Organisational learning and development during a recession

This paper critically evaluates whether learning and development is an unnecessary expense during a credit crunch. The first part of the paper gives a brief definition and overview in terms of training and development. Furthermore, when it comes to development it is worth bearing in mind that it is a far reaching concept with many different aspects which does not only include training. That is where organisational learning and culture come into the play. In order to promote understanding, the paper refers to practical examples of some of the most successful organisations such as eBay, Apple and Google.

In order to promote understanding it is crucial to make a clear distinction between training and development, because both words have a different meaning. According to Martin and Jackson (2002, p. 145), training can be described as “a process through which individuals are helped to learn a skill or technique”. Development, on the other hand, “occurs as a result of learning and can happen in any number of ways: for example: through training events or via the methods of coaching, mentoring, planned and unplanned experience in the workplace and so forth” (Sadler-Smith, 2006, p. 10).

The question which arises is why training and development is so important? Without doubt, due to the constant introduction of sophisticated technology, the world is changing faster than ever. Hence, it is of the utmost importance to provide training opportunities for staff at all levels in the organisational hierarchy in order to enhance the knowledge of both individuals and the organisation as a whole. But this can be quite challenging in times of a financial crisis, because many organisations try their best to cut down costs. In fact, the rigorous solution companies are likely to come up with is to scrap training and development for their employees.

Martin Clarke, director of General Management Programmes in Cranfield School of Management, stresses that “it is vital to give your top people the support they need, especially during economic downturns” (Clarke, 2009) because a “well-trained and skilled workforce will be instrumental in supporting organisations during the downturn as well as after economic recovery and growth resumes.” (Ambition, 2010)

A survey which was conducted by Boston Consulting Group and the European Association of People Management found out that cutting costs with regard to training and development in a recession can have a serious impact on the organisation from a long-term perspective (Strack et al, 2009).

In the first glance training and development might be regarded as a luxury investment in times of a recession. However, if organisations seek to be successful they need to realise that there are much more aspects than training and development in order to cope with external threats. A critical determinant of success is organisational learning and a culture where people work together and are fully committed to the organisation’s goals.

Nowadays, in competitive industries organisational learning is a prerequisite for organisational success. Many successful companies such as Google, Apple and Ebay are perfect examples and role models of effective organisational learning and culture. The notion organisational learning is a relatively new concept and it took very long that the people realise the importance of it. In the past employees were not seen as human beings, rather they were considered machines as a means to an end.

In the century that followed the upswing of the industrial age, management theorists such as Henri Fayol, F. W. Mooney or Lyndall Urwick were the first proponents of what we know as the classical management theory, which could be described as “a pattern of precisely defined jobs organized in a hierarchical manner through precisely defined lines of command and communication.” (Morgan, 2006, p. 18)

Nowadays, it might be argued that the management principles advocated by the great theorists of the last century were utterly wrong, because in most cases they made an organisation working like a machine and inhibited creativity and innovation. Indeed, the ever increasing globalisation and the improvement of new technologies such as the Internet seem to significantly influence the perception and behaviour of individuals and organisations respectively. These new circumstances require rethinking, as “difference today lies in the rapidity of change and the increasingly unpredictable nature of the environment” (Pearn et al, 1995, p. 35).

In fact, it is the learning organisation which has the necessary capabilities to effectively adapt to environment change, which was described by Peter Senge in his book “The Fifth Discipline”. But what distinguishes a learning organisation from its competitors? Broadly, the learning organisation is the one which looks into the future and considers long-term strategies, rather than focusing on the present and the short-term. It tries to figure out the underlying causes of events to solve problems effectively and learn from mistakes, rather than just relieving symptoms. Moreover, and probably most important, a learning organisation emphasises and recognises that employees are its most valuable asset to ensure sustainable development and innovation (Senge, 2006). As Gary Hamel put it, “for the first time since the dawning of the industrial age, the only way to build a company that’s fit for future is to build one that’s fit for human beings.” (The Economist, 2009, p. 84)

In fact, there are various theories about individual and organisational learning. One of the important and widely accepted theories comes from Argyris and Schön. They highlight the importance of organisation learning since organisational errors should not be undiscovered and it ought to be eliminated before it adversely affects the whole organisation. Single loop learning is when “given or chosen goals, values, plans and rules are operationalized rather than questioned.” While double loop “occurs when error is detected and corrected in ways that involve the modification of an organization’s underlying norms, policies and objectives.” (Smith, 2001) In fact, the double loop is much complex since it is crucial to analyse the internal operations and the environment where the company is placed in order to effectively avoid mistakes and how to improve establishments. It is vital to ask questions about the organisation’s goal and missions, consider the strategic plans, rather asking if the company provide the appropriate product (Leading Creatives, 2010). As seen, double loop learning is going in much more depth than single loop learning. But to adopt the double loop learning approach is easier said than done. For instance, employees who are working for a particular organisation for ages might think that they are working for this company for a long time and nothing bad happens.

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