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Proving The ROI Value of Learning and Development Investments

All The Facts CHROs Need To Secure CEO and CFO Support for Their Initiatives in '24


Group of People in a Leadership and Development Meeting

A 2022 study from the Society of Human Resource Management (SHRM) found that more than 8 in 10 HR managers believe training is beneficial to attract (83%) and retain (86%) talent. And 48% of employees agree that training opportunities were a factor in choosing their current company.


LinkedIn’s Global Talent Trends 2019 report found that 92% of talent professionals said soft skills are equally or more important to hire for than hard skills. Among those professionals, 89% stated that when a new hire is not retained, it’s often due to their lack of critical soft skills. Upskilling is not the only essential piece involved in training and development, as previously thought. Today’s employees and companies benefit from investments in improved communication, adaptability, and employee strength-centric roles.


Even with these informative studies on the impact of training and development, a report from Emerald Works’ found that fewer than 1 in 10 organizations actively calculate the ROI of their learning programs.


Unfortunately, this fact often creates a situation, especially in times of uncertainty, change, and economic headwinds, where senior executive leadership puts their learning and development investments into a “nice-to-have” bucket instead of the “must-invest-in” category.


Fortunately, many studies clearly illustrate the value of investing in development related to teams, leadership, creativity, and well-being.


Thus, this blog aims to arm all senior leadership levels, CEOs, COOs, CHROs, CMOs, and HR and talent development leaders with the ROI facts. This blog post contains information to share with your peers and other budget planners as your organization looks to talent development investments in 2024 and beyond.


Learning and Development Is Changing


Learning and development investments are no longer nice-to-haves.


Countless studies have shown their benefits on long-term financial success and sustainability, proving they are now a must-have and should be a more significant part of an organization’s strategic goals. There is no reason the ROI of training and development programs should not be actively sought out and tracked over time.


Consider these eye-opening statistics on the impact of proper training and development:
  • The Association for Talent Development (ATD) study found that organizations with comprehensive training programs have 218% higher income per employee than those with less extensive training.

  • Well-trained employees provide better customer service, increasing customer satisfaction and loyalty. A study by Harvard Business Review found that customer loyalty can be worth up to ten times as much as a single purchase.

  • LinkedIn’s Workforce Learning Report found that 9% of employees would stay at a company longer if it invested in their careers. In contrast, a study by SHRM found that the average cost of losing an employee can be 6 to 9 months of their salary.

  • The MIT Sloan School of Management found that an employer’s year-long soft skills training program led to a roughly 250% return on investment within eight months.

  • According to a 2021 report from the World Economic Forum and PricewaterhouseCoopers, upskilling could boost global GDP by $6.5 trillion by 2030.

In today’s business climate, companies must quickly adapt to employees' desires for remote and hybrid work, keep up with new technologies, such as generative artificial intelligence, and adequately support generational differences. These are just a few of the many rapid changes that executives and HR teams must consider when planning for the future of their organizations.


When leaders create a culture that taps into their employees' strengths and harnesses those strengths, their companies are propelled forward.


Specifically, Fortune’s 100 Greatest Place to Work stock performance study over 25 years found those companies that make the Fortune 100 Best Companies to Work For® List consistently outperform the market by a factor of 3.36, according to FTSE Russell, the global index and data provider.


But it takes commitment at the top to understand the short and long-term financial impact of their L&D investment and then commit to them. Unfortunately, when times are challenging and uncertain, leaders overlook their workforce as their business’s greatest asset and competitive advantage. They reduce or even stop investing in development programs during stressful economic times when their workforce AND company need it the most.


Let’s look at the ROI of various categories within organizational development.


1. The ROI of Investing in Team Development


Developing a solid team is essential to creating and maintaining a successful business in the long term. A team that works together well—using each member's strengths—as mentioned, can profoundly impact everything from productivity, innovation, growth, and overall revenue. But great teams are not built overnight.


To build effective teams, you must be strategic. Team leaders need to invest the time to learn about the strengths, weaknesses, and experiences everyone brings to the team. Then, help each team member understand the value of their role within the team and the role of the team within the more excellent organization.


Significant research highlights the financial benefits of investing in team development programs.

  • The Association for Talent Development (ATD) found that organizations that invest in comprehensive training programs for their teams outperform their rivals by a significant 45% in total shareholder returns.

  • The Harvard Business Review found that companies that invest in high-performance development programs for their teams have a 10% higher return on investment than companies that do not invest in such programs.

  • A study conducted by McKinsey & Company found that top-performing companies are five times more likely to have vital talent development programs than low-performing companies.


These statistics illustrate the value of investing in developing solid and high-impact teams of passionate individuals, all working toward achieving a common goal, leveraging their unique strengths together.


How does strength-based coaching development increase the ROI of team development?

Strength-based coaching plays a unique and critical role in developing strong teams. It enables each team member to learn what their greatest strengths are. In doing so, individuals become more confident in applying their natural abilities to their daily work. They develop stronger self-confidence and better understand how they make unique contributions to the teams they are a part of. This helps to increase their sense of purpose, which impacts the group's performance.


In a study spanning 45 countries and 49,495 business units, Gallup found that strength-based workgroups saw increases in both sales and profits.


And on average, these workgroups also saw:

  • 3% to 7% higher customer engagement

  • 6% to 16% lower turnover (in low-turnover organizations)

  • 26% to 72% lower turnover (in high-turnover organizations)

  • 9% to 15% increase in engaged employees

  • 22% to 59% fewer safety incidents


Furthermore, Gallup also found that teams that focused on developing their strengths had 12.5% greater productivity and 8.9% greater profitability than teams that did not.


Other studies have shown that when using a strength-based approach, employees are six times as likely to be engaged at work, three times as likely to have an excellent quality of life, 7.8% more productive in their role, and six times as likely to do what they do best every day.


According to a recent study from Gartner, 82% of employees want their organizations to view them as people with individual goals and aspirations and not just as resources. Strength-based coaching can help accomplish this.


It's easy to see the financial and performance benefits of strength-based coaching within the context of team development.


How does team development increase employee engagement, creativity, and well-being?

  • Research has shown that investing in team development programs can increase employee engagement and reduce attrition. According to a study conducted by Gallup, companies with highly engaged employees outperform their peers by 147% in earnings per share.

  • Another study by Gallup found that companies with highly engaged employees had 21% higher profitability than companies with low levels of employee engagement.

  • Furthermore, research by the Corporate Executive Board (CEB) has shown that employees who receive regular feedback and coaching are 39% more likely to be engaged in their work and 146% more likely to say they are happy with their job.

Crafting strong teams begins with buy-in from the top down. That means executives embracing the value of investing in learning and development as a culture creator and strategic differentiator, —at every level in the organization.


Individual talent development is an essential ingredient for solid team performance.

High-impact teams comprise individual strengths who come together to deliver a performance far more significant than any individual.


As such, CEOs and HR Leaders must also consider both the value of team development and the development of each individual within a team.


Consider recent research on employee development related to financial impact on organizations.

  • Deloitte’s Global Human Capital Trends study, completed in 2016, found that organizations with a strong focus on employee development had up to 250% higher productivity than those without such programs.

  • ATD found companies that invest in employee development and training programs have a higher revenue per employee and a 24% higher profit margin than companies that do not invest in such programs.

  • Research from ATD also found that companies that invest in employee development and training programs have a 46% lower employee turnover rate than companies that do not invest in such programs.

2. The ROI of Investing in Supervisor and Managerial Development


Managerial development, often confused with leadership development, develops managers to be more than task trackers and problem solvers.


Today’s top-performing managers are receiving training on inspiring others to be the best they can be.


This is being accomplished by investing in manager-as-coach programming. 70% of how an employee feels about their employer directly results from the actions or inactions their manager takes each week.


The most significant finding from Gallup’s 2023 workplace study is that the most impactful action a manager can take is to spend 15 to 30 minutes with each team member, serving as a coach. Specifically, a career development coach and a coach that focuses on each team member’s use of their strengths. This action is now referred to as holding “Meaningful weekly meetings.”


Research shows a comprehensive manager-as-coach development program is a critical component for succession planning, talent cost controls, and a high-valued talent pipeline.


Consider these statistics on the impact of managerial development:

  • SHRM estimates that replacing an employee can cost 50% and 60% of their annual salary.

  • Research by Gallup shows that managers account for at least 70% of the variance in employee engagement scores.

  • Research by the Sales Management Association found that companies with highly effective sales managers reported 10% higher revenue growth.

  • A study published in Training Industry Magazine found that running first-time managers through a leadership development program offered a 29% ROI in the first three months and a 415% annualized ROI.

The previously mentioned study published in Training Industry Magazine also found there were three factors most effective in maximizing the ROI of investing in managerial/supervisory level training. They included:

  • Having an immediate manager who discussed the training with them and encouraged them to apply new skills

  • Being given the opportunity and extra time to have coaching conversations with each of their direct reports

  • Quickly identifying and addressing the resistors to change within their teams

These points illustrate the importance of well-designed manager development programming, enabling future leaders to continue learning about their strengths and how to support their teams better by tapping into them.


Managerial development leads to better leadership, which, in turn, reduces turnover rates and associated costs. Companies with well-trained managers are likelier to remain adaptable and competitive. Studies from Gallup and 100 Best Places to Work have shown that these factors alone often translate to increased market share and revenue growth.


3. The ROI of Investing in Leadership Development


Everyone knows excellent leadership is essential, but it doesn’t happen overnight. However, investing in outstanding leadership pays off in the long term and is worth the investment. Consider that:

  • Research from the Chartered Management Institute (CMI) found that 93% of managers surveyed believed that management and leadership development positively impacted their performance, leading to increased team productivity.

  • A study by Development Dimensions International (DDI) and The Conference Board reported that organizations with strong leadership and management capabilities were 1.4 times more likely to deliver strong financial performance.

  • Employees who feel trusted and supported by their manager are 3.4 times more engaged, while Gallup finds that 70% of the variance in team engagement is impacted directly by the manager alone.

  • A study by Gallup found that companies with engaged workforces outperform their peers by 147% in earnings per share.

  • Research by Harvard Business Review suggests that effective leadership can account for up to 30% of the company's bottom-line profitability.

  • A study by Brandon Hall Group found that organizations with vital leadership development programs were 4.2 times more likely to outperform their competitors in terms of financial performance.

Leadership development has an incredible financial impact on organizations. When leaders have the opportunity to develop their skills, they are not the only ones to reap the benefits. Their managers and teams improve as well. Leadership development can result in improved employee engagement, higher productivity, talent retention, innovation, creativity, and better financial performance.


Improved Employee Engagement

According to a study by Gallup, managers account for at least 70% of the variance in employee engagement scores. When companies take the time to invest in leaders, they’re simultaneously investing in the ability to attract and retain top talent. All of these factors impact the financial success of an organization as well.


Higher Productivity

Managers and leaders also feel the impact of development. Leaders who can participate in development believe they perform better, making them more confident in their work. They can also use what they’ve learned to support their employees' development better.


Talent Retention

Employees with solid relationships with their leaders are likelier to stay with the company. Retaining talent eliminates the costs associated with finding talent and the time it takes to bring them up to speed.


Innovation and Creativity

The Corporate Leadership Council found that organizations with effective leadership and management development programs are more likely to be innovative. Skilled managers can create an environment that encourages new ideas and problem-solving.


Improved Financial Performance

When leaders are well-developed and robust, financial performance is more likely to be strong. This is no surprise, considering engagement, productivity, retention, and innovation affect a company’s bottom line.


4. The ROI of Investing in Creativity Development


When companies invest in creativity, it pays. Countless studies have shown the impact of prioritizing creativity and encouraging employees to flex their innovation muscles. Consider that:

  • According to a study by Adobe and Forrester Consulting, companies that prioritize creativity in their workplace experience 1.5 times higher market share and are also more likely to report a higher year-over-year increase in revenue.

  • A report from the World Economic Forum stated that by 2025, creativity and problem-solving skills will be among the top three most essential skills for employees. Organizations that foster a creative environment tend to have higher employee engagement and retention rates, which can lead to reduced turnover costs.

  • In a survey conducted by PwC, 60% of CEOs believe that creativity is the most critical leadership quality. Fostering creativity can lead to innovation, giving companies a competitive edge.

  • An IBM survey revealed that CEOs worldwide believe creativity is the most critical attribute for driving innovation. Companies that invest in creative development often see improved innovation outcomes, which can lead to the development of new products, services, and processes that give them a competitive edge.

  • Creativity often leads to greater employee engagement. A Great Place to Work study found that engaged employees are 64% more likely to innovate, and they are also more likely to stay with their current employer.

  • Creative workplaces are often more attractive to top talent. In a Deloitte survey, 88% of employees believe a positive work culture is crucial for a company's success.

  • A McKinsey report found that companies with diverse, cross-functional teams that encourage creativity and collaboration perform better in solving business challenges.


Multiple ways investing in creativity development can impact businesses – from a competitive standpoint to long-term sustainability.


Competitive Advantage

Creativity and innovation are often associated with gaining a competitive edge in the market. Organizations that foster a culture of creativity and innovation are more likely to develop unique products, services, and processes that differentiate them from competitors. This can lead to increased market share, customer loyalty, and profitability.


Improved Problem-Solving and Decision-Making

Research suggests that organizations prioritizing creativity and innovation training tend to have employees who are better equipped to identify and solve complex problems. Creativity training enhances critical thinking, encourages novel approaches, and promotes a mindset of continuous improvement, resulting in more effective decision-making processes.


Enhanced Adaptability

Creativity and innovation enable organizations to adapt to changing market dynamics, technological advancements, and disruptive forces. Organizations become more agile and responsive to emerging opportunities and challenges by encouraging employees to think outside the box and experiment with new ideas.


Increased Employee Engagement and Satisfaction

Organizations that value and promote creativity and innovation tend to have higher employee engagement and job satisfaction. By providing opportunities for employees to express their creativity, contribute innovative ideas, and be involved in meaningful work, organizations can attract and retain talented individuals motivated to make a positive impact.


Positive Organizational Culture

Fostering a culture of creativity and innovation can lead to a positive work environment characterized by open communication, collaboration, and a willingness to take calculated risks. This culture promotes a sense of ownership, engagement, and psychological safety, stimulating innovation and productivity.


Business Growth and Long-Term Sustainability

Creativity and innovation are linked to business growth and long-term sustainability. Organizations that consistently innovate and adapt to changing market demands are more likely to stay relevant and thrive in the long run. They can explore new markets, develop innovative products, and respond effectively to customer needs.


5. The ROI of Well-Being Development


When employees are supported correctly, their engagement and productivity often improve. Part of employee support is their well-being. Well-being, including mental health and work-life balance, significantly influences job satisfaction.


Gallup data collected from more than 300 independent studies across 49 industries in 73 countries worldwide found that job satisfaction is positively and significantly associated with customer satisfaction, employee productivity, and profitability. Job satisfaction has also been shown to decrease staff turnover.


If you need proof that employee well-being correlates with positive business outcomes, consider a 2020 study by Chamberlain and Munyikwa. The authors found that among companies on Glassdoor, in viewing rankings based entirely on employee reviews, highly rated companies outperformed the market by 115.6% from 2009 to 2014 (Chamberlain, 2015) and by 57% from 2009 to 2019. That means an investment of $1,000 in highly rated companies in 2009 would have grown to $6,529 by 2019, representing a total return of 553%.


When employees are happy and well, it pays off. Consider that:

  • 90% of companies see a positive ROI (return on investment) from their wellness initiatives—the same amount that sees a positive return from other benefits such as health insurance.

  • According to a study by PwC, for every dollar invested in employee well-being, there can be a return of $2.30 in improved productivity.

  • Investing in employee health and well-being can lead to reduced healthcare costs. The Harvard Business Review reported that every dollar spent on wellness programs can result in healthcare cost savings of $3.27.

  • Studies have found that introducing well-being programs can reduce absenteeism by 19%.

  • 85% of companies credit their wellness program with reducing recruitment costs and use of sick days.

  • 77% of employees would consider leaving a company that does not focus on well-being.

A growing body of evidence suggests when well-being programming is part of a company's culture, these kinds of investments lead to positive financial outcomes for companies in many ways.


Improved Employee Engagement and Productivity

When employees are more motivated and happier, their performance will likely improve. Well-being initiatives, such as wellness programs, access to mental health support, and work-life balance programs, can increase employee engagement and productivity.


Increased Retention and Recruitment

Employees are seeking out more than just a paycheck these days. There is an increased emphasis on work-life balance. However, there must be training around what that looks like within each organization. Potential hires want to know an employer is committed to their well-being and development rates. Committing to an employee’s well-being can reduce turnover and recruitment, training, and onboarding costs.


Reduced Healthcare Costs

The right kind of wellness initiatives encourage healthy behaviors and support balanced living. Well-being initiatives can help reduce burnout by providing employees with easy access to care and more time to address their needs. These efforts also help reduce healthcare costs for both employers and employees.


Reduced Absenteeism

When employees are taken care of, they are less likely to miss work due to illness or stress-related issues. Instead, they are more likely to be present and productive at work – both of which reduce the costs associated with absenteeism.


Improved Company Reputation

Companies that invest in their employees' well-being often have a better reputation, which can positively impact customer perception and relationships. A positive brand image can lead to increased sales, more business opportunities, and a larger pool of talent to select from.



Why can’t your CEO and CFO afford to underinvest in talent development next year?

The workplace, the terms of work, the location of work, and the types of work are evolving rapidly. Those leaders who always keep sight of the fact that no matter how good their products or services are, ultimately, their talent is their greatest competitive asset will be the winners in the future.

Those leaders who invest with a passion for creating great workplaces with a culture of growing and developing talent are proven to have increased levels of productivity, engagement, creativity, innovation, retention, and profitability.


Investing in development has positive outcomes on:

  • Your contributors

  • Your teams

  • Your future and current leaders

  • Employee creativity

  • Employee well-being

As you begin planning for 2024, don’t forget to budget for the ultimate investment in your organization. Kern and Partners are here to provide the research findings and personal experiences from our HR and Talent Development consultants to support your planning and implementation process. Contact Russell Kern, CEO of Kern and Partners, at Russell@Kernandpartners.com


Kern and Partners is committed to supporting the development of positive, productive, and innovative leaders. Our development programs and consulting services are designed to help managers and leaders tap into the natural strengths of their employees to build stronger, more engaged teams for more profitable, sustainable business growth.


We look forward to hearing from you. Please call me at 818-264-8480 or click here to schedule a call.

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