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What's the Link Between Organizational Training and Productivity?

By Dave Root on June 21, 2016

Blog_87_-_Whats_the_Link_Between_Organizational_Training_and_Productivity.jpgOrganizational training requires time and resources, like any other type of investment. How can you be sure that the results are worth the cost? Measure the productivity improvements at the individual and organizational level.

Perhaps Benjamin Franklin said it best, “An investment in education always pays the highest returns.” Here are a few examples that show just how correct his instincts were.

Training Boosts Productivity Better than Equipment

It is often easier to justify spending money on tangible equipment than it is to rationalize an investment in training. You can touch a new computer and interact with software, but you can’t do the same with a two-day process improvement workshop. However, the data says that your training dollars will go further than your equipment dollars when it comes to productivity.

In fact, a recent report from The National Center on the Educational Quality of the Workforce concluded that a 10% increase in education level resulted in an 8.6% improvement in productivity across all industry types. For non-manufacturing businesses, the improvement in productivity was even higher at 11%. In contrast, a similar investment in equipment only increased productivity by 3.4%. It is also worth noting that increasing the number of hours worked only improved productivity by 5.6%.

The key takeaway: Increasing the workforce’s level of knowledge reaps the best return on investment when it comes to improving productivity.

Productivity Translates to Profits

A larger investment in training resulted in a larger profit per employee, according to a study by The American Society for Training & Development (ASTD). The study compared two groups of companies, with one spending approximately three times the other on organizational training. The group that spent more had 57% higher sales and 37% higher gross profit per employee. This demonstrates that an investment in training correlates to higher productivity and a measurable return for the organization.

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The companies that performed the best:

  • Trained 86% of their employees
  • Invested 6% of payroll on learning initiatives
  • Used digital tools to complement hands-on learning.

Of course, the results for individual companies will vary, but you can measure training ROI in your organization by clearly defining goals, creating processes to gauge outcomes, and investing in experiential learning to get lasting results.

The key takeaway: Effective training improves productivity, which leads to higher profits.

Training and Coaching Takes the Cake

A study published in Public Personnel Management compared productivity improvements between only training and training supplemented with one-on-one coaching. A group of managers went through a training program that increased their productivity by 22.4%, which is a respectable number. However, when that same group went through the training program and eight weeks of  coaching to support the retention and application of the learning post-program, productivity shot up a remarkable 88%.

The key takeaway: Organizational training is definitely worth the investment, but if you add coaching you will see an even greater improvement in productivity.

Very few businesses can honestly say that they don’t want to improve productivity. Why wouldn’t you want to get more for your labor investment? A clear link between organizational training and improved productivity makes it difficult to say no to investing in learning. How much more productive would your employees be with the right training resources?   

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Dave joined Eagle’s Flight in 1991 after having spent a number of years with a Toronto-based accounting firm. Since that time, he has held a number of posts within the company, primarily in the areas of Operations, Finance, Legal, and IT. In his current role as both Chief Financial Officer and President, Global Business, Dave is focused on ensuring the company’s ongoing financial health as well as growing its global market share. In pursuing the latter, Dave’s wealth of experience and extensive business knowledge has made him a valued partner and trusted advisor to both our global licensees and multinational clientele.

About Eagle's Flight

Founded in 1988, Eagle's Flight has earned its reputation as a global leader in the development and delivery of business-relevant, experiential learning programs that achieve specific training objectives and lasting behavior changes.

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