Of the many possible bad investments business leaders can make – and work hard to avoid – hiring employees and then neglecting to train them is one of the most impactful. Doing so can have implications that permeate all areas of the organization – from culture to work output and customer service. Employee training programs, on the other hand, can increase productivity, decrease cost, and strengthen reputation.
Unfortunately, many businesses are too quick to place “employee training programs” in the category of needless expenditures when, in fact, employee training can be more cost effective than firing. As you pursue your MBA degree and prepare for your career as a business leader, here are four important training outcomes to keep in mind when considering investing in your employees:
1. Employee Training Boosts Retention
Employee turnover — whether voluntary or involuntary — is one of the biggest reasons companies lose money. According to the Dale Carnegie Training Center:
• 40 percent of employees who receive poor job training leave their companies within one year.
• $11 billion is lost annually due to employee turnover.
Additionally, Medium reports the average economic cost to a company for employee turnover in a highly skilled job to be 213 percent of the cost of one year’s salary for that role. Not only does employee turnover hurt company revenue, but it also damages overall morale and productivity — two of the necessary ingredients for employee retention. Finding and retaining the right employees, then, is of critical importance for a business to thrive financially.
2. Employee Training Saves Time
On the one hand, employee training is an investment of time and resources. Employees who spend time learning how to do their job properly are not actually spending time doing the work they were hired to do. Yet, it is important to factor in the opportunity cost of not offering the training at all, and the potential outcome of an employee departing from the company. Consider the time investment required for the following actions that could result from a lack of proper training and employee departure:
1. Addressing low employee morale resulting from sudden departures
2. Advertising, interviewing, and screening employee replacements
3. Training new hire(s)
4. Fixing new employee errors
3. Employee Training Improves Productivity
While the return on investment of employee training programs may be difficult to measure, training employees has the potential to improve their quality of work and productivity, thereby minimizing company losses and maximizing company revenue. Intergage cites a study by the National Center on the Education Quality of the Workforce that shows a 8.6% increase in total productivity with a 10% increase in workforce education.
Better yet, incentivizing employees to continue to better themselves through training and learning can be the secret sauce to improving employee loyalty, growth, and retention. In fact, according to an infographic by Customer Think, 7 out of 10 people felt that training opportunities impact whether or not they decide to stay with a company.
4. Employee Training Strengthens Reputation
Earning a reputation for high employee turnover, and the resulting low company morale, can be costly when looking for recruits or seeking to do business with new clients. It can also make it more difficult to find and attract top employee talent.
A company’s customer service acumen also influences its reputation, especially with ever-increasing customer feedback options on the internet. Interestingly, employee training programs can be the key to better, more positive customer engagement. According to the Harvard Business Review, “Among the most common factors contributing to the discrepancy between the customer service experience that organizations want to provide and the one that they actually provide is their failure to supply their employees with the resources and training necessary to meet customer service expectations.” The hope is that better trained employees are able to handle customer service inquiries not only more autonomously, but with more satisfactory outcomes.
Happy Staff. Healthy Company.
When you hire an employee, you are investing in both the future of the hire and in your company. Investing poorly can result in high employee turnover and therefore high costs. While terminating an employee can be necessary, sometimes, training an employee is the wiser use of company resources. Training a low performing employee has the potential to create a great employee without being cost-prohibitive. It can also boost company morale and reputation. The bottom line: investing in your employees pays off.
If you are interested in reading about more trends impacting today’s business leader, visit Washington State University’s online MBA program for access to relevant articles, infographics, videos and more.