Making the Case for Investments in People

I’ve been writing here and elsewhere for over 20 years mostly for audiences of leaders and prospective leaders, and those who are responsible for developing leaders in organizations. And when talking to those responsible for developing leaders, all too often I hear that budgets for training, learning and development are limited or non-existent.

The fact is, organizations are always investing in something, it just isn’t always in their people. So rather than bemoaning that fact, I want to help you think about why we invest (in anything) first, before we shake our heads as to why employees aren’t at the top of that investment list.

The Biggest Reasons Organizations Invest

Let’s look at criteria organizations use to determine which or what to invest in. Put on your business hat…

• Strategic Alignment. Does this investment support the long-term mission, vision and core objectives of the organization?
• Expected Return on Investment (ROI). What is the rate of return on the cost invested (and over what timeline)?
• Risk Assessment. What are the risks (market, financial, reputational, or operational) to the investment?
• Resource Requirements. Does the organization have the resources of people, infrastructure, technology and additional capital to support this investment?
• Implementation Timeline. How quickly will the investment begin to generate returns?
• Growth Potential. How can this investment aid or create new market demand or revenue growth?
• Competitive Differentiation. How can the investment create or maintain a competitive edge?

Organizations consider some or all these criteria when considering any investment. When you know the criteria being used, you can begin to put investment in developing people in the context of these criteria to help sell employee development as a best investment decision.

Employee Development as an Investment

Let’s take each of those criteria and translate investments in employee development into each of these areas. But before you do that, make sure your organization sees resources used to develop people as an investment and not a cost. When you get people to make that mental determination, you can then use the criteria far more effectively to influence investment levels in employee development.

• Strategic Alignment. What is the role of our talent in our long-term strategies? Can we meet our strategic objectives without a strong and developing team?
• Expected Return on Investment (ROI). How can we consider investments in employee development on a rate of return basis? Doing this will help us invest those dollars more wisely.
• Risk Assessment. What are the risks we expose ourselves to if our talent isn’t keeping up with the pace of change and the needs of the organization? What does that cost us?
• Resource Requirements. How important are more talented and skilled people to make all our investments provide great return?
• Implementation Timeline. How can more talented and skilled people speed up any implantation efforts? And how will that positively impact all other investments?
• Growth Potential. How does a more skilled and prepared workforce impact our overall growth potential?
• Competitive Differentiation. How can the investment in people create or sustain a competitive advantage for the organization?

This isn’t meant to imply that investments in employees will always be at the top of the investment list for a given organization in every time period. It should however help make investments in employees a realistic inclusion in investment decisions, and one that adds to the effectiveness of nearly every other investment choice that will be made.