The ROI of Workforce Development
Posted by Des Sinkevich on February 16, 2024
In business, for a program or plan to be considered a success, it needs to show positive return on investment (ROI). With sales metrics and revenue benchmarks, it’s fairly easy to measure the return and impact of your strategy. However, for strategies and plans involving human capital, getting a clear picture of how your investment in workforce training affects the business isn’t quite as straightforward. People are variable. But it’s also true that people – human capital – are essential to growing your business, revenue, and improving retention rates. As a necessary investment for employers, understanding the impact of effective workforce training can help you build a strong program with positive results for your employees and business.
The impact of workforce development on retention
While some on-the-job training is essential when onboarding a new employee, continued learning and training opportunities are often sidelined by employers. If employees can efficiently and correctly perform the job tasks they were hired for, what’s the point of spending more on additional education? But not investing in legitimate workforce development can, over time, negatively impact all aspects of the business from culture to revenue.
Consider the cost of high turnover within your organization. Whether you’re in a high-turnover business like retail or are operating in a more stable industry, turnover, like taxes, is something you know will happen every year. While some turnover is inevitable, a steady stream of it over time can impact your revenue. On average, it can cost upwards of $4,129 to recruit and hire a new employee. Multiply that several times and you’re looking at a potentially heavy loss.
Besides taking a hit in revenue, turnover adds additional stress to current employees and company morale. If you’re hemorrhaging workers, employees take notice and may start to question what, exactly, is leading so many others to leave the company. Those who stay are then often asked to add training a new recruit to their full list of tasks, taking away from productivity. Cyclically hiring and losing employees is a stressor that impacts all aspects of the business, even up through client satisfaction.
Read more: 10 Workforce Trends to Expect in 2024
4 reasons to invest in training and upskilling
Besides ensuring an employee can handle the work they’re given on a regular basis, providing in-depth training to your workers builds career confidence and motivation. It also allows you, as the employer or hiring manager, to create a strong, developed talent pipeline within the company that can feed into high-level or more skilled roles.
Offering training or education benefits to your employees can also act as an effective recruitment tool; today, many workers consider learning and development opportunities – and the ability to grow within a company – as top priorities when searching for new roles.
Other benefits of building an effective training and education program include
1. Improved performance
An employee who knows what their job duties are and has the tools to perform those duties well is confident in their work, improving their performance which drives accelerated company performance- meaning training is good for business.
2. Increased loyalty or motivation
If someone is doing well in their job and is being recognized by managers, they’re more likely to stay motivated to continually meet that high level of performance. Providing training opportunities also increases employee loyalty – if an employer is willing to invest in their career growth, there’s more incentive to stay with that company.
3. Increased retention rates
Most employees want an opportunity to grow their skills and advance their careers. Companies that invest in learning and development programs see a 30-50% increase in engagement and employee retention.
4. An internal talent pipeline
Recruiting can be costly, especially for higher paid roles. After recruitment, the onboarding process can then take up to 90 days, meaning that the new hire won’t be as productive while they’re learning the ropes of the role. By offering training and development opportunities, you can reap all the other benefits while also creating a pipeline of skilled, knowledge workers that can take on new roles and promotions.
Invest in effective online training programs
Internal, in-depth training programs can often put stress on already busy employees and human resources personnel, thus creating an environment of fast-forward learning that will, down the line, affect employee productivity and skills. By partnering with an expert training provider like Penn Foster, you can offer a wealth of development opportunities for employees that can help them grow within the business, create a company culture that inspires loyalty and fuels motivation, and positively impacts your retention rates and bottom line. Contact a training expert today to find out how you can build a program that works for you.