September 22, 2015
It would seem that profit and growth are two sides of the same coin, which is a company’s continued presence on the market. As R&D spending is financed from profit, the higher the profit, the better the growth prospects. And since profits are undermined by costs, businesses pay a lot of attention to cost reduction programmes, whose first targets tend to be R&D and training expenses.
At first glance, this is no wonder – we have limited resources. If we spend PLN 1,000 on training an employee, we do not know how the decision will benefit the company’s development specifically. If we choose not to spend the money this way, we have a very tangible effect in the form of an additional PLN 1,000 in profits. When choosing between uncertainty and certainty, we tend to opt for the latter. Averting risk is part of human nature.
Approaching the issue from a different perspective, let’s set aside employee training and consider athletic training. If an athlete is to achieve success, they must train on a regular basis. There is no certainty that they will ever become a champion. What we do know, however, is that every training session they miss not only makes success less likely, but may also thwart it altogether if it happens too often. Their rivals do not stop training, after all. In this situation, training money would be the last thing we would want to cut off.
If we aim to innovate (and be a world champion in business), we have no choice but to bear the cost of regular employee training. Research indicates that the efficiency of R&D spending is largely dependent on the ‘quality’ of the team. We do not know when we will be able to market, or even develop, an innovative product. We can be sure, however, that if we do not invest in R&D and train our employees, we will see no innovation at all. The opportunity cost is therefore very high, as others continue to invest and train their employees on a regular basis.
What should we do to appreciate the importance of investment in R&D and employee training? It seems simple enough. Let’s not view the money spent on improving our employees’ qualifications as a cost subtracted from the year’s profit, but see it as a necessary investment in business development, laying the foundation for future profits. Why is it necessary? Because other companies do it and we are bound to lose out if we lag behind. Let’s take our eyes off spreadsheets, look far ahead and begin our own race to success. The race has no end, but what does it matter? Let’s be like Forrest Gump.Author : adamczyzewski