As any experienced manager or HR professional will tell you, hiring new employees is a tedious, time-consuming endeavor. What many might not realize is that recruitment costs time and money. Even before ongoing training is taken into account the total cost of hiring a single new employee can surpass $50,000.
Companies need to do everything they can in order to make sure that the people they bring on board are given every chance to succeed, as having to repeatedly replace failed hires can take a significant toll on any bottom line.
So, what’s the best way for companies to minimize turnover? Well, as we’ve written about before, employee onboarding is absolutely essential. Some 25% of American companies lose new employees within a year of their hiring, and even among employees who stick it out, the productivity lost during their adjustment period can amount to as much as 1% to 2.5% of their company’s total annual revenues. That being said, a good onboarding protocol is only the beginning.
As Jeff Goldberg, founder of Goldberg & Associates, explains, “Great training is useless without reinforcement and you must make [your employees] practice, rehearse and then make sure they’re actually doing it out in the real world.” In other words, while comprehensive introductory training and onboarding is important, a firm commitment to ongoing training is the only way that companies can guarantee that they get the most out of their workforce.
The Business Value of Ongoing Training
At the end of the day, your employees are the most valuable – and malleable – assets you have, and the better you are at helping them improve, the better your company is going to fare in the long run. It is essential to understand that ongoing training is an investment in your company as much as it is an investment in individual workers. Yes, ongoing training can help prepare an employee for bigger and better things down the line, but if you take care to create an industry-leading company culture, you are likely to be the one reaping the benefits of this development for years to come.
According to the Association for Talent Development, the return on investment of ongoing training can be rather remarkable. For one, companies that invest $1,500 or more per employee per year on training average 24% higher profit margins than their less ongoing training-oriented competitors. What’s more, compared to their competitors, companies that offer comprehensive training on a yearly basis enjoy 218% higher income per employee and generate a 6% higher shareholder return.
Given that more than 70% of companies cite “capability gaps” as one of their top challenges, it’s no surprise that ongoing training has been capable of delivering such tremendous returns. As corporate HR insider extraordinaire Josh Bersin points out, “Many companies tell us that it takes 3-5 years to take a seasoned professional and make them fully productive.” Even if they hire well, companies are always in need of highly-skilled, reliable talent, and ongoing training is often the best way to maximize a workforce’s potential and fill productivity-killing capability gaps as quickly and efficiently as possible.
Using Ongoing Training to Produce Multiple Good Outcomes
Of course, addressing employees’ capability gaps – or “skills gaps,” as they’re also often called – is only one of the myriad benefits that stem from ongoing training. Indeed, there are at least seven ways in which ongoing training helps a company improve its operations and, by extension, its bottom line.
- Remaining compliant with changing regulations
In today’s ever-connected, fast-paced world, very few industries remain stagnant for very long. Especially in highly regulated industries like healthcare, finance, energy production, and food service, staying up-to-date on changes in oversight policies is absolutely crucial. If you’re not careful, your company can very easily find itself in noncompliance with a new or updated industry regulation, which can result in significant penalties and restrictions being levied against your company.
Remaining on the right side of the rules requires that everyone at your company knows about every change, and that they understand how each change impacts their day-to-day work. If the only formal instruction they receive is during onboarding, there’s no chance that this is going happen.
- Staying up-to-date on industry best practices
Even in less regulated industries – sales, for instance – the most successful companies are those that stay abreast of shifting best practices. It’s a mistake – and a huge waste of money – to maintain a workforce well-versed in the methods of yesterday once the methods of tomorrow become clear. A salesperson may well be supremely competent in a “features and benefits” approach, but as the dominant sales paradigm continues to shift toward a stronger focus on the “customer journey,” this competence will only become decreasingly valuable.
A truly modern salesperson must understand brand building, content creation, and social selling, concepts that may very well be foreign to them even if they were initially trained and onboarded but a few years ago. As such, in industries as dynamic as sales, ongoing training is vital to keeping your employees in the know about what’s hot and what’s not, so to speak.
- Taking a forward-thinking approach to technology
The future of nearly every industry will be defined by new technologies, especially those designed to help companies leverage big data in a meaningful, productive way. Case in point: a Harvard Business Review study found that “companies in the top third of their industry in the use of data-driven decision making are, on average, 5% more productive and 6% more profitable than their competitors.”
That’s all well and good, but the hard truth is that many employees – especially older ones – are not properly equipped to deploy the kind of data-driven technologies that will become increasingly critical in the years to come. It’s one thing to possess a basic understanding of how a new platform or system works, but knowing how to use the new tech to its full effect is an entirely different matter. As such, while a one-off all-hands training session at adoption time can be a good way to get the ball rolling, your company is not going to get what it needs to out of a new technology unless it provides ongoing training that digs progressively deeper into the ins-and-outs of the tool.
- Spotting skills gaps, maintaining current skills, and adding new skills
As alluded to above, ongoing training is a great way to determine where your employees’ weaknesses are – and work toward erasing them. What many companies don’t realize is that ongoing training isn’t only an opportunity to provide more information to employees; it’s also an opportunity to assess where employees stand. If you don’t invest in ongoing training – and ongoing assessment – you’re not going to have any way to know when there’s a problem, or at the very least you won’t know where to look when it becomes clear that something is going wrong. The fact of the matter is, people are forgetful, and it’s unreasonable to expect your employees to retain everything you threw at them during onboarding.Of course, in addition to reinforcing old skills and highlighting skills gaps, ongoing training also represents an opportunity to add new skills to your workforce’s arsenal. As a manager or executive, your ultimate goal is to increase the value of your human capital, and committing to a comprehensive ongoing training program is the easiest – and often the most effective – way of doing so.
- Incentivizing workplace learning
From a management perspective, ongoing training is valuable since it facilitates employee upskilling (and all of the other benefits outlined above and below), but there’s another perspective at play here: that of the employee. To an employee, ongoing training represents an opportunity to better themselves as a worker, to make themselves more professionally attractive – both as an applicant for other positions and as a candidate for promotions. If a company manages to make it clear to its employees that a given training session is part of a well-considered, comprehensive ongoing training program, the employees will have much more of an incentive to participate in earnest.
This is especially true of Millennial workers, a group that already comprises a plurality of the American workforce. As Gallup Chairman and CEO Jim Clifton argues, “Millennials don’t want bosses – they want coaches. The role of an old-style boss is command and control. Millennials care about having managers who can coach them, who value them as both people and employees, and who help them understand and build their strengths.” If Millennials – and, really, all workers – feel like your company is only providing training when absolutely necessary to check legal or regulatory boxes, they’re not going to be happy.
An ongoing training program, however, gives managers the ability to flex their “coaching” muscles and really get their employees’ excited about and invested in workplace learning.
- Boosting job satisfaction levels
It might go without saying, but struggling is no fun. If an employee goes through every workday worrying about their performance and having a hard time executing the tasks they’ve been assigned, chances are that they won’t be very satisfied with their job. Though sometimes an individual just isn’t cut out for their position and needs to be let go, most of the time, ongoing training can right the ship. By offering struggling employees a variety of channels through which to bolster their skills and improve their performance, ongoing training guarantees that your employees don’t become dissatisfied simply because they aren’t realizing their true potential.
Further, the best employees are always seeking new challenges and looking for ways to mix things up at work. If, by virtue of their access to ongoing training materials, these employees are constantly discovering new, more efficient ways to do their job, the likelihood that they will become bored in their current position greatly diminishes. Ultimately, this means more productivity for you and greater job satisfaction among your top talent. A true win-win.
- Increasing opportunities for internal promotions
As we covered at the top, hiring a single new employee can easily cost as much as $50,000. Consequently, the more you’re able to develop your current employees and promote them internally, the more money you are going to save. Think of your business as a baseball franchise. Sure, you could go out and spend a ton of money securing the services of an established, top-notch star. While doing so will more likely than not work out in the long run, it’s probable that this new star will take some time to adjust to their new teammates, your clubhouse, and the unique way you play ball.
Conversely, you could invest heavily in your farm system and create a talent-producing apparatus that will churn out high-quality prospects on a regular basis. Not only will this enable you to know what kind and volume of talent is coming down the pipeline at all times, it will also empower you to shape your raw talent “in your organization’s image,” developing them according to the fundamental principles you hold dear.In a corporate setting, ongoing training closely parallels this “farm system” approach to talent management. While you could choose to spend $50,000 a pop recruiting a worker with a pristine resume, you could just as easily invest in the development of your current employees who, importantly, are already well-versed in your company culture. Certain positions obviously demand an external search, but the value internal talent development cannot be overstated.