By Allan Schweyer
“Training is fundamental to the long-term success of any organization. A recent survey of U.S. industrial companies shows that training budgets are one of a very few areas of spending likely to increase in 2009 over the prior year. This is because good companies know that the financial payback from training is so high that they are willing to invest in it even during a severe recession.” – Linda Bilmes & Scott Gould, The People Factor, 2009
For more than a decade, former American Society for Training & Development (ASTD) President Dr. Lauri Bassi and her colleagues have tracked hard “proof” that investments in training pay off to the bottom line. Their findings demonstrate that, year over year, there is a high correlation between the expenditures on training/training content and company stock price returns – in some cases, “super normal” returns occurred in model portfolios. Bassi et al demonstrated a 5.6% per annum out-performance compared to the S&P 500 index over the same period of time, and much greater returns for organizations that were in her top quartile for training expenditures.
The evidence supporting investments in training and development is, in fact, overwhelming. Nevertheless, most organizations fail to capitalize on the opportunity. Part of the challenge lies in accountability – who in the organization should be charged with ensuring that career development takes place such that it benefits both the worker and the organization? In my view, the answer is clear and unambiguous: the front line supervisor or manager in concert with the individuals themselves.
Last year I co-authored a comprehensive talent management study with the Human Capital Institute and Hewitt Associates. In it, we found that only about 10% of organizations consistently hold senior executives accountable for developing their direct reports, and just 7% do so with managers.
This is surely a critical issue in most mid- to large-sized organizations where the manager is the only practical link in the chain to ensure that the workforce is developed. In study after study, workers of all ages and backgrounds tell us that career development is among the top three drivers of retention and engagement (and therefore productivity).
Most business leaders will say that developing talent is important, but many fail to follow through. In most cases, the selection of managers and their reward mechanisms ignore their ability and willingness to spend the time to develop others. And if managers aren’t accountable for developing their direct reports, who is?
But more telling is the fact that most managers lack the basic capability to develop talent effectively. Just over a quarter (26%) of the almost 700 participating organizations in our survey (HCI/Hewitt) believed that their managers have the skills and capabilities to grow people in their jobs to a considerable degree, and only 5% believed their managers demonstrated this ability consistently across their organization. When asked if managers provide ongoing developmental feedback to employees, respondents reported similar results.
What happens in companies when managers aren’t capable of growing their reports or are not held accountable for doing so? Not only do employees lack a clear picture of the skills they should build to support business growth, they also lack an individual development plan that may anchor them to their organization.
Having no plan for their career with their current employer, most top talent will leave, especially in a stronger economy in which they’re the first to receive offers. Employers that have ignored career development during the recession may only have months remaining before they face a devastating loss of top talent and future leaders. Attention paid today to making managers competent talent stewards – with rewards and consequences attached – will pay off many times as the economy goes from recession to recovery.
Towers Perrin Global Workforce Study, 2008