Recession-Proofing Your Company: Why Cutting Training Budgets Cuts the Wrong Costs
A Q&A with Pamela Eyring, President & Owner of The Protocol School of Washington®
From the Great Recession of 2008 to the COVID-19 pandemic and today’s fluctuating markets, economic downturns often tempt leaders to cut what appears to be “discretionary” spending. Learning and development is frequently one of the first areas considered. Yet history and data show that organizations that remain disciplined while continuing to invest in their people consistently outperform those that cut too deeply.
In parallel, organizations are adopting increasingly similar AI tools and workflows. Yet, the most competitive edge an organization can gain is what’s hardest to copy: people’s judgment, creativity, relationships, and trust with customers, partners, communities, and investors.
In today’s Q&A, we explore insights from Pamela Eyring, president and owner of The Protocol School of Washington® (PSOW), an accredited educational institution that teaches international and domestic protocol, cross-cultural awareness, and business etiquette. Drawing on her four decades in training and development, Pamela shares lessons learned and offers a recession-ready playbook approach to prioritize learning opportunities that keep your staff sharp to outpace the competition when serving customers and critical stakeholders’ needs.
Q: Why does it seem like such an obvious move for companies to cut training during a downturn—and why is that often a mistake?
A: I’ve seen this pattern repeat itself over four decades and it’s very human. When pressure rises, leaders look for places to cut quickly, and training often gets labeled as “discretionary.”
But the issue is that we tend to confuse costs with capabilities. During the 2008–2009 recession, about half of organizations didn’t reduce training at all, while others made targeted adjustments instead of sweeping cuts.
Research across thousands of companies shows that those who only cut tend to underperform compared to those who balance discipline with strategic investment. Capability is a compounding asset and once it’s gone, it’s expensive to rebuild.
Q: What is the core business case for continuing to invest in employee development during uncertain times?
A: Start with the math. According to Gallup, replacing an employee can cost between 50% and 200% of their annual salary. At the same time, learning is the number one driver of retention, and nearly 40% of workers require reskilling in short timeframes.
When leaders look at these realities together, the question shifts from “Can we afford training?” to “Can we afford not to?” Development supports retention, engagement, and adaptability which are the three things every organization needs during uncertainty.
Q: How does the rise of AI change this conversation?
A: AI makes the case for investing in people even stronger. As organizations adopt similar tools, the competitive advantage shifts to what cannot be replicated such as human judgment, communication, creativity, and trust.
AI may level the playing field operationally, but it widens the gap in how people show up. There is also evidence that AI can reduce collaboration if left unmanaged. That means leaders must be intentional about developing the human side of the business.
Q: Can you share examples of companies that stayed the course?
A: During the 2008 financial crisis, Starbucks closed more than 7,000 stores to retrain approximately 135,000 baristas. That was a bold move in a stressful financial moment, but leadership understood that customer experience starts at the front line.
A more current example is Walmart. Through its SkillsFirst initiative, Walmart has committed $1 billion to workforce training and development, connecting skill-building to internal mobility and long-term workforce resilience.
What I like about the Walmart example is that it is practical, scaled, and forward-looking. It reinforces the idea that the talent often already exists inside the organization - you just have to invest in it.
Both examples show the same principle: strong organizations do not stop developing people when pressure rises. That is often the very moment they lean in.
Q: What are your most practical recommendations for leaders navigating today’s environment?
A: I would keep it focused and practical:
Protect your capability spine - focus on the roles and skills that directly impact revenue, delivery, and trust.
Treat internal mobility as a growth strategy - develop the talent you already have before assuming you need to buy it from outside.
Build cross-training into your operations - create flexibility and reduce risk when teams get lean.
Measure impact, not just participation - track retention, promotions, and business outcomes tied to training.
Modernize delivery - short, practical, easy-to-apply learning works best for busy teams.
Downturns test more than financial discipline; they test leadership judgment. The organizations that come out ahead are those that remain disciplined while protecting what matters most: their people.