Defining ROI
Employee Training & Development

 

Many companies both large and small ask themselves the question, “Is spending the money on employee training and development really worth it?”

 

According to studies by the American Society for Training and Development (ASTD) and recent articles in the Harvard Business Review the answer to that often asked question is a resounding “Yes!” According to a recent article in the Harvard Business Review, when an organization invests resources in the training and development of its human assets, the organization can expect to receive these specific things in return:

  • Increased value of the company’s human assets

  • Assurance that competent people will be ready and able to move up as vacancies in the organization appear

  • Creation of a pool of individuals who understand the company’s industry and are knowledgeable about the latest practices of the industry

  • Employees who are prepared to assume leadership roles as the enterprise grows

  • Effective retention of the top employees*

Having well-trained and highly skilled employees will allow you to promote from within, saving thousands of dollars in recruiting costs. Providing training and development opportunities to employees has been shown to reduce turnover by up to 70%. With the total cost of replacing an employee including lost production and missed opportunity costs, estimated anywhere from 50% to 150% of the departing employee’s salary, the importance of retaining employees is clear.

 

A study conducted by the American Society for Training and Development (ASTD) addresses a more targeted impact on the bottom line. ASTD surveyed 575 publicly traded companies which showed that for every $700 spent in employee training, there was a 6% increase in total shareholder value the following year.

 

Clearly there is a very strong correlation between employer provided training and development and the bottom line, employee satisfaction, and retention. It has become more common for employers to recognize the value of this investment as they become increasingly proactive in providing training and development opportunities.

 

 

Author: Ryan Noll, Associate HR Business Partner, Helios HR

 

* "Developing the Employees You Have: A Strategy for Training and Development." Harvard Business School Press, Boston, MA 2006. "Hiring and Keeping the Best People," p. 2-4.

 

 
Issue 6 | June 2008
In this Issue

 

Also This Month...

 

Emerging Trends Impacting HR
 June 26

 

 

ELITE Program
Emerging Leader Institute
 New Session Starting Sept. 10! Washington, DC location!

 

 

About Helios HR

Helios HR client-focused delivery models include:

  • Human Resource Outsourcing

  • HR Consulting

  • Interim HR Management

Additional information is available at www.helioshr.com