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I strongly agree that cost-cutting and profit making go hand in hand but employees stand in-between the two. I have less experience as to this financial concepts and my contribution to shareholders value. Share more light.

John, your comment brings up a much larger conversation, but let me touch the surface here. Look for another blog entry that goes into greater detail. The idea that profit-making is dependent upon cost-cutting is myopic. In fact, it is more often the case that enhanced profitability is the result of previous investment. Smart managers recognize this, and spend time surveying the competitive landscape and trends in their industry to determine where their investment is best placed. Employees have a significant role in this equation as their efforts must be directed and managed so that the company's investment in them is also well spent. In fact, employees can be a significant contributor to shareholder value through their innovation, sales efforts, and operating ingenuity. In my view, the focus of financial training should be to educate employees in how their company creates value, and how their role within the company contributes to that effort. As I mentioned in my blog entry, we have a long way to go in that area.

Patricia, During the past decade, most company leadership have dogmatically held on (or forced by Wall Street) to the traditional concept of shareholder value, increase stock price, it is all about the revenues and the numbers. I agree with your myopic cost-costing comment and ask that consideration be given to include all the dollar and cents driven decisions. I also agree the collective "we" have a long way to go in this area. Seems ironic to me that the investment community demands increase stock prices to the detriment true shareholder value. The evidence for a new paradigm is overwhelming as one considers the state of the economy, unemployment, banking, etc. Too often in my opinion, the employees (remember the cliché, "Most Important Asset") in an organization are not in need of financial training, they need training, period. Training on topics that improve their skills to communicate, become change agents, job skills, management & leadership, project planning and implementation, I think you get the idea. A competency-based curriculum that will develop people to effectively and efficiently carry out the vision and achieve the goals of the organization. I believe the improved financial outcomes of an employee focused training will provide the "returns" and shareholder value so many companies require. How familiar is the scenario of sales over promising, operations under delivering, customer service resolving issues, and finance recording the under-priced, costly to deliver, outcomes of the transaction. Business success (and may I add Shareholder value) is about a number of well-designed cross-functional processes, customer-focused decisions, and near flawless task execution. I note here that most of the financial outcomes are the result of upstream process, decisions, and tasks; at best, the financial activities and reports provide a postmortem of measures to identify the process issues and the training needs. Financial training is, from a total business perspective, definitely needed, as financial results do provide insight into customer service, process, and job skills training deficiencies. The ability to translate the financials to employee training needs is a missing component that is often not addressed because of vague returns to "shareholder value" (i.e., training costs). Let's train to a new norm, where sales is customer focused and understands the down-stream implications, operations is skilled in delivery and customer needs, customer service builds satisfaction, and the financial results improve as the by-product of a well- trained and committed workforce. Thank you for the opportunity Patricia.

I understand Cleon's frustration about the focus on short-term results, and the limits that puts on investment in well-rounded training for employees. But Cleon, I think your argument is one that will rarely succeed at the highest levels of a company--especially a public company. I hope that Patricia's going to teach us how to word your argument in financial language. Her blog will be worth it if we know *when* it's worth investing in employees, when investing in employees isn't the best thing a company can do with its money. Let's not get distracted by the motivational phrase "Most Important Asset". Our children might be the most important thing in our lives, but that doesn't mean they always get everything they could benefit from. After a certain age, most of us become investors. We look for the best stock market gains and dividend returns. For investors, a company's spending on training is a dubious use of resources. It usually can't be measured, and there are often better things to do with the money. Patricia, here's an ambitious goal for your blog: Teach us enough finance that we'll know when employee training is the right thing for a company to do.

This conversation is going no where. It’s lacking the place of a good leader to head the things to come out on conclusion. ==========

I strongly recommend the training of financial knowledge to the employee. It is imperative for a company to continously upgrade and boost the knowledge of the employee. He should aware of the financial implication of the decisions made by him.

nice post here,thanks for share!thanks again!

Waw! It is very fantastic. So I am very happy. This very advantageous for me and it is a source of knowledge for us. I have less experience as to this financial concepts and my contribution to shareholders value. Share more light.