"You must spend money to make money" is a famous quote from Plautus which has been cited and repeated throughout history. Nothing more authentic has ever been saying. People invest in real estate, stocks, antiques, and more, hoping to get a better return on their initial investments. However, when it comes to most business owners fail to invest in their most important asset: their people. When a company grows, it must invest in the right people to help it thrive. Professional development is an investment in your business, just like investing in the right equipment, buildings, and software.
In this series, we will discuss the Top 3 Reasons professional development is essential to your company. Follow us on this journey as we break down each reason with its personalized blog; Up first is reason #1, Return on Investment (ROI).
What is Professional Development?
First, let's address the elephant in the room! What is Professional Development? Learning and development is a systematic process to enhance an employee's skills, knowledge, and competency, resulting in better performance in a work setting. Think of it like this - when you were taught to read, you practiced it, and your teachers coached you. To get your driver's license, you probably attended some form of driver's education to practice and learn the road rules. The same is true for any software or policies you introduce to your company. Teams need training on new software platforms to utilize them, whether end-user or technical personnel fully. An organization will only realize a high return on its software investment if its team members are adequately trained. Any software investment needs to consider the training component to ensure a maximum return. Investing only in software, and hoping for the best, is not the answer.
The Facts
We know investing in your employees is a huge part of helping your business grow, but what does it do for your company specifically? Offering professional development options for employees provides you with a higher return on investment. Companies that offer comprehensive training have 218% higher income per employee and a 24% higher profit margin than companies that don't provide training. To put that number into context, the average profit margin is 10%, and a 20% profit margin is considered high.
How Does Profit Margin Increase?
Seeing a 24% profit margin increase sounds nice, but HOW does professional development do that for your company? There are two primary reasons which result in higher revenue generation. The first is that companies that are dedicated to professionally developing their staff see increased revenues from the stock market due to increased credibility. Companies such as Microsoft and General Electric are two examples of revenue growth through stock price increases resulting from professional development programs. The second reason is an increase in efficiency. Once appropriately trained, Sales and Operations team members can perform more efficiently on the job. Well-trained employees = more revenue gains.
Takeaways
You are professionally developing your employees' matters to your bottom line. The proof is in the numbers. If your organization needs help creating a professional development program, please use the Contact Us form below - we would be happy to assist.
Want more information on training your entire team? Head to our Leadership and Development page to determine what type of training would be the best fit for your team and company.