I enjoyed some protracted, but nevertheless enjoyable debate over the weekend regarding the value of ongoing skills development and the similiarities to sports coaching.

Afterwards, I researched some commentary that I produced a few years back, and I thought I would share it with you.

Research by the American Society for Training & Development (ASTD) has shown that organizations 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 collected by ASTD is the first published research to overcome the fundamental measurement problems that occur when correlating per-capita investment, an intangible asset and financial profit. The database contains standardized information on training expenditures for hundreds of publicly traded firms. Data has been collected on more than 2500 firms in 63 countries, of all sizes and industries. Training investment is measured in dollars per-capita.

Correlation Between Training Investment And Shareholder Returns

ASTD’s results show there is a significant correlation between pounds spent 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).

* Organizations 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. Bearing in mind the disparity between “direct cost” and the true cost of “learning”, the return may be more like $3.36 to $6.72 – still a very high return.

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: Over at Top 10 Sales Articles, Kendra Lee has a commanding lead as we enter the final week – have you voted yet?

Trackback URI | Comments RSS