Training Evaluation and the Financial Goals of the Firm

Training Evaluation,  Posted by Dave Basarab, V.A.L.E. Consulting, on Mon, Sep 12, 2011

Many business leaders define the ultimate financial goal of a firm as “to maximize shareholder wealth” or “the creation of shareholder wealth.”  Both terms may be used interchangeably but essentially the goal is to have the price of its stock as high as possible.  In order for a company’s stock to grow in value you must have profitable growth.

Profitable growth means that a company’s profit grows at a greater rate than revenue.  This however might be difficult to achieve over a long period of time.  At the minimum, companies try to make sure that their profit is growing at the same rate as their revenue.

Profitable growth begins with the growth in a company’s revenue or “top line” but that is not enough.  What a company really aims at is growth in profits or “bottom line growth.”  It is the growth in profits that investors seek from a company in order to be willing to buy its shares, thus creating demand for the shares and increasing their price.

For training this means creating learning that increases employee performance that translates into profitable growth.  When we predict the value of training via the Impact Matrix, we need to find the link between what performance will drive bottom line growth.  If we cannot, then consider reworking the instructional design so that the predicted value will aid in this growth.  If we always check for this linkage, you can feel comfortable that what we train will be supportive and aligned with the financial goals of the firm.

http://www.evaluatetraining.com/blog/bid/45280/Training-Evaluation-and-the-Financial-Goals-of-the-Firm

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