Every time OpEx gets tight, it’s the same list. Travel. Discretionary spend. Learning and development.

In fact, scaling companies do it. Organizations in transformation do it. PE-backed teams under margin pressure do it. And almost every time, learning and development lands near the top of the cut list.

But here’s the problem: that’s not a bad financial decision. That’s a misclassification problem.

This is the first in a four-part series called “Reimagining Learning & Development.” Over the next month, I’m going to dismantle the way most organizations think about their people investment — and rebuild it as what it actually is: a strategic asset, a financial position, and the infrastructure that determines whether your next transformation lands or stalls.

This week: why learning and development keeps getting misclassified on the P&L — and what strategic human capital management actually looks like when it’s done right. In the weeks ahead, we’ll get into how to reposition your development budget as an investor story, a tax strategy most leadership teams don’t know exists, and the capability gap that’s quietly undermining every transformation initiative in corporate America.

If you’ve ever sat in a budget meeting and watched the development line get cut without a fight — this series is for you.

What Strategic Human Capital Management Actually Is

In last month’s series, The Price Just Went Up on Humanity, we explored how AI is compressing the experience layer that builds expertise — and what that means for organizations that depend on human judgment. This month, we’re looking at the other side of that equation: the investment layer. Because the way most organizations classify and manage their people spend is fundamentally misaligned with what their strategy actually requires.

In practice, most people use “human capital management” as a synonym for HR operations — recruiting, onboarding, performance reviews, compliance. However, that misses the point entirely. Not at the strategic layer.

Strategic human capital management is the deliberate alignment of your people investment with your organizational outcomes. In other words: what capabilities does this company need to execute its strategy in the next 12, 24, 36 months — and are we systematically building them?

Essentially, the difference comes down to this: training because HR said so versus developing people because your roadmap requires it.

When learning and development disconnects from strategy, it looks like a cost. On the other hand, when you connect it to outcomes, it becomes a capital investment — one with a measurable return, a defensible budget line, and a direct link to enterprise value.

The OpEx Trap

Here’s what happens when learning and development lands on the P&L as an undifferentiated expense: it competes with everything else that’s also undifferentiated. And it loses. Every time. Because no one in that budget meeting can point to a number and say: this investment produced that result.

In other words, that’s not a learning problem. Instead, that’s a positioning problem.

McKinsey research on organizational resilience shows that companies investing in capability building during downturns outperformed their peers over the subsequent five years. The companies that cut? They spent the recovery period rebuilding what they eliminated.

As a result, the cost of cutting is deferred, not avoided. And it compounds.

Furthermore, this matters more right now than it ever has. Anthropic’s March 2026 Economic Index describes what they’re calling “a tale of two workforces” — managers are reporting growing performance gaps between workers doing the exact same job, with the only differentiator being whether they know how to use AI effectively. In fact, the skills gap isn’t theoretical. It’s already splitting teams in real time. And the organizations cutting learning and development right now are accelerating that split.

What Gets Cut When You Cut Learning and Development

Consider what actually disappears: not a line item, but a set of capabilities your organization no longer builds. As we explored in The Experience Crisis No One’s Talking About, AI has already compressed the repetition layer that used to build expertise organically. When you also cut the deliberate development layer, there’s nothing left. Specifically:

• The leaders who needed development to handle the next level of complexity don’t get it — and either plateau or leave.
• The organizational bench gets thinner. Key person risk goes up. Succession readiness goes down.
• Change initiatives stall because the behavioral infrastructure needed to execute them was never built.
• Recruiting costs increase because internal promotion pipelines dry up.

On top of that, a Gallup study on employee development found that 87% of millennials — now the largest segment of the workforce — rate “professional or career growth and development opportunities” as important in a job. Consequently, organizations that stop investing in development don’t just lose capability. They lose people.

Moreover, Deloitte’s research on senior leader wellbeing finds that over 80% of senior leaders are experiencing burnout-level stress, with 51% actively considering leaving their organization within the next 12 months. Notably, the primary driver isn’t just workload — it’s the combination of AI-driven change velocity and unclear organizational direction. When you cut the development infrastructure that helps leaders build capacity through disruption, you don’t just risk losing capability. You risk losing the leaders themselves.

Repositioning the Investment on the P&L

So here’s the reframe: learning and development isn’t a discretionary expense. Rather, it’s infrastructure investment for your human capital — the same category of thinking you apply to technology, systems, and physical infrastructure.

After all, you don’t cut your CRM when budgets get tight. Similarly, you don’t eliminate your project management system. Because those are tools your strategy depends on.

Likewise, your leaders are tools your strategy depends on. Except they require continuous investment to maintain and increase their capacity.

Consequently, the SHRM research on human capital ROI consistently shows that organizations with formal, strategically aligned development programs see 218% higher income per employee than those without. That’s not a rounding error. That’s a structural difference in how organizations manage human capital.

What Strategic Alignment Actually Looks Like

Specifically, strategic human capital management starts with a simple question your development program probably can’t answer right now: what specific organizational outcomes did you design this investment to produce?

Notably, if the answer is “well, we do management training and some online courses,” that’s a symptom of the problem.

Strategic alignment means:

• You derive development priorities from your operating plan and growth strategy — not from a catalog.
• You scale investment levels to the criticality of the capability you’re building.
• You measure progress against business outcomes, not completion rates.
• The C-suite sponsors it because they can see the direct line to results.

In particular, that last point matters more than most leaders realize. When the CEO treats learning and development as an HR program, the organization treats it as an HR budget. But when the CEO treats it as a strategic investment, the room protects it — because everyone understands what they’d lose along with it.

Here’s how wide the gap already is. PwC’s 2026 CEO Survey found that 62% of global CEOs believe AI will fundamentally change the skills required for leadership within three years. Only 27% say their leadership pipeline is ready. That gap — between knowing the shift is coming and actually building for it — is exactly where strategic human capital management lives. And it’s where most organizations are underinvesting.

The Transformation Multiplier

Here’s the reason this becomes urgent at inflection points: transformation initiatives — AI adoption, organizational redesign, succession, scaling — all require people to change how they work. Not just processes. Not just systems. People.

According to Prosci’s change management research, projects with excellent change management are seven times more likely to meet objectives than those with poor change management. In other words, the difference isn’t the technology or the structure — it’s whether the human capital investment ran in parallel with the operational change.

Additionally, Deloitte’s 2026 Human Capital Trends report puts a number on this: 73% of workers say their organization pushes new technology adoption faster than they can build the skills to use it well. That’s not a technology problem. Rather, that’s a development infrastructure problem — and it’s the direct consequence of treating learning and development as a cost to minimize rather than a capability to build.

Ultimately, learning and development isn’t what you do after the transformation. It’s what makes the transformation stick.

What This Means for Real Leaders in Plain English

If you’re a founder, operator, or executive reading this — here’s the plain version.

Your development budget is probably positioned wrong inside your organization. Not because you don’t value it, but because the way it’s categorized on your P&L makes it invisible at decision time. As a result, nobody in the room can connect the dollars to an outcome, so it gets cut alongside travel and office snacks.

Instead, the fix is repositioning what you’re already spending so it’s tied to the capabilities your strategy actually requires — and so the people making budget decisions can see what they’d be cutting. When your CFO understands that this line item is what makes your succession plan work, your AI adoption land, or your next leader ready to step up — it stops being discretionary.

At the same time, the workforce is already splitting. The people who know how to work with AI are pulling ahead. The ones who don’t are falling behind. And the organizations that cut the training line item are the ones who’ll be wondering, 18 months from now, why their transformation didn’t land and their best people left.

So start with one question in your next leadership meeting: can anyone in this room tell me what specific business outcomes our development investment produces? If the room goes quiet, that’s the gap. And it’s fixable.

Ultimately, if you’re navigating an inflection point — and you’re reading this, so you probably are — the question isn’t whether you can afford to invest in your leaders. It’s whether you can afford what happens when you don’t.

If you’re ready for a conversation about repositioning human capital development as a strategic function in your organization:

Schedule time with Brynn

Estimated reading time: 8 minutes

1. McKinsey & Company — Why Investing in People Builds Resilience: https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-organization-blog/why-investing-in-people-builds-resilience
2. Gallup — How to Improve Employee Engagement in the Workplace: https://www.gallup.com/workplace/285674/improve-employee-engagement-workplace.aspx
3. SHRM — Human Capital Benchmarking Report: https://www.shrm.org/topics-tools/research/human-capital-benchmarking
4. Prosci — Change Management ROI: https://www.prosci.com/resources/articles/change-management-roi
5. Deloitte Insights — The High Cost of Employee Turnover: https://www2.deloitte.com/us/en/insights/focus/human-capital-trends.html
6. HBR — Why Companies Should Invest in Employee Well-Being: https://hbr.org/2019/05/why-companies-should-invest-in-employee-well-being
7. World Economic Forum — Future of Jobs Report 2025: https://www.weforum.org/reports/the-future-of-jobs-report-2025
8. BCG — Reskilling the Post-Pandemic Workforce: https://www.bcg.com/publications/2020/reskilling-workforce-for-the-future
9. Anthropic — Economic Index, March 2026: https://www.anthropic.com/research/economic-index-march-2026-report
10. PwC — 28th Annual Global CEO Survey 2026: https://www.pwc.com/gx/en/ceo-survey.html