Maximizing Talent Development in Face of Budget Constraints
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Maximizing Talent Development in Face of Budget Constraints

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Sofía Garduño By Sofía Garduño | Journalist & Industry Analyst - Wed, 04/19/2023 - 14:01

As businesses around the world grapple with the uncertainty brought on by continued economic disruptions, many directors are bracing for budget constraints in the year ahead. As chief human resources officers (CHROs) are responsible for managing talent and workforce development, they are uniquely positioned to guide the decision-making process around these cuts without sacrificing the development and growth of their most valuable asset: their employees. Consequently, before implementing any talent programs, industry leaders recommend offering non-financial incentives in addition to economic benefits to ensure that companies can continue to develop and retain top talent in the face of budget constraints.

The economic landscape of the post-COVID-19 era is fraught with challenges and many businesses are facing tough decisions as they look to navigate uncertain terrain. According to a recent Gartner CFO and CEO survey, companies are preparing for budget constraints in 2023, with investments in workforce and talent development among the top three programs expected to be cut. This is largely because businesses are looking for ways to reduce spending and conserve resources in the face of economic uncertainty. However, such cuts can have serious implications for the long-term health and competitiveness of a company, as a lack of investment in talent development can lead to a shortage of skilled workers and an inability to keep pace with rapidly evolving technological and market trends.

To navigate these challenges, CHROs must focus on retaining talent through innovative and strategic approaches. "It is the responsibility of HR executives to align business and development strategies, so talent can become an investment, rather than a cost," said Sergio Arangua, HR Director, Solistica (FEMSA). Leveraging analytics and predictive models to make informed decisions is essential given the varied scenarios and challenges presented by global crises. Aligning talent and development strategies with business objectives is also critical. Moreover, providing employees with a sense of certainty, creating a culture of development and outlining clear career paths are essential to retaining and developing talent in the organization.

However, budget constraints can pose a significant challenge to achieving success and HR departments must be equipped with strong arguments that support their plans. "We need to be highly strategic when it comes to budget cuts. We need to reinvest in key positions and profiles," said Alejandro Domingo, Country Manager, Cobee. One strategy that can be implemented is to metricize training programs to demonstrate their impact and benefits to decision-makers who focus on data. Also, companies can use social media and customer relationship management software (CRM) to leverage technology and better understand their employees' needs and preferences, explained Javier Jaramillo, Director of Human Capital, Blue Star Group. Meanwhile, AI can be used to automate onboarding processes and benefits programs, allowing HR departments to focus on providing a positive employee experience. "We need the right technology to build predictive models. That way, we can maintain quality while keeping costs down," said Michelle Cascardo, Expansion Manager LATAM, Deel.

Additionally, to present a successful budget proposal, the HR department must invest in emotional compensation to increase employee retention. This approach has been shown to make a significant difference in retention rates, particularly among millennials who value the ability to choose their benefits and live life on their own terms. For example, employees increasingly want to choose how they receive their salary, with some opting for cryptocurrencies.

However, navigating labor reforms that have already earmarked a significant portion of future budgets is a challenge. Creativity and innovation are essential to finding ways to adequately compensate and retain employees. It is important to emphasize that the success of companies depends on the strength of their people, and HR plays a critical role in cultivating and retaining that crucial talent. "The people serve as a bridge to enhance process efficiency and challenge the status quo," said Isabel Martínez, LATAM Head of People, WeWork. 

While budget cuts are often necessary, it is more important than ever for CHROs to focus on retaining talent. When companies prioritize talent development and growth, this can lead to a positive feedback loop where the success of the business and the development of employees support each other. Ultimately, investing in the well-being and development of employees can result in increased job satisfaction and better overall company performance.

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