Training: Measured Response
Training: Despite fervent debate about whether companies should measure the ROI of their training-and-development programs, most proceed (or not) on gut instinct.
David McCann – CFO Magazine : June 2011 Issue : Article June 1, 2011
In the mid-1990s, labor economist Laurie Bassi began to notice a strong correlation between public companies’ stock prices and how much they invested in training-and-development programs. On average, the more a firm invested in training in a given year, the higher its stock went the following year.
The big difference between this form of spending and other investments that can also boost share prices — such as those for research and development, capital equipment, and marketing — is that those latter ones show up on financial statements, allowing analysts and investors to incorporate them into stock valuations. Not so with money spent on training and development, which does not have to be reported and therefore gets little attention.
In my experience, if no-one is held accountable for a positive return on investment, no one will be interested in comparing expenditures to business gains.
This is changing.
In sales, where there is a direct and measurable connection to individual performance improvement and business bottom line, successful training should always present a positive ROI:
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