Training is a process concerned with organizational activity aimed at increasing job performance of employees. Employee training and development is an important aspect for companies. Commitment to employee training and development can provide companies with a set of advantages such as lower employee retention and higher productivity.
Employers’ ability to retain employees is known as employee retention. Employee retention is critical for long term success of business. According to a study made by PwC, the estimated cost of losing an employee in the first year can be up to three time the person’s salary(1). Another study estimates that seven out of ten employees are directly influenced by job-related training and development opportunities while deciding to stay with the company(2). Even though high employee turns over can not be minimized only with employee training, studies clearly state investing in training results in higher employee retention.
Nowadays opportunity to learn a new skill is considered to be one of the most important benefits among employees. Accomplishing this desire through training is a mile stone to reach organizational goals. Employees which are well-trained are willing to take control over their jobs and are more result oriented. They need less supervision, understand business requirements, increase their contribution to the business and are upskilled to do new and different tasks which keep them motivated. A study made by the National Center on the Educational Quality of the Workforce estimated that a 10% increase in training investment led to a 8.6% increase in total productivity while in comparison 10% increase in value of equipment increased productivity only by 3.4% (3). In order to talk with numbers, here are some examples reported by the companies to demonstrate the benefit of training in terms of increased productivity;
Xerox Copr. reported that for every dollar spent on training, they get a return of $22.
IBM Corp. reported that for every dollar spent on training, they get a return of $26(4).
In conclusion, there are still many studies which are made to link training investment and its benefits for the company; however, in order to achieve organizational goals, employee training should not be considered as a cost, it should be considered as an investment. An anonymous conversation is definitely worth taking into consideration to evaluate the importance of employee training. “CFO asks CEO: What happens if we invest in developing our people and then they leave us? CEO: What happens if we don’t and they stay?