Talent retention has become a mandate for any company that wishes to be successful today. Seventy-eight percent of business leaders surveyed by Deloitte ranked employee retention and engagement as either important or urgent.1 One reason is the growing awareness of the expense of replacing employees, which Deloitte says can cost up to twice a departing employee's salary.2
One of the strongest ways companies can boost employee retention is by providing development opportunities. We've compiled five reasons why companies concerned about employee retention should consider investing in training and development programs for their workers.
Retain Top Talent
If you want employees to stick around, offering opportunities for career development is the best motivation. When asked what would motivate them to stay with their current employer, 54 percent of employees surveyed by Deloitte cited opportunities for promotion or advancement, preferred over compensation, bonuses, benefits or any other incentive.3
Companies today widely recognize that education is key to employee retention. For example, GE Capital is advocating 40 hours of technical training per year for all IT employees, reflecting a trend toward increased training investment by companies of all sizes.4 In 2015, training investments grew 29 percent among large companies with 10,000 or more employees, 41 percent among midsize companies with 1,000 to 9,999 employees, and 30 percent among small business with less than 1,000 employees, Training magazine reported.5
Decrease Turnover Costs
Training and development programs increase employee retention, thereby reducing the costs associated with high turnover. The direct costs of replacing an employee equal 50 to 60 percent of the employee's average salary, with total associated costs reaching as high as 90 to 200 percent, according to the Society for Human Resource Management.6 Hard costs include expenses for the separation process, job vacancy consequences, and selection and sign-on of new employees, while soft costs include loss of productivity for both departing and current employees. Development of employees reduces these costs by promoting opportunities for career advancement, which Deloitte research identifies as the top driver of employee retention.7
Increase HR Efficiencies
Improving retention improves human resources efficiency as a byproduct. HR personnel make significant efforts to deal with retention-related issues; in fact, 40 percent of HR professionals say loss of personnel is their top organizational challenge, while another 29 percent cite replacing lost talent as a major concern, according to a survey by the Society for Human Resource Management and Globoforce.8 To the extent employees are retained, HR teams are relieved of these tasks, freeing up more ability to focus on other pressing items such as managing benefits programs and ensuring compensation equity.
Provide Higher Quality Service
Well-trained employees deliver better customer service. They make fewer mistakes, resulting in fewer customer service issues. And when issues do arise, well-trained employees are better equipped to handle them. Together, these factors translate into greater customer satisfaction.
Take, for example, Apple, which is well-known for its emphasis on training for tech support representatives and retail staff. Apple has become the fastest-growing retailer in history9, in part by consistently ranking as the best customer service provider in the tech industry. Consumer Reports found that Apple representatives were able to resolve customer issues approximately 80 percent of the time, far ahead of the 61 percent delivered by the next-leading competitors.10
Increase Customer Retention
Better customer service from better-trained employees translates into more satisfied customers and higher customer retention. For example, by implementing customer service training from the Disney Institute, one Chevrolet dealership was able to increase its customer retention rate to 64 percent, compared to an industry average of 39.7 percent.11 Harvard Business School research has found that increasing customer retention by 5 percent increases profits by 25 to 95 percent.12
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If you missed the previous installments of the Learning & Development series, check out parts 1-3 below.
Resources: (1) Forbes (2) LinkedIn (3) Upskill America (4) CIO (5) Training (6) Society for Human Resource Management (7) Upskill America (8) Globoforce (9) Shopify (10) Consumer Reports (11) Disney Institute (12) Harvard Business School Working Knowledge