Banks are in the training news again. Last week I wrote about a WSJ article that said banks are losing top performers because they are failing to develop them. This week an article on Workforce.com discusses new research which shows a link between training budgets and future stock price.
The research was focused on banks, and their performance relative to their peers. Though the data set was relatively small, “it appears training expenditures were a very strong predictor of stock price even during last year’s market turbulence.” One of the examples cited was Wachovia. Wachovia cut training per employee by more than half from 2006 to 2007. In 2008, stock prices fell 95 percent prior to the merger with Wells Fargo.
Tying training investment to future business performance has always been tricky. Why should training investment yield better stock price? Improved business performance is one reason. Another theory is that training investment is reflective of overall management focus and direction. Those that invest are interested in long-term performance; those that don’t are only interested in short-term gains. Hmmm. Food for thought.
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