A few months back Fortune magazine published their “2007 100 Best Companies To Work For" report. I enjoy analyzing reports like this to find commonalities that link successful organizations.

The products and services that these winning organizations offer, while important, are not their key to, since most products and services these days are all pretty much alike. What is important are the internal systems and processes that enable these organizations to develop and deliver their products and services in a world-class manner. The common link: training!

Training: Expense or Investment? The average number of training hours per year for Fortune’s top 100-companies was 54. Quicken Loans offered the most training hours at 250/year, with W.L. Gore & Associates bringing up the rear at 10 hours/year.

Nine companies averaged in excess of 100-hours of training, which included retailers like Whole Foods Market and the Container Store. Included in Fortune’s listing next to each company is a section titled: “What makes it so great?’ Here are some of the comments:


* Employee ownership and involvement
* Employee growth and development
* People are our business
* Employees respected and trusted
* People centered strategies
* Employee trust

So how does your organization view employee training: expense or investment? Training and development are the foundation of successful companies. The best companies view training and development as an investment as opposed to an expense.

Companies that view training as an expense usually cut the budget in a down economy. Mr. Peter Drucker, perhaps the greatest management consultant of all time, was once quoted as saying: “People are a resource, not just a cost." Many of the best performing companies such as Marriott, Starbucks, FedEx, and Ritz Carlton are making extraordinary investments in training.

Training is so valued at FedEx that it is policy that all members of management participate in 40-hours of training each year. Marriott invests over $100M each year on training and has one of the lowest turnover rates in the hospitality industry. Coincidence? I think not! Companies that make unusually large investments in training and development (a key cutoff point is about $1K per employee) typically have lower employee turnover.

Lower employee turnover is associated with higher customer satisfaction, and customer satisfaction is a key driver of profitability. A very strong correlation exists between training investment and economic valued added (EVA); a performance measure most directly linked to the creation of shareholder wealth over time.

Training Outcomes:
Training is a great way to communicate your company’s job-performance expectations. Training is the key link between job-performance and the mission of the company – the differentiator is people.

Research proves that cumulative knowledge and experience manifests itself in higher productivity, increased sales, greater customer satisfaction and loyalty, fewer errors and injuries, and less absenteeism. People perform best if they see a future for themselves at a company, and training accomplishes this.