Training and Return on Investment
Leaders and managers know the development and training of their employees is critical to the growth and success of their organization. However, as leaders are pressured with time and cost constraints, the training budget is often the first to go. It can be difficult to justify training costs without the hard numbers to back up the value of education.
The research gathered below demonstrates the ROI of training and its positive impact on organizations as a whole.
The ROI of Training
Exhaustive research by Dr. Laurie Bassi, a human capital analysis specialist, found that training and development has a 300% return on investment. The ROI of training out-returns many other investment options like R&D.
The research found companies that invested in training and development had:
- 21% increase in productivity
- 24% higher profit margin
- 300% reduction in employee turnover
- 218% higher income per employee
- 86% higher company value, and
- A return per dollar invested of $6.72
Training and Financial Performance
Jack Welch calculated the impact of training and development on his executives and described the return on investment as infinite. GE continues to get returns on the leaders trained in the 1980s.
Research presented to The Association for Talent Development further supports this. According to this research, investment in employee training enhances a company’s financial performance. Research showed that an increase of $680 in a company’s training expenditures per employee generates, on average, a 6 percent improvement in total shareholder return.
Over a period of three years, the researchers studied more than 500 companies and found that firms investing the most in training and development (measured by total investment per employee and percentage of total gross payroll) yielded a 36.9 percent total shareholder return as compared with a 25.5 percent weighted return for the S&P 500 index for the same period.
Professional training is an investment that’s a win-win for companies and their employees. In fact, it is one of the first steps on the path to real, lasting change.
When it comes to Agile training, workshops and classes don’t make your organization automatically agile. Many factors play into organizational agility–from processes to culture–and some of them can’t be taught in a 2-day class. It takes commitment, practice and oftentimes, strong guidance.
However, it is vital your teams, managers, and leaders are all on the same page (language, practices, processes) when it comes to Agile frameworks and methodologies. That’s where training comes in.