When times get tight and the economy flounders, businesses look to cut costs. Typically, one of the first areas to feel the bite of cutbacks is employee training. On the surface, this seems like a logical decision, but dig a little deeper and you realize cutting training does more harm than good over the long term, especially if you’re focused on retaining employees and increasing productivity.
Cutting edge companies typically invest twice the industry average on employee training, even during lean times. If the leading companies in your field take this approach, they must be seeing a return on investment on their training—after all, they’re leading the field.
A survey of 3,100 US workplaces by the National Center on the Educational Quality of the Workforce sheds some light on why. According to the EQW, increasing workforce education by 10 percent results in an 8.6 increase in overall productivity. In contrast, increasing the value of equipment by 10 percent only raises productivity by 3.4 percent.
Employees, Skills, and Retention
Regular training and educational opportunities rank high among employee-desired job benefits, especially for younger workers. An opportunity to learn new skills is the number one reason for accepting employment among millennials and Generation X workers.
What effect does this have on retention? Gallup reports “engaged and thriving” employees are 59 percent less likely to look for alternate employment over a twelve-month period. Regular training increases a company’s rate of engaged employees by proving management is willing to invest in them. You gain happier, more skilled employees who represent an important pool for in-house hiring and promotions. Opportunities for advancement are also highly valued by employees, so again, retention rates drop while productivity increases.
Companies that offer opportunities for training, education, and advancement also attract the best talent when they have to recruit outside of their workforce, increasing competitiveness.
How You Benefit
Training is a long-term investment for a company. As Eric Rolfe Greenberg, director of management studies at the American Management Association puts it: “Investing in [your] employees’ future is more important than immediate compensation.”
Well-trained employees are:
– More capable
– Willing to assume personal responsibility for their jobs
– Require less supervision
– Better prepared to answer questions from clients or customers
– Less likely to complain
– More satisfied
– More motivated and productive.
Additionally, trained employees tend to have better relationships with management, creating a more open workplace culture where communication between employees, supervisors, and management facilities productivity and problem-solving.
The American Management Association reports 78.1 percent of companies use external seminars and courses for training. Tuition reimbursements and company support for degree completion are also popular choices, as are material training, interpersonal skills training, technical training and employability training. In all cases, the training offered should benefit both the employee and business.
So next time you’re tempted to cut training and development out of your budget, ask yourself what industry leaders would do. Chances are, they’d keep right on training.