Why is Professional Development Important?
So you have a title that carries some authority, not to mention more than a fair amount of responsibility; what do you need to do now?
I can’t count the number of times that I’ve seen someone land themselves a position with a fancy title, be it fresh out of school or after several years with their company, and dig their heels in so they can enjoy the ride. All too often though, they immediately abandon exactly what got them there; the professional development process…
A quick internet search landed me on a page titled Sobering Statistics About Readers Today, stating that “33% of high school graduates never read another book the rest of their lives and 42% of college grads never read another book after college.” By the time I was 23 years old, I was well on my way to being one of those statistics! Interestingly enough, I only remember reading one book from cover to cover all through high school - The Hobbit - and I really think that was because it reminded me of Led Zepplin… (It wasn’t until years later that I learned how much Robert Plant wove Tolkien’s work into his lyrics!)
Just before Cindy and I were married, the work ethic I had learned before I was even a teenager opened the door to a significant promotion with the company I had been working for since I was just out of high school. Like several people I had seen earn promotions before me, and dozens I’ve seen earn them since, the type of hard work that I had done to get to that point had next to nothing to do with what I would need to do if I wanted to be successful in that new role! That’s when I realized I would need to make some changes in how I used my time away from work.
The first two books I remember reading after that were by John Maxwell (The 21 Irrefutable Laws of Leadership) and Robert Kyosaki (Rich Dad, Poor Dad). Reading those actually made me kind of mad; not at either of the authors, but that none of the required reading that was shoved at me during high school had even a fraction of the applicable value I pulled from those two books! Had anything in the public school library offered the kind of tangible application I picked up in those, I may have actually read more than one book in four years…
Long before I was in a position that essentially forced me to dive into professional development, I learned about the long term value of investing. While I was still in high school, my dad encouraged me to contribute to the 401(k) plan with each of the companies I worked for that offered them. He also connected me with his financial advisor who helped me invest in my first mutual fund. The idea of compounding interest absolutely fascinated me!
Benjamin Franklin is quoted as saying that “an investment in knowledge always pays the best interest.”
Why is professional development important? Rarely are the skills we use to earn a promotion the same skills we’ll need to succeed in that new role. If we want to perform as well as we had leading up to that point, we’d better be prepared to develop new or additional skills. Depending on the requirements of the role, those skills could vary greatly! But one thing is for sure: professional development is a must! As we move forward here, we’ll look at how we can get the best return on our investment!
Speaking of Benjamin Franklin...
Interestingly enough, Ben’s comment about investments was the topic of conversation for me and Cindy recently as we filtered through a massive amount of junk mail and looked at the two pieces that actually had a bit of relevance; our quarterly IRA statements…
As we each made career changes over the last several years, we’ve rolled what we had in our respective 401(k) plans into IRAs; partly to avoid the crazy tax hit we’d take with an early withdrawal and partly to maintain some potential to recognize at least a little bit of ongoing interest. While our risk tolerance for our investments are nearly as different as our behavioral styles, the historic return on our plans have been nearly identical. Cindy’s, having been a one-time rollover, has yielded an average of just over a 9% annualized return, resulting in a 50% increase in the total value in the last five years. Not too shabby…
I could take this opportunity to get on a soapbox here about how much less a dollar buys today than it did just a year ago or how the ever-increasing DJIA would seemingly have to go through a correction at some point, but I’ll fight the urge and deliver on what I committed to previously; a look at what we can count on to bring us the most Benjamins ($100 bills…).
I recently read a blog post from SHIFTelearning citing a study by the Association for Talent Development (ATD) stating that “companies that offer comprehensive training programs have 218% higher income per employee than companies without formalized training.” The blog post also shared that the same study suggested that “these companies also enjoy a 24% higher profit margin than those who spend less on training.”
I believe there are some additional things that are often considered to be intangible that factor into this as well, but we’ll circle back to those soon and I’ll touch on just how tangible they really are. For now though, let’s do some simple math using the numbers suggested by that ATD study… Let’s say Company A (without a comprehensive training program) does $1 million in annual revenue. If that 218% is true, Company B, with an intentional focus on professional development, should be doing nearly $2.2 million in annual revenue with the same number of employees. And just for simplicity, let’s imagine Company A is operating with an average profit margin of 20%. That would yield around $200k in annual profitability. At that same 20% profit margin, Company B would see around $440k annually but if the ATD folks got it right, it would actually be close to $550k in annual profitability! I’ve been accused of not being all that sharp, but that seems to be even better than the 50% increase in Cindy’s IRA over the last five years...
For perspective, the average small business does around $100,000 in revenue per full time employee so both Company A and Company B in the scenario I just shared would have ten or so total team members. But professional development is rarely without some sort of price tag attached. Even your time with me here is an investment into your development! If that same group of ten employees could churn $350,000 more for your company in additional PROFIT, how much of that would you be willing to invest to get there? And I still believe the intangibles that we’ll look at next will impact profitability even more!
Some Very Tangible Intangibles!
OK, let’s pretend the nearly 275% increase in profit that we just looked at doesn’t make a strong enough case for being intentional about focusing on ongoing professional development… I mean those particular numbers were only based on the study referenced by the Association for Training and Development, showing the impact on revenue per employee and overall profitability. But other areas of a business can ongoing professional development impact?
Over the last two decades, I've taken part in the orientation process with more new employees at the various companies I’ve worked with than I can count. It’s pretty exciting when hiring happens because the company is growing, but it’s far less of a thrill when the push is to fill the spots of people who leave the company voluntarily. And more often than not, this is a significant cost that’s not tracked all that effectively - with regards to the direct costs of recruiting or the total indirect impact turnover has on overall profitability and productivity.
The few organizations that do the very difficult work of tracking this get it! Just in case you’re not familiar with that total impact, here are some stats from a Gallup poll I read a while back that grabbed my attention, “It’s generally estimated that replacing an employee costs a business one-half to five times that employee’s annual salary.”
And then there’s this thing called employee engagement; something we tend to build when we show our team members that we value them. A Harvard Business Review article shared these stats from a global survey showing the total financial impact engagement can have on a company’s bottom line:
“Company leaders won’t be surprised that employee engagement—the extent to which workers commit to something or someone in their organizations—influences performance and retention. But they may be surprised by how much engagement matters. Increased commitment can lead to a 57% improvement in discretionary effort—that is, employees’ willingness to exceed duty’s call. That greater effort produces, on average, a 20% individual performance improvement and an 87% reduction in the desire to pull up stakes.”
That same SHIFTelearning blog post I mentioned earlier referenced another national survey of over 400 employees spanning three generations cited that “70% of the respondents indicated that job-related training and development opportunities influenced their decision to stay at their job.” And since I’ve heard quite a few supervisors and managers air frustrations with millennials, I’ll share what this same study had to say about them, “The Millennials had the most significant results, with 87% of them citing access to professional development or career growth opportunities as being very important to their decision of whether to stay or go.”
OK Wes, there’s data to support it… But what in the world does it look like? What do I need to do for myself or for my team members in order to build a culture that supports ongoing professional development; one that makes it THE thing to do? Unlike the baseball caps I had growing up, one size DOES NOT fit all so let’s close for now by take a look at that!
What Approach Works Best for YOU?
The vast majority of the work Cindy and I do is focused around developing effective leaders and building effective communication into the cultures of the organizations we work with. But when we’re digging into Why Professional Development is Important, understand that there are so many more things to consider! Don’t get me wrong, I still believe effective communication and leadership are crucial, I’m just saying that there are more things we need to consider than the one-size-fits-all baseball caps I just referenced…
Several years ago, while working with some of the most experienced team members some friends of mine had working in their company, one gentleman commented, “We’ve done it this way for 30 years. This is the best way it can possibly be done!” Having been involved in so many continuous improvement initiatives over the years, my initial reaction was to jump on the table and preach about all the risks that come with thinking that. Before I could though, one of the owners of the company (who actually had less seniority than the fellow who made the comment), jumped in and said “if we continue with that approach to what we’re doing, it won’t be long until our competition passes us!”
When it comes to professional development, the owner's comment holds true in just about every scenario I can think of! Regardless of how great we are at any particular thing we’re doing today, the world around us is constantly changing. If we rest on the skills we currently have and hope to stay the best in our respective field, we’re in for a very rude awakening - sooner or later…
One of the first things we need to do is to develop a keen awareness of where we are, as well as how we got there, so we can have a firm appreciation of just how much we’ve had to adapt already. It’s really common for the folks who have developed a high level of expertise in their field to believe that much of what they’ve learned over a long period of time is “common sense” and that everyone else should know what they know. That’s just not the case! And realistically, what any of us do as “experts” today has very little in common with how we approached the same task when we got started; even our approach has evolved in one way or another whether we realize it or not. We had to get better along the way or we would have never gotten good at what we do! But that’s not a license to rest on our laurels…
Once we come to terms with that often tough realization, we can begin to truly analyze the areas we need to keep a constant focus on in order to continue honing our craft. And regardless of what those areas are, we’ll also need to find an approach to doing this that we can maintain long term. Professional development is much more like a marathon than it is a sprint! Just like the Benjamin Franklin quote I referenced as we started down this path, “an investment in knowledge always pays the best interest,” the compounding interest we see on even small, routine deposits can yield far bigger returns than a single quick burst that we never add to again.
As we develop a clear understanding of the areas that will require ongoing professional development, we will absolutely need a strategy. Just hoping it will happen won’t make it so. And working as hard as we can rarely does the trick either. As we move forward with this idea soon, we’ll begin working through some simple steps we can each take to make ongoing professional development part of who we are!
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