The Devastating Effects of Gutting Learning & Development in Tech Companies

If you don’t know about all the tech layoffs lately then congratulations, you’re free from the press machine.

It seems there’s an announcement of another big tech layoff every other week. Just this week it was a huge layoff from Lyft. Since the beginning of 2023, the number of layoffs is over 185,000 according to which tracks layoffs in the tech industry.

That’s more than all of 2022!

Update: Luckily they tapered off slightly in the second half of 2023.

The odd part is that the layoffs seem to be for no reason. The companies aren’t losing money and sales seem to be at least in the black. Microsoft for one had a great year yet still decided to do massive layoffs. Microsoft laid off 10,000 people in January 2023 and their third quarter 2023 earnings were definitely profitable.

Inevitably part of those layoffs will affect every department in the organization including learning & development. Judging by my feed on LinkedIn made up of mainly L&D folks, that is true. Many layoff announcements from L&D folks come with every massive layoff announcement by a tech company.

To be fair, though, I also see layoffs from salespeople, UX designers, etc. Every department seems to be touched equally. But there’s something different when it comes to L&D. No, not just because that’s where I come from and what I love.

There’s something different with learning & development because it has such a huge impact on organizations internally. While it isn’t a profit center, it does make money indirectly and can save money too.

L&D has too much of a positive impact on organizations to make it an easy candidate for layoffs.

So this post focuses on the impact that layoffs in the learning & development department have on tech companies.

There seems to be a spreading feeling of job insecurity in addition to an already high financial burden. The cuts are going to have a direct effect on productivity and creativity. Those are two things that helped propel tech companies forward.

Companies often cut back on learning & development (and other departments as well) as an immediate cost-cutting measure, even though it is a long-term investment. But what gutting the L&D department does to further damage tech companies goes beyond the negativity of layoffs in general.

The future of business belongs to technology. Innovation has become key to a successful business’s survival. Yet many tech companies are cutting back on their investment. That means they’re cutting out a department that has a huge impact on innovation, efficiency, and better workplace culture.

With a slimmer learning & development department, companies miss out on essential strategies for staying ahead of their competitors.

With the cuts, employees will have less access to company-specific upskilling. Not only does this put the company at a disadvantage, but it also affects the quality of services or products themselves.

Layoffs have recently become an all-too-common solution for saving costs, yet this short-term decision can lead to a long-lasting negative impact on a company’s growth and success. That impact will be seen even more in learning & development which is already known for having to do a lot with a little.

In this article, I’ll take a look at the real implications of gutting L&D in tech companies and explore the various ways the industry can reshape its practices to make sure that the development of its people and products remains strong.

Why Companies Cut The Learning & Development Budgets

Layoffs in the tech industry are common right now, but they aren’t always. And the reasons for these cutbacks are different for every company and timeframe. However, companies may consider cutting down on their learning & development budgets due to the cost of labor paired with the perceived contributions to organizational growth.

Even profit-generating departments see cutbacks but learning & development isn’t a profit center, it’s seen as a cost center. That puts it in a tricky position because they aren’t directly contributing to the profit on a short-term basis.

Every department likely sees cutbacks with company-wide downsizing.

Because it’s harder to prove the benefit of L&D, it’s easier to cut back there.

While I must say that’s a pretty myopic view of profit and the market, companies have never been known for being farsighted. Most company leaders prioritize short-term benefits over longer-term growth. That’s kind of how it all works with the stock market and private industry in general.

So, learning & development is in a bad position and prone to layoffs on par or greater than profit-generating departments.

The Impact of Reduced Learning & Development Programs

The impact of reducing L&D programs on tech companies is often underestimated. Cutting back on training and development initiatives is likely to have serious implications for both employee retention and productivity.

When L&D programs are reduced, tech employees could find themselves without the resources they need to stay up to date on current technology trends. This can lead to tech workers feeling alienated, leading to a decrease in morale and employee engagement.

And that’s beyond the already demoralizing effect that layoffs have in general!

Leaders underestimate the importance of career development to employees, just check out this survey from edX Enterprises. Whether leadership values L&D or not doesn’t matter, employees want more and they want the right stuff including technical training.

Without adequate training, workers may struggle to stay productive, resulting in a decrease in the quality of their work or worse high levels of employee turnover. Reduced L&D programs can also lead to a rise in the number of technical errors, which can have a significant negative impact on any business.

Reducing the amount of staff development can be devastating to company morale.

Without good software training, employees are bound to make lots of mistakes that can add up to be costly in the long run. It’s easy to say that cutting L&D will save money but it’s more difficult to say how much will be lost if that happens. Just like it’s sometimes difficult to say exactly how much L&D contributes to growth and profit, it’s also difficult to pinpoint how much will be saved vs. total losses.

When companies stop (or even reduce) investing in their employees, that’s when they become stale and start losing relevance in the industry. Some tech companies are on their way to becoming old-hat companies that nobody wants to work for and many of them will slowly die due to staleness and lack of innovation.

The fact that markets are competitive remains true, though. That means there has to be some type of differentiator to which L&D is a great contributor. A company that cares for its employees will be a desirable place to work with happier employees.

Free food and other perks only go so far. Showing a true interest in employees and their growth is priceless.

The Benefits of Investing in Learning & Development

Investing in learning and development is the foundation of success when it comes to any tech company. Companies prioritizing training programs give employees the necessary tools to develop and hone their skills, ultimately leading to greater employee engagement, retention, and efficiency.

Then there’s this funny thing called creativity. The more development opportunities outside of an employee’s normal work, the more creative they can become. It’s funny how exposure to new ideas and education can do that. That’s exactly what L&D is great at.

L&D also gives tech companies an edge over the competition, allowing them to have the latest know-how in the industry. Companies that gut their budgets for training are inevitably going to be at a disadvantage.

Investing in learning & development is necessary for tech companies that want to stay ahead of their competition and remain successful and relevant in their market.

Why This Matters Now More Than Ever

Tech companies that can find a way to keep their learning & development intact and growing will have the upper hand over companies that cut it.

In general, tech companies that are laying off employees are tarnishing their reputation both as a place to work and a place to buy products. Who wants to spend money at a company that treats its employees as disposable?

I sure don’t, especially when they didn’t have to cut them in the first place.

Tech companies that don’t cut learning & development are more competitive.

Good tech companies will eventually realize (I hope) that training is much more than just an extra expense. Investing in learning and development for employees not only increases the overall skillset of the workforce but also improves the productivity of the company as a whole.

As technology grows and changes, the need for an up-to-date and well-trained workforce is becoming more and more critical. Companies simply cannot afford to keep up with the competition and remain at the forefront of their industry by leaving L&D on the back burner.

By making sure employees are equipped with the tools and resources they need to do their jobs, tech companies can gain the edge they need to stay ahead of the competition.

I think there will be growing pains and overall this is just a blip, but soon companies will realize what they’ve done and it won’t all be positive.

How to Mitigate the Impact of Gutting Learning & Development

One way to mitigate the impact of gutting L&D is to invest in organizational development initiatives that are more affordable yet extremely effective. This could include investing in resources, such as training and mentoring opportunities. This would support the individual needs of employees and their growth as professionals. It can be relatively affordable and cost-effective also since many of the resources already exist in the company.

That is unless they laid them off already!

Creating a culture of learning helps retain existing employees and attract top new talent.

Tech companies should also focus on developing an effective onboarding process, which includes setting expectations, introducing new employees to the culture and processes, and providing access to various resources that support the employee’s success.

Layoffs are likely necessary for L&D if poor leadership insists on them, but they must be approached carefully. By looking for affordable ways to keep some resources for employees, cutbacks don’t mean everything will be lost for L&D. It’s just a temporary setback.

Strategies to Keep Learning & Development Programs Robust Even With Cuts

In the tech world, the most successful companies are those that prioritize learning and development programs. Keeping staff updated on the latest technologies, while training them to use those technologies effectively, is crucial to staying ahead of the competition.

To ensure that training programs remain robust even with budget cuts, employers should consider several strategies.

I know some people are firmly entrenched in the thought that training must be in person and is more effective that way. That’s not affordable or realistic, though.

Sometimes it’s helpful to look toward outside help for keeping L&D lean.

It may help to move some training programs online. This can be a cost-effective way to deliver content and can be just as (if not more) effective than instructor-led training. The effectiveness (both cost and benefit) of digital training is exactly why we don’t do instructor-led training at all. There are simply not enough benefits to justify the cost.

While having an internal L&D department is helpful, for some projects and needs it may make sense to hire an instructional design consultant or acquire custom eLearning development. That’s a good way to get training resources without committing to full-time resources that might be difficult to effectively utilize.

Learning & development can ensure that their programs remain strong, even in the face of budget cuts. This, in turn, will help tech companies stay ahead of the competition since staff will be more knowledgeable and better prepared to take on new technologies.

Ultimately, investing in learning and development will lead to increased innovation, productivity, and profitability in the long run.

The Role of Leadership in Protecting Learning & Development Programs

Leadership often gets us into the mess of layoffs but coincidentally they’re also the ones to get us out. Of course, they don’t always get us in. Occasionally there is a huge crash in markets external to the organization, but that’s not the case in today’s market. This one solely lies at the hands of poor leadership.

Leadership also plays a key role in protecting learning and development programs in tech companies. Effective leadership must come up with long-term strategies to ensure the sustainability of training and learning culture.

Leaders must collaborate with other departments to build a strong culture around learning that encourages employees to participate and benefit from these initiatives. They must also identify relevant learning programs to help the organization meet its goals and objectives.

All training should tie back to the organization’s overall goal in some way or another. This makes training more relevant. Employees obviously demand it.

Good training at an organization must focus on how it helps employees do their jobs better. This can motivate employees to continue engaging with them.

With the right leadership in place, tech companies can ensure that their learning and development programs remain an essential part of their organizational strategy and that they contribute to the success of the organization.

Wrap Up

Thanks to the ever-evolving tech world, tech companies have been steadily growing and thriving. But that isn’t guaranteed to continue forever. Those that stop investing in their employees will suffer in the long run.

What’s the best way to invest in employees?

Learning and development of course. Cutting it will have a major impact on the long-term success of the company, as well as its employees. Without the necessary investment and resources, tech companies can easily fall behind their competition or fail to be relevant in the future.

Only time will ultimately tell how much L&D cuts affect these tech companies.

Without internal growth opportunities, employees will look to other companies for those opportunities. It’s up to leadership to find what works for developing their employees.

They need to realize how best to invest in their employees and ensure they have the necessary skills and knowledge to remain competitive in the ever-changing tech world.

Every organization is in a different place and has different requirements. Whatever your position or path forward, we’re here to help and are available for a free consultation to discuss the best path for you.

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