Why You Should Reconsider Your Earlier Decision to Cut My Executive Training Budget by More than 75%

Why You Should Reconsider Your Earlier Decision to Cut My Executive Training Budget by More than 75%.

You have raised several issues that you think justify your decision to cut my executive training budget for next year. For instance, you are concerned that I did not manage to convince you that executive training will have positive implications on the bottom line. At the same time, you are concerned that the company is going through tough financial moments brought by the recent mergers, among other issues.

To begin with, let me remind you that executives may be the difference between good companies and exemplary ones. This was revealed by Jim Collins and his team, who examined the performance of 1, 435 companies between 1965 and 1995. The team focused on 11 companies that had transformed from good to great. On average, the companies had a stock return of 6.9 times higher in comparison to the general market (Zenger & Folkman, 2009). From the study of the 11 companies, Jim Collins and his team revealed that executives played a great role in helping these firms attain exemplary performances. For this reason, our company should prioritize our executives being top-notch if we are to move to the next level.

At the same time, numerous studies have revealed that there is a strong correlation between the amount of hours one dedicates to his or her craft and his or her chances of succeeding in it. For instance, it is believed that expert violinists practice for over 10,000 hours (Zenger & Folkman, 2009). The same is true for leadership. Executives need to dedicate many hours of training to master the art of leadership. This is one of the reasons I believe that cutting down the budget for executive training is a decision in the wrong direction.

For you, my earlier proposal for executive training is likely to have only qualitative effects and no quantitative value for our company. Let me remind you that qualitative effects associated with good leadership may translate to increased profitability. For instance, the effects that leaders have on employee satisfaction and commitment ultimately translate to higher profits for the company (Zenger & Folkman, 2009). At the same time, you indicated that you do not know whether the past education programs the company’s workers have participated in have had any positive effects on return on investment. You are also not sure how the return on investment in education programs for workers is calculated. However, let me remind you that a study by Paul McKinnon revealed that individuals who have worked under the same person for several years tend to exhibit not only the same weaknesses but also strengths as their bosses (Zenger & Folkman, 2009). This means that any benefits that will be realized by our executives if they are subjected to training programs aimed at enhancing their leadership competencies will be realized throughout the company. I hope this answers your question pertaining to how the effects of training programs on the bottom line can be calculated. The focus should not be only on the top management. Instead, the focus should be on the entire workforce.

For you, the company’s financial situation does not justify huge expenditures to be incurred on executive training. Besides, you argue that there are many facets of our organization that will be affected by the budget cuts, not just the executive training programs. On this note, you have noted that the company’s sales have dropped by 26% because of the recession, as well as the fact the company took on $ 300 million in debt when it acquired pharmaceuticals (Kesner, n. d.). For you, the budgets for various departments had to be dropped, not just mine’s. However, I would like to remind you that the company is facing a significant challenge when it comes to integrating the workers from Premier to those of Zendal. Since Zendal took over Premier, the company has expanded by a third (Kesner, n. d.). However, no significant efforts have been made to integrate the workforce from the two previously different companies. Combining the two workforces is very important. For instance, it is in line with Stockton’s mission, which entails building closer ties between the various units of our company (Kesner, n. d.). Executive training will play a crucial role in equipping the skills leaders in our company need to merge the workforce from the two organizations.

My position is that Zendal’s executives would benefit tremendously from off-site training. I would like to give you an example of a company which, despite it going through financial turmoil, did not cut down on its leadership training problem, and this decision saved it. This company is Dreyer’s Grand Ice Cream. The company faced a serious financial problem in 1998 from the soaring of its manufacturing costs, among other challenges. Amidst its crisis, Dreyer still managed to spend $ 1 million in the company’s leadership university education (Kesner, n. d.). I believe that reinvesting in executive education may mark a turning point for our company too.

Besides, good leadership has positive impacts on net profits. However, the effects may be neither direct nor immediate. Instead, it may affect many aspects of our organization, and in the long run, it will translate to higher profitability. If the executive leaders get access to the kind of training that will make them exemplary leaders, they will benefit many aspects of our company, such as turnover rates, customer satisfaction, and profitability. At the same time, good leadership has positive implications on the worker’s turnover. For example, a chief talent officer for Agilent Technologies in Palo Alto, California named John Sullivan, the turnover costs for a software engineer is approximately $200,000 to $250,000 for departing employee (Zenger & Folkman, 2009).  Let me remind you that other companies are investing heavily in leadership development. As such, they present lucrative opportunities for our executives, who may feel demotivated. Another study revealed that a higher turnover of 19% was created by leaders whose performance potential is in the bottom third as ranked by their peers (Zenger & Folkman, 2009). Our company may not be experiencing any significant challenge when it comes to turnover but it is a noble idea to be proactive since we cannot afford to lose our executives to the competitors.

One of the goals of executive training is to enhance employee motivation. Employee motivation may seem like a qualitative effect. However, it has direct implications on the bottom line. A study conducted by Rucci, Quinn and Kim revealed that employee behaviors have direct effects on the customer behaviors, which are, in turn, associated with a company’s financial performance (Zenger & Folkman, 2009). When leaders are unmotivated, for instance, by being denied an opportunity to advance their education, they are likely to pass over negative behaviors such as lack of dedication to their followers. In turn, the followers will exhibit these negative behaviors when they are dealing with the customers.

Lastly, I did a little research on you, and I realized that you have a strong history pertaining to executive education. From my research, I realized that you have participated in an executive education program in the past. Additionally, you have attended several industrial and off-sites conventions over the years. From your own admission, you do not think that these programs helped your leadership endeavors in any way. However, let me remind you that the effects of these programs are likely to have significant effects on the company than you can imagine. Finally, I would like to talk to you about the customized leadership development program that I had earlier proposed. Firstly, this initiative is relatively cheaper in comparison to sending executives to external programs (Kesner, n. d.). At the same time, it will be based on the identification of loopholes in leadership competencies among the company’s executives. As such, it will be tailored to meet the specific needs of our organization and the challenges it is facing, such as the reduced sales.

References

Kesner, I. (n. d.). Leadership development: Perk or priority. PDF File.

Zenger, J. & Folkman, J. (2009). The extraordinary leader: Turning good managers into great leaders (2^nd ed.). McGraw-Hill Education.