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"If
you think education is expensive, try ignorance." As
astute as these words from former Harvard University president Derek Bok are,
they provide little consolation for practitioners trying to make the business
case for training. Anybody serious about moving senior management beyond the tired
rhetoric ("people are our most important asset") must understand the
need for hard-nosed ROI justifications for any training program. Fortunately,
recent studies can help make the business case for employee development and training.
Money management firm Knowledge Asset Management (KAM) has tracked the performance
of companies that invest more aggressively in employee development than their
peers over time. In 2001, they decided to put their money where their mouths were,
generating a live portfolio of 20-40 companies that spend aggressively on employee
development. In its first 25 months, that portfolio has outperformed the S&P
500 index by 4.6 percentage points. In January 2003, KAM expanded their investment
strategy by launching two additional live equity portfolios composed of similar
development-oriented companies. The results speak
for themselves, and they speak loudly: each of these three portfolios outperformed
the S&P 500 by 17% to 35% in 2003. Now that Wall Street is starting to get
it, how long will it be before your organization catches up?
Source:
"How's Your Return on People?" Harvard Business Review, March 2004,
p. 18.
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