The Value of Learning and Development

The value of investing in training is a hot-button issue for many businesses. While there’s little argument that companies have a need for skilled workers, many organizations question the value of investing in learning and development and often, training is made to take a back seat as a way for companies to relieve the strain on tight budgets. But while cutting learning and development (L&D) costs can save a company a considerable chunk of cash in the short term, research suggests it may be having other, more detrimental, effects on business.

Investing in learning and development

According to the Conference Board of Canada, it’s vital for companies to invest in training if they hold any hope of staying competitive in the marketplace. In the board’s publication Learning and Development Outlook 2011, a summary of survey results from more than 2,500 Canadian organizations found a correlation between a decline in economic performance and a decline in spending on L&D. In that same document, its author concluded that one of the key drivers behind a decrease in Canada’s capacity for innovation could be that companies are neglecting to make L&D a priority.

In a 2006 study, researcher Laurie Bassi found direct correlations between a company’s investment in training and its financial results. Her work found that the quality of a firm’s human capital is one of the top four determinants of future financial performance, and discovered a relationship between training and stock prices. In fact, Bassi found that per-employee expenditures on training and development were a leading indicator for future stock prices. Her work concluded that investment in training resulted in a financial payoff for the company.

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