Since moving from the Recruitment industry into the Sales Training and Development arena, I have been surprised by the number of companies that I speak with, that haven’t worked out the correlation between a lack of investment in employee training and the high recruitment costs that they face and the effect it has on staff attraction, engagement and retention. So my question is ‘Why view Training as an Investment, not a cost?’
My best client takes their People Development extremely seriously and have Gold status as Investors in People. Their annual cost on recruitment is negligible. They don’t use agencies, they don’t advertise vacancies in the press, they genuinely have a “Talent pool” of sales professionals, applying to join their business on an almost daily basis and when a vacancy does arise, almost always due to growth, then they have a smorgasbord of great talent to choose from.
Their employee testimonials on the likes of Glassdoor are a dream for any CEO to read. They weren’t always like this, however, they took a positive decision to put the development of their people as their Number 1 Business priority and it has been paying off for years. Their Investment in Training is sizeable, however their return on that investment is even greater.
Having asked the question of many other companies about how much they spend per annum on recruitment costs and how much they invest in training, my star client’s Training expenditure is still considerably less than the vast majority of companies recruitment costs and naturally considerably more than those organisations training expenditure.
In a recent IBM report, it highlighted that Top performing companies not only recognise the importance of their people, but also the need to provide the right skills and training to enable their people to peak perform.
- 71% of CEOs in the report of over 4000 companies cited human capital ahead of customer relationships and brands as the leading source of sustained economic value.
- 84% of employees in Best Performing Organisations are receiving the training that they need, compared to 16% in the worst performing companies.
- 65% of global leaders cite “talent and leadership shortages as their Number 1 business challenge”.
- 21% of new hires intending to stay at companies that do not offer training for their current jobs, compared to 62% of new hires intending to stay when training is provided.
- Those who felt they weren’t being invested in and therefore couldn’t meet their career goals in their current organisation were 12 times more likely to consider leaving.
Companies need to maximise their human capital by providing the right skills at the right time to the right people. This has been proven to dramatically reduce staff churn and safeguard the initial investment made in hiring. After all, great people are hard to find, so when you do bring one into your business, then it is vital that you train, develop and engage them. What’s more, the total costs of replacement can reach 200% of any employees annual salary. That is a lot of pain to take, very often due to a lack of investment in their employee training.
This part of the report really resonated with me, as in my previous life as a recruiter, I would always ask someone why they were looking for a new opportunity and why they wanted to leave their current company. An incredibly high percentage used to say it was due to a lack of training, investment and career development. When I asked what training they had received, I was often told that they were given a brochure and a set of car keys and told, read that and get out and sell!
In a recent PWC report into what the Millennial generation are looking for in an employer, (typically seen as those born between 1980 and 2000) personal development and coaching was the Number 1 employee benefit cited. Retaining employees and motivating them, by improving their skills and ability to do a good job, will do more than create a positive work environment, it will save money in the long run.
More Companies need to re-think Training and Development of their People and shift their mindset from it being a cost, to an Investment. It shouldn’t be seen as a nice to have luxury, that a company might be able to find a small budget for. By aligning the learning strategy to the business, organisations create an attractive learning culture and a positive differentiator in attraction and retention of staff.
In the era of social media and employer review websites such as Glassdoor, where reputations can be built and broken very quickly, taking employees for granted and not training and investing in them, will not only cost companies big in terms of recruitment costs, but they’ll also find it increasingly difficult to attract the right quality of candidate into their business. There is no arguing with the fact that retaining and training current employees is more cost effective than hiring new ones. Taking the time to invest in them by coaching and training and developing may not seem like an urgent business decision, but as many companies are now beginning to find with a better economic climate, delay investing in your People Development programme at your peril.