Companies are increasingly recognizing the value of offering training and development programs for their employees. In 2014, businesses spent an average of $1,229 per employee on training and development initiatives, according to the Association for Talent Development's latest annual State of the Industry report.1 Employees received an average of 32.4 hours of training, while employees in organizations recognized by ATD as demonstrating the most enterprise-wide success received 43.9 hours of training. Bersin by Deloitte principal Josh Bersin also notes that high-performing companies spend more per employee on training.2
Why do it? Because money spent on training is not merely an expense but an investment with high financial returns. Here's how investing in training and development programs for your employees benefits your business and its bottom line.
Upskilling Fills the Skills Gap
Employee training is one of the most efficient ways to fill job openings created by the skills gap in today's market, a major concern for many employers. Finding qualified talent to fill skilled positions is the biggest human resources challenge for today's companies, ranking ahead of even retention, according to a Spherion Staffing Services survey.3
Fortunately, both of these pressing problems have a common solution in employee training development programs that "upskill" workers in order to "backfill" vacant slots within companies. Sixty-four percent of talent development professionals responding to an Association for Talent Development survey felt that internal training could close specific skills gaps, while 94 percent of executives polled by Deloitte thought that internal training should be used to close the skills gap.4
Employee training also improves employee efficiency, and greater efficiency means money saved. A National Center on the Educational Quality of the Workforce study of 3,100 U.S. workplaces found that a 10 percent increase in employee education yielded an 8.6 percent increase in productivity.5 A study by CompTIA and Prometric found that an increase of productivity of just 2 percent yielded a 100 percent return on investment.6 Companies such as Xerox IBM, and Motorola report seeing returns on investment to be as much as $22 to $33 for every dollar spent on training.7
Better-trained employees make fewer costly mistakes. Workplace mistakes and the employees who make them can be expensive - in fact, 27 percent of U.S. employers report suffering losses of as much as $50,000 from a single bad hiring decision.8 In cases where a workplace mistake results in an injury or a lawsuit, mistakes can be far more costly. UC Davis research estimates that work-related injuries cost U.S. employers a total of $250 billion annually, a bigger drain on the economy than cancer, diabetes or strokes.9 Better training can help employers reduce these and other costs that can arise from employee mistakes.
Retention Reduces Organizational Efficiency Obstacles
Boosting retention through training also improves performance throughout the organization by reducing organizational efficiency obstacles. Inability to fill skilled positions has a negative impact throughout the organization, hindering productivity and ultimately hurting revenue. Forty-one percent of U.S. employers feel that productivity has been reduced by inability to fill open positions, and 21 percent see loss of revenue as a result, according to a CareerBuilder survey.10 By retaining skilled employees, employers reverse this loss of productivity, improving efficiency and boosting revenue.
Education Improves Quality and Safety
Retaining and training skilled employees also helps companies adhere to quality and safety standards. This can be particularly important in industries with strict quality and safety requirements such as healthcare, manufacturing and construction. For example, the nuclear industry is currently suffering a deficit of young employees with training to implement the industry's high quality and safety regulations, says Power Consulting Services at GlobalData head Jennifer Santos.11 Internal training can alleviate the need to seek such outside assistance.
Stay tuned for the fourth and final installment in the Investing in Learning & Development series, coming soon!
Recommended for You: Investing in Learning & Development: Its Crucial Role in Solving the Skills Crisis
Resources: Photo Credit. (1) Association for Talent Development (2) Forbes (3) The Society for Human Resource Management (4) Association for Talent Development (5) Workforce (6) LinkedIn (7) Corp! Magazine (8) CareerBuilder (9) Occupational Health & Safety (10) CareerBuilder (11) The National Institute of Standards and Technology