The economic picture again seems to be dominated by doom and gloom. Let’s leave talk of the Euro zone debt crisis and possible double-dip recession to one side though. I am interested in what effect another round of economic belt-tightening may have on HR practitioners? Will companies, for example, stop investing employees if the economic situation worsens?

A recent CIPD study suggests this may not be the case. Seven in 10 employers report that spending on coaching has either increased or stayed the same since the last recession. And this comes during a period where budgets for HR have remained very tight. So what conclusions can we draw?

It is encouraging that learning and development is being prioritised by business leaders. Nobody can be sure what the immediate future holds for the economy. But what is sure is that companies, by investing in employees, can help better prepare themselves.

Of course this doesn’t mean blindly spending on endless learning and development initiatives. Companies should identify their talent and prioritise developing top performers. Set in place plans to nuture, develop, engage and retain them. By doing so, they can build from within.

Investment in training and development is a top priority. Employees want to feel valued and empowered to develop their skills and capability. Employers invest in development to gain improved performance and organisational effectiveness. Such investment also benefits the ‘employer brand’, helping attract the best candidates. It’s a win-win situation. The problem though is how employees are trained and developed.

Employees typically request greater investment in formal training. But it is more cost-effective and relevant for companies to focus on experiential, on-the-job learning. This issue has come up repeatedly at our roundtable events and is something many companies are tackling. But which approach is right?

We argue that experiential learning is best. And research backs this up. The 70-20-10 learning principle shows that learning on the job tends to be most effective in developing employees. It also offers obvious benefits from an organisation’s perspective, in terms of working capacity. But how do we get employees to see that this is best approach? Highlight the advantages of experiential learning over formal training:

Experiential learning, by definition, has greater relevance and application to the workplace. A major problem with formal courses is the limited transfer of learning.

To motivate employees, companies should start by initiating open, one-to-one conversations to understand what skills they are most keen to develop.