Like many organizations, your budget planning for calendar year 2024 is likely well underway. Current economic trends and market realities (such as high inflation, continued supply chain challenges, 2024 political races on the horizon) are all creating extreme levels of pressure and uncertainty. Many businesses are looking to “tighten the belt” in the coming year to ensure increased financial stability. While streamlining expenses is an undeniable reality, it is just as critical for leaders to identify where to prioritize continued investment that lays the foundation for continued or future growth. In addition to common (and perhaps obvious) areas of investment—like new products and services, customer experience, sales and marketing, and sustainability efforts—leaders would be remiss not to invest in human capital.
Intentionally investing in your people will be a vital approach to set your organization up for success in both the short and long term. There are numerous ways to do this, and some have a higher ROI than others. So, where should leaders prioritize these dollars to get the biggest payoff?
Learning and Development (L&D)
In times of economic uncertainty and tight budgets, training and professional development efforts are often the first to be stripped back to the bare necessities. However, organizations that “bounce back” from challenging financial times stronger are those who avoid the trap of treating L&D as a luxury. With that said, it’s important to invest those training dollars strategically.
In today’s uncertain, volatile and complex world, the most critical capabilities are those around change, adaptability and leadership. This isn’t to say that technical expertise or basic operational skills are immaterial. However, leaders who invest in equipping their employees to be more agile will have a workforce that can better transfer skill sets across contexts and roles and meet constantly changing market and customer needs.
Often, leaders hear the phrase “employee engagement” and associate it with “rah-rah,” feel- good activities. True employee engagement goes much deeper than snacks in the office or even good scores on employee pulse surveys. Gone are the days of the “clock in, clock out” mindset. Today’s workforce is looking for opportunities to meaningfully contribute to the business—and to have the chance to challenge themselves in new and creative ways to grow.
Leaders need to set a clear direction, directly articulating where the organization is going and what opportunities there are to drive toward the future. Then, they need to tap into the passion, commitment, and even hidden talents across the organization. Create dedicated time, programs and initiatives for people to contribute in meaningful ways, including raising innovative ideas (around customer experience, new products or improving processes), experimenting with and implementing new solutions, or helping to translate strategic priorities to make them real and tangible for front line workers.
Retention and Recruitment
It’s no secret that high turnover is extremely costly. Recruiting, hiring, and onboarding talent is a significant investment of both time and capital. Investing in L&D and Employee Engagement are two useful strategies for retaining current talent, particularly your highest value talent. Of course, this is also supported by clearly outlined career paths, work-life balance and effective managers.
When it comes to recruiting new talent, leaders need to invest their efforts in hiring employees that have skills and capabilities that align with where you’re going, not where you’ve been. Capabilities that have been a significant asset in the past may not be what’s needed for your organization to thrive today—and tomorrow. Start by identifying the skills, mindsets, and behaviors that will help the organization evolve, at pace. Then, look at your current recruiting and hiring processes and adapt them as needed to ensure you’re attracting a candidate pool that aligns with that future state. By investing in future-proofing your recruiting efforts, you will decrease the likelihood of both voluntary and involuntary turnover down the line, stretching your current investment dollars much, much further.
As we move through the 2024 budget season, organizations are grappling with decisions that will shape the year (or even years) to come. It’s vital that leaders consider and preserve dollars for nurturing human capital. Taking a people-first approach, investing in L&D, employee engagement, and retention & recruitment, will set organizations up to see a dramatic return as the macroenvironment right-sizes. People are an organization’s strongest asset; their budget can and should reflect this.