Training and Development-Is it a good investment?

One of the factors for motivating and retaining employees is to provide them with essential training so that they are willing to grow and develop career enhancing skills. It can mutually benefit both the employee and the organization. Training in general increases employee’s job satisfaction, motivation, and morale. A trained workforce provides the opportunity to expand into new markets and seize opportunities in a highly competitive global economy.Training and Development
In order to gain results, there has to be a proper link between training and profitability. For this, managers need to sit with the employee in order to probe areas where employees can be provided with essential training. This information regarding employees’ training needs can be obtained through their performance appraisal analysis. It can help in:
•overall employee & organizational development
•succession planning (making an employee eligible for a planned change in his/her role in the organization)
•employee retention
For this, proper tools should be provided to reinforce training, objectives must be clear and appropriate tools should be provided for evaluating efficiency and effectiveness.
On the contrary, it might be too complicated to be cost effective. After receiving proper training, one cannot deny the fact that the trained employee might be willing to depart from the current job for a better opportunity.
What are your thoughts on this? Is training and development- a good investment or an additional expenditure?


  • Eric Saint-Guillain

    Today, it is a matter of fact that people in companies are playing a key role in the process chain, and the training is essential to help them to play that role on a effective way.
    There is two essential conditions. The first one is that employees have to subscribe to the project of the company and have to be in the right place, playing a role matching with they expectations. The second condition is that the manager needs to ensure that the first condition is met, and for this needs to develop a long term vision with defined goals and targets. As you mentioned, these trainings needs to be defined with manager and employees, to ensure there is a matching between the expectations of both parties.
    These conditions are the start points to ensure that trainings will be an investment for the company and not a cost.
    Another essential point is to have a long term vision. I often heard that trainings are considered as a cost, because during training times, people are not productive. This is a short term vision. By receiving training, people can gain some expertise in specific areas, and can perform their work with more efficiency and effectiveness, which means a gain of time and of increase of quality. By improving their work and the results, their motivation is increasing too, which has a positive impact on the success of the organization. So, the initial cost is largely compensated by these gains. There is clearly a return on investment.

  • Anything is an expenditure, and with such a tight focus on reducing operational costs, training and development is usually the first to suffer; either by directly removing the T&D budget, or by restricting T&E and making attending training events more of a challenge.
    A smilar cost saving can be carried out when driving your car. When travelling at speed on a motoreway (highway), shift your car into neutral. Immediately your fuel saving is seen and you continue to travel at close to your normal speed, so it appears that the cost saving in fuel was a good decision.
    However, after a period of time, your speed decreases to a point where your progress is insufficient and so you have to increase the cost by shifting back into gear. Unfortunately the cost to get back to where you were is higher than if you hadn’t made the initial saving.
    Same with T&D – pulling back the budget may show a short term saving, but you risk mid- to long-term issues with staff leaving due to lack of development and insufficient skills in your ever-changing business. The cost to replace these staff and to re-educate those left will probably be higher than continuing to develop.
    So rather than take the short term view of cutting the T&D budget, a better solution would be to review how to make more efficient use of resources and “effective” distance learning tools.

  • Training and development is an investment, and like any other investment, effort should be expended during tough times in order to gain more during the “good” times.
    Since sales and sales management is the space I know best, I’ll use a general example from that. As mentioned in the other answers, training and development is reduced during difficult economic times. So, instead of firms using slower economic times to re-tool and re-train their sales teams to take advantage of the impending recovery, they slash expenses and make no meaningful changes in the sales team skill sets (leaving reps unprepared for recovery).
    Then, once economic conditions finally recover (and when, presumably, a firm would want its sales team in the field closing deals in a favorable environment – not in a classroom), firms take their teams out of the field for training and development.
    In my experience, the firms who get the most out of the training and development investments are the ones who “invest” during the tough times, and then reap the rewards when the economy recovers.
    Investing in training and development is no different from how successful financiers invest their money – buy low and sell high.
    That said, continuous improvement is always important. For more on this, you might be interested in the blog article below.

  • Yes to both. It depends on how you structure your training development and deployment. In my mind training has to deliver results. If it doesn’t it’s talking not training. So if you to quote Covey, “begin with the end in mind,” you can have a clear objective on what the training is going to accomplish, what the participants are going to do differently and what outcomes the company should see then you are ahead of the pack.
    I think were companies get a little caught up, is that they think delivering something is cool, with out looking at the return they are expecting. This Non-Return based approach to learning is one of the main reasons I think that the market traditionally frowns on learning departments. They are labeled as the fun group, go there if you need to have a good time. Don’t you think we can have a good time and deliver results. I do !!!
    So it is an additional expenditure that can be positioned as a great investment.

  • You seem to have answered your own question regarding the value of investing in training.
    As for what happens when an employee receives training and then leaves; you should really be worrying about if that person doesn’t get trained and stays?
    If you train your employees, they should add to your bottom line. If they add to your bottom line and you share the wealth, most will stay. If you keep the returns to yourself, most will in deed leave.

  • Training and developing is only one element of managing “human capital”. The objective of “human capital management” is to harness the people of the organization for competitive advantage. The investment in training and development is absolutely a necessity.

  • Hi Salima,
    Training and development rather than being considered as a recurrent cost with no apparent ROI, is indeed an investment from the perspective of assuring that an engaged and motivated employee is a key factor in fulfilling its business goals.
    To make sure that investments in training and development can be cost-effective in the long term, these must be tied to succession plans with links to business goals that should be susceptible of being analyzed, measured and compared.
    The ultimate goal of such policies is to provide to a employee from the programs of training and development that they need to grow professionally in congruence with the business strategy; in a workplace environment on which, an employee may be rewarded and acknowledged for his/her positive contribution to an organization; where an employee may grow with justified pride for belonging to a prestigious organization that provides him/her from approaches to reach a healthy balance between life and profession.
    In these times when there is a clear understanding that the workforce is the main asset of an organization, makes sense apply consistently the best practices of Talent Management to attract, engage, motivate, train and retain the best professional talent currently available in the job market. In parallel to these good practices of Talent Management, is instrumental that current HR organization assume a more strategic role, that even may have a seat at the Corporate Table, and apply policies of employer brand management to instill in its employees a meaningful sense of purpose and a justified pride of belonging to a great place to work.
    If you need justify the value of training plans and development programs with the business goals, you should make sure that you have at your disposal an effective approach where you may correlate the skills and behavioral competences inherent to a given role, with the business goals that are accordingly defined in congruence with the the business plan and the strategic plan.
    To achieve this goal is advisable applying employee performance management systems, where performance appraisals and competency management are tied to the business goals and may be coupled with Learning Management Systems to provide to the workforce all the resources they need in managing by themselves their own professional development.
    In a nutshell, a satisfied employee is more compelled to remain faithful to a company where he/she is more motivated to make an extra effort in achieving the business goals.
    With the aim of being helpful for your purpose, I am including links to 3 questions, I have posted time ago in Linkedin Answers:
    1. Does the current economic meltdown justify a slowdown in Talent Management practices?
    2. How would you create a sustainable Competitive Advantage by applying Competency Management?
    3. How do you reward excellence without being a conspirator against corporate culture?
    I hope this helps you.

  • no only not enough, the company must have employee retention strategy, to retain trained manpower. without training, the business will not go further, but retaining talents is another vibrant topic which need to be addressed along with this topic.

  • Hi Salima,
    There can be two way of looking at this. Let me start with the way we view it today:-
    1. In today’s date, (unfortunately) most of the companies look at the ED/OD or succession planning or Emp. Retention as big investment which has no immediate reflection on the bottomline. This is certainly a bad way of thinking however a good way of curtailing expenditure. In a time when everyone is busy saving his own forte instead of making a new one, it has really no substitute.
    2. Talking of a better time when cut throat competition used to be present in the market, every company lined up for the same share of wallet of the customer, this was really a good option to invest in training and development programe to equip them with all the armour in their stable. There was a time when getting training on specific speciality set was treated as being getting a better chance but now a days even employees are just trying to save their own head instead of preparing themselves for more bad days to come.
    At a personal note, in my professional career, which is just 1 Year 5 month long, I think I am fortunate enough to have seen this tough time so early as this has made me rock solid to face any turbulence. We were 7 students from the same college who joined this company and within 8 month I was the lone survivor and still I am. The reason being I took up more challenges. Being from a Hardcore Marketing background, I could have insisted on doing the same. But on the contrary I took up assignments in Supply Chain, Production, Export Documentation and even Export Photography and that made me an overall package. Even during this tough time I got 20% increment.
    Coming back to your question, I slightly differ from the inference that you have stated “A trained employee can fly away for better opportunity”. It may be but not certainly. And that does not create an excuse infront of the company to stop their training programmes. In my current assignment I am working on some sales techniques using TOC, which states that (for me the concept is marvellous),
    No bad debts = No sales = No profit = No throughput = Company shuts down
    Similarily if you don’t invest on your own employees, eventually their career enhancement will come to a halt .
    No training = No enhancement = No progress = Company stagnates and seize
    So, in my own point of view expenses on employee training and development can never be an investment. In a more sophisticated way of saying you can call it creation of ASSETS for your ORGANISATION.

  • Adam Munga

    It is definitely and investment in the long run.
    Training is one aspect employees usually complain about when asked about job satisfaction. Yes they are skilled in their roles, but most jobs and job tasks are dynamic. Nothing stays the same.
    Staff are just as important to keep happy like customers, one good thing is that they are already there and you just have to work them emotionally enough, in a good sense, to get the best potential out of them.
    Do a SWOT analysis concerning staff development and you might get a surprise be it good or bad. Then you have sufficient tools to back up the expenditure and have the knowledge to keep your best performers.

  • John Schaefer

    Hi Salima,
    This is a very good, but multifaceted question. I am reading Danial Pink’s book A Whole New Mind, which I highly recommend. In a nutshell, is points to a new era approaching, what he calls the Conceptual Age (right-brain thinking), as the Knowledge age begins to fade (left-brain thinking). He is not saying that left brain thinking is no longer needed,but must be suplimented with right brain concepts.
    How this impacts you question, is what I have been developing at Schaefer Recognition Group for about 6 years. Training in itself is a good thing, but it’s value is tied directly to employee perception and how much they feel that you truly care about them (right brain thinking), rather than simply using training as a way to get more work out of them (left brain thinking).
    There three secrets to making training a good investment are:
    1. Make it Real – show employees first and foremost that you value them as people, so they believe you mean it and see your training, recognition and incentive opportunities as more about them, than about the company. You get the trickle down value automatically.
    2. Make it Relevant – We have a more sophisticated workforce today than ever before. The good news is that they are more able to hit the ground running and use tutorial-type self training tools. The bad part is that they are very fickle and immediately recognition when they are being manipulated. Your training and communications must focust on keeping your people informed about the big picture (right braining thinking), rather than the more traditional “need-to-know-basis” (left brain, and somewhat insultring, thinking). You must have a component in your train the trainer that gets the management team emotionally on board, so they not only can implement the training, but demonstrate what’s in it for everyone involved. If you have begun with showing employees that you genuinely Love and Respect them (right brain), the are more likely to believe and get behind training the will help THEIR company.
    3. Prove it’s Working – This is the part where many good intentions fall short. If you can’t prove that your time and effort spent on training is yielding measurable, profitable results,you will soon find your best training efforts on the cutting room floor. Upper management normally houses the most left brain folks in any business, and while they may give you some warm and fuzzy right brain leaway, they will ultimately need to show the board an ROI component that justifies the money. This can be done using today’s high tech platforms, as long as you are working with someone who understands, practices, and promotes the development and use of drill-down reporting as a total performance management strategy, Don’t set up just a training program, but view the goal as building a performance management tool, that saves far more than it costs.
    Good question and good luck!

  • The right training and development is a necessity in today’s world of work, and can show great returns on your bottom line.
    Yes, companies know that employees won’t stay forever. In fact, I just heard recent numbers showing the average stay at a company is 4.3 years. So companies need to focus not on getting the most out of their employees, but on getting the best out of them.
    Here’s one example of the benefits in building the personal brands of your employees at your company :
    Companies today need to innovate to be successful. If they don’t innovate, they become a commodity, and commodities compete on price. No company wants to do that.
    To innovate, companies need creativity. And creativity comes from diversity, and when we talk about diversity we’re talking about it down to the level of the individual.
    When each individual contributes something that is only uniquely available from them, that ensures creativity, which leads to innovation, which makes a company more successful in the marketplace.
    When each employee has developed a strong personal brand, they can deliver that value to support the corporate brand promise, which makes the company exceptional.
    I believe it’s a win-win for both the company and the employee.

  • David Jacobs

    The first question you must ask is ” who is asking the investment question?”
    If it is the CEO everyone might be suprised at the answer. Most CEOs do not know how much money is spent on training. What is the investment, what is the reward? Once you can quantify training results into $$$, the sooner you can answer yes to “Training and Development -Is it a good investment?
    Most organizations treat training department as an expense or a cost and surely should. Any expense or money spent that can not show you an improvement or a gain in performance would be just spending money, but any organization that can show a Return On their Investment. i.e. link the investment directly to the improved performance, they can actually show a good investment.
    Here is an example I always give when asked the “investment” question.
    If you spend the money to send your childen to a 4 year college what will their over all chances for making more money in their lifetime vs. not sending your children straight into the worforce without any additional education.
    Training is education. The more you can get the better off you will in the future.
    By yourself the following book: Developing and Measuring Training The 6 Sigma Way…..A business Approach to Training and Development

  • The answer to this question depends on how your training function is managed. There are essentially two ways.
    1. Training on demand. Someone asks the training department to provide training, and the training department complies. No attempt is made to evaluate the results of the training beyond reaction. The training department is a cost centre, an expense.
    2. The training function is run more like a business. When the training manager receives a request for training, he/she asks questions to determine if there is an actual training need.There isn’t always. There may be a need, but it isn’t a training need. A training need exists when an employee lacks the knowledge and/or skill to perform an assigned task satisfactorily. If the need doesn’t have to do with a knowledge or skill deficiency, training won’t work, and the cost/benefit ratio will be all cost, no benefit. If you are calcuating the return on investment of the training, the return will be negative.
    Managers worry that they may provide training only to have people leave and take the training with them. Yes, this may happen. But it’s no reason to withhold training. Try this question: Does your organization run better with trained employees or with untrained employees? Thought so. Please train your people.

Leave a Reply