Latest Research Shows Positive ROI for Employee Development Programs

Despite a predicted labor shortage and the anticipated retirement of millions of Baby Boomers, many companies assign employee development opportunities only on an informal basis, according to the Society for Human Resource Management (SHRM)/Catalyst 2005 Employee Development Survey Report. In response to these findings, organizations may find it necessary to move toward a more formal system for assignment of training, viewing training programs as part of a structured process to develop current employees.

In terms of the actual development methods used, the study found that generic and cross-functional training programs top the list of training methods most organizations use. The survey also showed a minority of companies use formal methods of employee development, including succession planning, job rotation and career mentoring programs. This survey polled a random sample of 248 human resources professionals to identify the employee development methods used by their organizations.

In addition to seeking new talent to replace the flood of retirees expected in the next few years, organizations should develop their current employees to avoid the loss of organizational knowledge and experience from those retiring.

“Many employers feel that the knowledge, experience and skills employees acquire in their day-to-day tasks is sufficient for developing talent,” said Debra Cohen, SPHR, Chief Knowledge Officer of SHRM. “However, with so many key employees positioned to retire in the near future, companies need to take formal steps to ensure smooth transitions and business continuity. When the talent and knowledge of retiring workers walks out the door, every organization needs to make sure they have others ready to fill the gaps.”

Investment in employee development programs has a positive effect on the bottom line. Although few organizations measure the return on investment of these programs, of those that do, almost all show a positive ROI. Despite this, the majority of organizations do not invest in formal practices, programs and methods meant to address employee development.

With the growing presence of women and minorities at all levels in organizations, there is a need to specifically focus development efforts on these groups. For example, the study showed that representation of women and minorities in managerial positions decreases significantly as the level of management increases.

“What we see is the business case for developing the talents and leadership of women and minorities, including people of color, which will become even more important in the years ahead,” said Paulette R. Gerkovich, Catalyst senior director of research. “Catalyst research shows that companies with a higher than average representation of women in top management significantly outperform companies with lower than average representation. Companies will find ways to develop talent across all lines because it’s simply good business and smart to do!”

For more information: visit SHRM online at www.shrm.org or visit Catalyst at www.catalystwomen.org

Go here for a complete listing of AMA’s HR/Training and other management seminars.

AMA On-site: Every one of AMA’s 170+ public seminars can be delivered on-site. This flexible, money-saving option allows you to train ten or more people, when and where you choose, at a low cost per participant. Click here for more information.