Hard New Evidence: Learning Predicts Profits

Many of the questions we get on our website ask for information about the link between training and performance. Below is a synopsis of an American Society for Training and Development (ASTD) study which unveils solid links between investments in workplace learning and an organization's financial performance.

Investments in training and learning predict corporate financial performance. That is the clear evidence emerging from a major national study of workplace learning practices and outcomes in 540 U.S. corporations conducted by ASTD.

ASTD's study, the first of its kind in the performance arena, compared company expenditures on workplace learning during 1996 with their performance during the first half of 1997. By creating two sub?samples in the study group ? those that invested an average of $900 per employee on learning and those that invested an average of $275 per employee ? researchers found that among 40 publicly traded companies in the sample the top group outpaced those in the bottom group by:

• 57% higher net sales per employee,

• 37% higher gross profits per employee, and

• 20% higher ratio in market?to?book values.

The study also provides companies, for the first time, with reliable concrete ways to measure the outcomes from workplace learning investments. Laurie J. Bassi, ASTD Vice President for Research and leader of this study, noted that this new work comes at a time when traditional forms of competitive advantage (cost?technology, distribution, new product lines) are weakening. Companies are concluding more and more frequently that their only sustainable source of advantage lies within their employees. Bassi states,

"So while the need to make sizable investments in human capital is growing, companies haven't had the 'metrics' for maximizing the value of those investments. This study gives them the 'metrics."

In a second phase of the study, ASTD identified a group of 32 companies with leading edge workplace learning practices, and analyzed company performance against a set of these indicators. This work yielded additional insights into which workplace learning practices and investments are the most important predictors of future financial performance. "We find that leading edge companies simple approach this whole topic of investment in people with a different mindset," said ASTD President Curtis E. Plott. " They spend more, they use technology more extensively and creatively, they outsource more, and they have a more innovative blend of practices."

For more information call 703-683-8100 and ask for the Linking Performance Benchmark Study.