Jun 13 2008
The Correlation Between Training Investment And Shareholder Returns
Research by the American Society for Training & Development (ASTD) has shown that organisations that are able to offer their salespeople opportunities for ongoing development are ten times more likely to create more peak-performing salespeople than those that don’t.
Data has been collected on more than 2500 firms in sixty three countries, of all sizes and industries. Training investment is measured in dollars per-capita.
ASTD’s results show there is a significant correlation between spend on training per-capita and total shareholder return one year later. Profitability does not show immediately because of a lag effect in the stock market, but it shows a year later because of the hidden nature of investments in staff.
The following findings by ASTD compare the relationship between training investment and total stockholder return (TSR) in the subsequent year:
• Firms in the top quartile, with respect to training investments, have higher median TSRs in the subsequent year than firms in the other three training quartiles. Further, the third quartile is higher than the second and the second is higher than the first (the quartile with the lowest training investment).
• Organisations in the top half for training expenditure in one year have a mean TSR in the following year of 36.9%, while organizations in the bottom half have a mean TSR of only 19.8%.
• Firms that spend more than average on training have TSRs that are 86% higher than firms that spend less than average and 45% higher than market average.
• The model estimates that each dollar invested in training leads to a $33.57 benefit to the firm.
Therefore, Sales Directors need to allow sufficient time to enable their investment in training and development to “pay off”.
Introducing ongoing reinforcement programs will help accelerate the benefits gained from the training and development investment.
Today’s News: One of my fellow Top Sales Experts, Alen Majer is Croatian and he has written a superb book called “How To Sell To Americans” - I highly recommend it and you can find it here
Tomorrow: It’s a final, final proof read for the 140 page Top Sales Experts e-book, which you can download from Tuesday, all being well - and it’s FREE.
Have a great weekend and be sure to make your way back next week - JF
