ROI on Subsidizing Professional Memberships

What Return On Investment (ROI) does a company receive by paying the professional membership dues or educational expenses of employees? For example, if a company pays the annual PMI or INCOSE membership dues, what dollarized benefit or ROI does it receive?

[Sarcasm="On"]

I only have one data point. When the company invests zero dollars in its employees' growth, the investment:

• Creates zero expansion of its pool of outside SMEs
• Creates zero growth of workers' skills
• Encourages zero engagement in the work
• Subsidizes zero creativity
• Suppresses crazy ideas from professional cross pollination

On the positive side, such an investment strategy:

• Discourages annoying attributes such as pride and overconfidence
• Prevents exposure of its products, services, expertise, and industry leadership to the public
• Encourages turnover of unengaged and obsolete employees
• Ensures that personal connections will not interrupt hiring managers' time reading resumes.

[Sarcasm="off"] Employee Focus

If the company pays for schooling, it might be possible to argue that the ROI of membership fees is even greater. You will not only learn from presentations during meetings, but the meeting time per membership dollar will be a multiple of classroom time per tuition dollar, you will spend countless hours studying toward PMP, CSEP, or other certifications, and you will bring all the other intangible benefits, too.

If the company pays for books for classes or for reference, you can also list the values or prices of the numerous downloadable materials such as the PMBOK Guide (hard copy was $66 for the fourth edition). 

If the company reimburses you for certification exams, then you can list the discounts on exam fees. For example, if you join PMI before registering for the PMP exam, the discount on the exam pays for the first year's membership.

As an alternative to paying for dues directly, a company can reward employees through raises or bonuses when they see positive results. The flaw in a reactive strategy is that it fails to model the trust and loyalty that management expects from employees and only rewards tangible, directly measurable, short-term results.

Wider Perspective: It's Your Loss, Boss

Businesses lose a lot of money by failing to align their talent management with their business strategies.  A study by the Project Management Institute found that managing the talent pool cuts risks by 50% (1). Cutting project risks cuts costs, improves quality, shortens schedules, and boosts morale.

PMI estimates that active talent management results in 14% more project success -- meaning that projects reach all success criteria. If you focused on individual success critera, the numbers would be much higher. Would it be worth, say, a hundred dollars per employee to improve your success rate by 14% on a million-dollar or billion-dollar contract?

Turn the question around and ask, what does the company lose if it does not subsidize professional memberships? Just go through the issues above and you will see issues of obsolescence, disengagement, turnover and the resulting loss of braintrust, as well as disengagement of the company itself from its industry.

According to the PMI, industry will annually create 1.57 million new project management roles, globally, each year until 2020 (2) and 80% of organizations already report struggling to find qualified managers (3). Employers that fail to encourage employee growth will lose to proactive competitors.

Sample Calculation

Remember that you obligate yourself to whatever you list.

Some people will get the membership, add it to their resumes, and then never think about it again until the renewal notice arrives. Others would will join regardless of whether the company reimburses them.

On the other hand, if young employees find mentoring and take an early interest in expanding their networks, social skills, and professional skills, how would you calculate the exponential growth in their value to the company?

But... we have to try.

One source measured the increased productivity multiplied it by the hours saved and the labor rate.

They looked at the cost incurred by a project manager in previous projects under the charging categories for estimation, planning, resource, scope, schedule, and customer management. They then compared the numbers with the same charges in a current project.

The manager spent 27 hours less per year. This did not include the higher level of tasks or the higher quality of performance. Using a very conservative $100/hour, the savings appeared to be $2,700. A $130 membership spent corellated to an ROI of 20 times.

Factors such as the employee's learning curve could have contributed to the ROI. However, even with such factors accounting for 90% of the gain, the ROI was still 2:1.

If you consider that an employee creates value greater than the rate of pay (otherwise, why employee him?), then that 2:1 ROI leverages back into a higher ratio again; and the higher the level of the employee, the greater the leverage.

Even ignoring the many difficult-to-measure benefits, subsidizing membership fees yields a far higher return than most company dollars return.

References

1. Pulse of the Profession (TM) In-Depth Report: Talent Management. Project Management Institute. 2013.

2.  Ibid.

3.  Project Management Talent Gap Report. Project Management Institute. 2012.