High-profile business leaders know the value of employee training. PwC Chairman Tim Ryan told the Wall Street Journal, "In the next three years, upskilling will be a required employee benefit just like a 401(k) or health care." The promise of training helps you attract great employees when included as part of your benefits package. But employees aren't the only ones to benefit. Your business can realize a positive return on investment by offering learning and development opportunities for your employees.
Like any business decision, determining whether to offer company sponsored learning for middle skills and front line employees comes down to return on investment. What does your business gain by sponsoring employee learning? Can it be a mutually beneficial offering for both your business and its employees?
Penn Foster and it's partners have found that the benefits are great for both learners and employers. While learners gain access to new opportunities, confidence, skills, and credentials, employers get higher retention, fewer unfilled positions, more opportunity to promote from within, and higher productivity.
Employees don't have to complete a degree to benefit from company sponsored learning. ROI comes from more than just program completions. In fact, working learners can be classified into three categories, and each one provides value for the business:
- Credential Earners: These are the employees that most employers think of when they think about working learners. These employees have completed or are actively working toward earning a credential.
- Skills Gainers: These employees are expanding their skills set through training and education. Although they may never earn a credential, their learning is an asset to the business because it makes them more efficient and competent in their jobs.
- Explorers: The potential to learn and grow is enough for these employees, at least for now. They're not yet enrolled in a program, but they're exploring their options. In the meantime, they feel valued by an employer who offers them opportunities to develop.
Each type of learner brings value to the business, while also benefiting from what the business has to offer. Again, ROI isn't just about completions. It's about building a strong, well-trained, and engaged roster of employees.
Employee Training As a Benefit
Company sponsored learning programs drive value in four ways, each of which can save you money and reduce your hiring burden.
- Improve Retention. Employees engaged in company sponsored learning are more likely to stay since staying with your company allows them to continue their studies. At the same time, the company's investment in their future makes them feel valued and encourages a strong employee-employer relationship. These soft benefits are complemented by some tangible results as well. The average cost to replace an employee is 16-20% of their salary plus lost productivity as the experienced worker is replaced by someone new. That means your business can save $3,000 to $10,000 by investing in employee education.
- Strengthen Your Talent Pool. Employees who engage in company sponsored learning are preparing themselves for promotion. Since the outside cost-to-hire averages more than $4,000 plus an 18% higher salary, you can save $5,000-$10,000 educating your employees and hiring from within.
- Fill Positions Quickly. Because you can hire from within and keep employees from leaving in the first place, offering company sponsored learning minimizes the length and frequency of open positions. The daily cost of a position going unfilled is about $500 a day, with the average time to hire around 42 days, you can lose $21,000 due to just one open position.
- Maximize Productivity. When employees have the skills they need to confidently do their jobs, they get more done. Gallup estimates that about 17% of employees are truly disengaged at work. Disengaged employees don't make money for the business, in fact, they cost money. Gallup found that each disengaged employee costs their employer about 34% of their total salary. Meanwhile, boosting workforce education levels by just 10% can result in an 8.6% productivity gain.
It's clear that company sponsored learning can help you save money by making the most of our greatest asset; your people. But that's only half of the picture. Business leaders know they have to spend money to make money. So how much do you have to spend to get these results? And what kind of results can you reasonably expect? Let's break it down.
Calculating Employer ROI
The average cost per 300 learners is about $300,000. That assumes that about half of your employees are either just getting to know the program or haven't really started yet. About 30% are in the process of learning, and the remaining 20% have already earned a credential. Under these conditions, that $300,000 investment translates to more employees being retained, more employees being promoted, fewer unfilled positions, and greater productivity.
The total savings is $1.3 million. In short, investing in Penn Foster can provide a greater than 3.0x ROI. And that's in just one year. As more employees move from the investigation phase to the credentialed phase, you see bigger increases in productivity and more internal promotions. Unfilled positions may drop to virtually zero.
Those are just the tangible benefits. A company sponsored learning program also creates value that's harder to measure. You gain a recruiting advantage, because applicants can see that you care about your employees and are willing to invest in them. You also get enhanced brand image as a result of happier, more qualified employees. In addition, training allows you to more quickly identify high potential employees.
The community and social impact benefits are real as well. By providing company sponsored learning programs you give underserved populations of workers access to quality, affordable and accessible training. These workers gain economic mobility and increase the quality of the overall talent pool. By advocating for learners that might lack sufficient voice and choices, you increase the diversity of the workforce and build a corporate reputation for giving back to your employees and your community. In a society where 52% of US consumers factor values into their purchase choices, the return on this investment is almost incalculable.
Real results from real businesses
Our employer partners have seen these results and more. Here are a few of our success stories:
- Penske Truck Leasing has issued more than 1,6000 certifications to truck repair technicians, 60% of whom receive a promotion.
- EmployBridge has enrolled more than 40% of their eligible population, more than 22,000 associates in their Better WorkLife Academy to upskill and help retain contingent employees.
- Turnover of employees in the Veterinary Technician Associate degree program at Banfield Pet Hospital is less than 10%.
Every company is different. Your results will depend on your initial investment and your starting point, but Penn Foster will guide you every step of the way. With a tailored ROI dashboard, you'll always know the value of your investment in company sponsored learning. Contact our learning experts to get started today.