Posted 11-10-2010

Let’s face it: Even though our economy is slowly recovering from the Great Recession, times are tough, with HR, management, and workers being asked to do more with fewer resources. Why should you invest in legal training for managers now? Because the success of your company depends on it.

In the New Economy, award-winning economist and NYU professor Baruch Lev points out, corporations’ intangible assets have replaced tangible assets as the major drivers of value. His studies on the correspondence between intangibles and stock prices has shown that, while historically the correspondence between earnings and stock price was about 90%, in recent years, it has dropped to 50%, with the other 50% being the company’s intangibles. In his books, articles, and speeches, Prof. Lev has criticized corporations and the accounting profession for thinking of intangible investments, including employee training, as mere expenses, without taking into account their consequences, such as the impact of training on employee turnover and productivity.

Recently, Wayne Brockbank, a business school professor at the University of Michigan, talked about the research that accounting giant Ernst & Young has done on intangibles, interviewing several hundred analysts to see what factors they use to make their buy or sell recommendations and decisions. The number one answer was leadership, including leadership development, and the number two answer was corporate culture.

Legal training for managers supports both leadership development and corporate culture. Legally astute managers look at the business, legal, and ethical opportunities and risks of competing alternatives as part of their fundamental decision-making process. Legal astuteness, just like technical expertise and business acumen, provides a significant competitive advantage to employers. There’s really no doubt about it: Employment law training for managers brings a clear return on investment. Successful employers recognize that training the people who run the organization is a primary responsibility, not just a “nice to have” fringe benefit. In fact, a Society for Human Resource Management survey found that 82% of employers rate employment law training as effective in minimizing employment claims.

What this means to you:

Investing in training for managers is not an optional expense, but a crucial business strategy, even-or especially-in hard times. Training for both new and experienced supervisors is essential because well-trained supervisors will lower an employer’s chances of being caught in a lawsuit. There also is a direct correlation between well-trained supervisors who use sound management practices and employees who are motivated, engaged, and productive. As author and motivational speaker Zig Ziglar has noted, “The only thing worse than training people and losing them is not training them and keeping them.”

Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.