real-time skill Project 105
data that can help you recruit and promote Management
internally. During an economic downturn,
Python 94
your business-critical goals and initiatives
are more important than ever. With Degreed Microsoft
93
Skill Insights, you can identify and align your Excel

people’s skills to those goals and initiatives Data

83
faster than ever. Visualization
0 50 100 150 200
Advanced Degreed analytics can help you
Number of Opportunities: 930
pinpoint the transferable skills you need
for specific roles and what skills gaps you
may have within a team, department or
Top User Skills
across your entire organization. When you Feb 2023
have a full picture of the skills available and
Project
610
needed, you can then plan a more targeted Management
upskilling program using the already vetted Microsoft
523
content within Degreed or outside sources. Excel

Plus, Degreed skills data can help you Communication

520
Skills
uncover hidden subject matter experts at
your company. Data
495
Visualization

Collaboration 458

0 100 200 300 400 500 600

Total Skills: 35.6k

A Solution in Degreed 10
Opportunities + Skill Insights = Cost Savings
A reduced L&D budget is not the end of the world — as long as
you know how to spend it to get the largest return on investment.
Because your employees are your most valuable asset, investing
in them by purchasing a platform like Degreed can save your
organization money in the long run. Proven Results
Reskilling your current employees saves you money on external
Benefits
recruitment while also creating a more efficient and streamlined ROI:
Present Value:
talent management strategy, showing just how much your
company values its people. And when you invest in your people, 312% $6.19 M
especially during an economically troubled time, your workforce
and the market notices. The “halo” effect is real, meaning your
organization might become admired for an emphasis on talent Net Present Payback for
and development. This can boost morale, drive productivity and Value: Product:
attract top talent.
$4.69 M <6
By enabling your people to gain transferable skills and expand
their vertical and horizontal career options, you can boost
Months
employee satisfaction and lower your attrition rate. When L&D
focuses on personalized learning and equips everyone to own Source: Forrester Consulting’s The Total
their careers, employees are much more motivated and engaged. Economic Impact™ Of Degreed
They feel more fulfilled at their jobs even in a volatile economy,
meaning they are less likely to look for work elsewhere.
Forrester Consulting’s The Total Economic Impact™ Of Degreed
study commissioned by Degreed in 2022 found that employee
groups using Degreed saw turnover rates drop from 10% to 2%.
This improved retention rate in key roles could save companies
$1.3 million over three years.

A Solution in Degreed 11
Of course, internal hiring is not always possible. When this is
the case, Degreed Skill Insights can help you identify what
skills your company needs to make external hiring quick and
more cost-effective. In Conclusion
So while other companies struggle to maintain morale and
Investing in and upskilling your
keep employees engaged during a recession, you can
watch your employees thrive with a solution like Degreed.
current employees has incredible
And personalized learning isn’t just for a recession or financial benefits.
economic downturn — it’s an investment for long-term
Start today by learning more
success and growth.
about Degreed. Take the first
step in future-proofing your
organization and schedule a
personalized Degreed demo.
“With Degreed in our
toolset, we have improved
SCHEDULE A DEMO
retention because there’s
higher performance among
our employees and they’re
happier with their learning
and skills journey.”
L&D lead, Finance

A Solution in Degreed