Is your training budget really the key to success?
  • rli
  • Blog post

Is your training budget really the key to success?

Training programs aren’t exactly notorious for being flush with cash. But when workplace learning struggles to deliver the expected outcomes, a common reaction is to throw money at the problem. More content, more resources and perhaps even hiring an outside consultant to come in for some in-person training sessions.

But is money the biggest factor in determining whether your workplace learning succeeds? A recent study out of Ohio State University explores this question.

The research

A team of education policy researchers wanted to explore how financial resources impact learner achievement – and if money wasn’t the biggest determinant of success, then what was? The study looked at over 5,000 students in schools across the state of Michigan.

First, the researchers calculated how much money was being spent per student at each school. Then they had instructors and school officials complete a questionnaire about their school. The questionnaire was designed to assess the environment and culture of each school. For example, questions asked about the level of trust between instructors and students, and how much the school community supported each other.

Specifically, the study explored organizational culture to look for the amount of “social capital” each school possessed. Social capital is defined as the network of strong relationships developed over time that provide the basis for trust, cooperation and collaboration within organizations.

After collecting the data on spending and social capital, the researchers analyzed standardized test scores for each school as a measure of student achievement. They found that, on average, financial resources did have a positive effect on learning. But the effect of social capital was three to five times larger than the effect of financial capital (the effect varied depending on subject matter).

Importantly, the study also found that increasing financial spending at an institution did not increase social capital. So organizations can’t just “buy” social capital by spending more money on learning resources. So how does social capital increase?

“Sustained interactions over time focused on [student] learning and effective teaching practice are the best way for people to build trust and build networks that are at the heart of social capital,” said the study’s co-author. “We need intentional effort… to build social capital. We can’t leave it to chance.”

Why is social capital so important?

Anyone who’s been a member of a team knows that there are certain social dynamics at play. And research indicates that the stronger an organization’s social ties are, the more effective and successful the organization as a whole can be.

A study of social capital out of the London Business School argues that social capital is the key to another important factor for success, intellectual capital – essentially the growth and expansion of knowledge within an organization. In fact, the study states that because social capital is a vital ingredient to increasing knowledge and innovation within an organization, companies with high social capital have a significant advantage over their competition.

The study cites two important reasons why social capital provides an advantage: Shared norms and shared expectations.

Shared norms within an organizational network provide employees with a common behavioral code. For example, if a company’s norm is open communication between team members, there is social pressure to conform. As such, employees will share their experiences, knowledge and ideas, spreading information and creating greater intellectual capital.

Shared expectations are more about how an organization’s employees feel they are obligated to perform on the job. For example, if team members know they are expected to collaborate to solve problems, no team member will feel stuck or isolated when they run into a challenge. As a result, the team regularly works together to overcome adversity, which builds knowledge and strengthens their existing social bonds.

By building a supportive network of employees committed to learning and sharing their knowledge, the study suggests that organizations can excel.


Here are some suggestions based on the research to increase social capital in your organization.

Establish workplace learning as a priority from the top down.

Culture comes from the top. If leadership communicates the importance of workplace learning and makes it priority, that commitment flows through the entire organization.

When leadership demonstrates its commitment to training, it builds employee trust and buy-in, which helps to establishing a learning culture where learning and knowledge sharing are a organizational norm.

Coaching is key.

Social bonds and trust are important at all levels of an organization, but especially between managers and their employees. When managers coach their employees throughout a workplace learning program, they not only help their employees improve but they show their commitment to their employees’ success, which strengthens trust and social bonds within a team.

Harness the power of peer learning.

Studies have shown time and time again that employees that learn from their peers perform at a higher level. Establishing the norm of peer-to-peer knowledge sharing within a team or an organization can lead to a stronger social network and better outcomes for the business. Peer learning can happen formally within a workplace learning program or informally through employee conversations. The important thing is that it happens.


Salloum, S.J., et al. (2018). Resources, learning, and policy: The relative effects of social and financial capital on student learning in schools. Journal of Education for Students Placed at Risk. doi: 10.1080/10824669.2018.1496023

Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. The Academy of Management Review, 23(2), 242-266.

1 Comment

  • Harry Koolen says:

    Stephen – Thanks for yet another insightful summary and interpretation of interesting research. I would add just one more recommendation to your list – management should clearly connect both formal training and other forms of workplace learning to employees’ personal development plans, which, in turn, should be visibly linked to longer term organizational performance goals.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Get a demo of all our training features

Connect with an expert for a one-on-one demonstration of how BTS Total Access can help develop your team.