“An investment in knowledge always pays the best interest”
― Benjamin Franklin
When businesses balance the books, they often tend to cut down in those areas they consider difficult to prove a return on investment (ROI). For this reason, employee training and development are often the first aspect that suffers. If not by outright budget cuts, then by general neglect and a lack of increased investment. While the most obvious form of neglect is reducing or removing development services, it can also manifest as a lack of increased investment where it is needed to meet business demands. Yet, high-quality training and development have clear benefits in respect of improving win rates, revenue, and quota fulfilment.
While it can sometimes be difficult to prove an ROI on employee development programmes, which makes increased investment tough to justify, it is nevertheless an area where businesses will only get out what they put in. Below, we look at 4 ways how poor employee training and development programmes can negatively affect your ROI.
Consequences of neglecting employee training and development
1. It affects employee turnover
One of the biggest consequences of neglecting employee training and development is illustrated in the form of employee turnover. There exists a direct link between what you invest in development (time and money) and whether employees decide to stay with or leave your organisation. To illustrate: Businesses listed on the Fortune 100 “Best Companies to Work For” that provide 73 hours of training for full-time employees, compared to the 38 hours provided by companies, not on the list saw their ROI manifest in increased employee retention – their employee turnover was 65% lower than other companies in the same sector. Essentially, what this shows is that neglecting your development programmes decrease your overall ROI while investing fully in development programmes results in a much greater ROI.
2. It affects client/customer retention
With efficient employee training and development, companies can address various challenges that lead to profit loss including poor customer service, wanting product knowledge, unskilled employees and low employee morale which, overall, also leads to a competitive disadvantage when compared to other businesses in the same industry. This has a direct bearing on, for example, sales and customer relations. It can be argued then that happy clients/customers who are serviced by knowledgeable employees will result in increased client/customer retention and longer-term and increased sales (or services), which has a direct influence on ROI.
3. Profits and productivity
A study conducted by the Association for Talent Development (ATD), found that companies offering comprehensive training programmes have a 218% higher income per employee than companies without formal training. The study further found that companies that invested in training and development also enjoy a 24% higher profit margin than those who spend less on training. Continuing to invest in training and development, even when there are economic downturns, is evidently a smart play.
Employee training and development programmes require a substantial investment of both time and money. Consequently, the programmes must be high in quality but also progress along with business practices and market conditions. Moreover, there is a direct correlation between training provisions and employee turnover, with neglect resulting in more employees leaving a company. If your employees are untrained, they will ultimately lack the knowledge to use company resources properly and lack the requisite knowledge about procedures which will affect customer interaction and retention. Because of this, your employees, your business, and your clients or customers will suffer.
From the above, it is clear that neglecting employee training and development has a detrimental impact on your ROI. The only way to create a sufficient level of return from your employee training and development programmes is to invest sufficiently – both time and money – in development practices and ensure development is continuous.
Read more:
The proof is in the pudding: How to measure the impact of corporate learning
5 Ways mobile learning can improve corporate training
“A picture is worth a thousand words”. Five benefits of visual facilitation in corporate training
