A Review of Employee Training and Development

Employee training and education is the most reliable tool that companies can use to keep an edge on the competition.

In fact, there is evidence that investments in work-force training can predict a company's future performance, including stockholder return.

The American Society for Training and Development found that of 575 publicly traded firms reviewed between 1996 and 1998, those that invested $680 more in training per employee than the average company in the study, improved their total stockholder return by 6 percentage points -- even after other factors were considered.

Researchers also found a link to the gross profit margin and income per employee. Firms in the top quarter of the study group that invested an average of $1,595 per employee in training had 24 percent higher gross profit margins and 218 percent higher income per employee than firms in the bottom quarter that invested $128 per employee.

"The first thing a company should do is to identify what their training needs are," said Jennifer Homer, spokeswoman for American Society for Training and Development in Alexandria, Va.

But in this era with a shortage of skilled workers, talented employees are a key differentiator in the new economy.

"(Training) doesn't begin and end with a course," Homer said. "A company ought to be looking at developing a long-term plan. It doesn't have to be complex."

Once a company has decided to initiate a plan, there are several steps that need to be taken. Organizations such as ASTD or the American Association for Adult and Continuing Education in Washington, D.C., can help companies find the right type of program.

For example, ASTD's Web site offers employers a directory of local companies that specialize in topics ranging from sexual harassment, diversity or learning a new computer software.

Virtual learning also is becoming more commonplace as companies take advantage of the Internet to make training available to nearly all their employees.

But with all the tools available, the Business-Higher Education Forum, a coalition of top corporate CEOs and university presidents, warns that American business is headed for a skills and knowledge crisis unless it improves the education of the growing minority population. The forum is a partnership between the American Council on Education and the National Alliance of Business.

"Diversity is an invaluable competitive asset that America cannot afford to ignore," said Stephen G. Butler, chairman and chief executive of KPMG LLP and co-chair of the forum's Diversity Initiative Task Force.