Lack of Employee Development - The Cost to Companies

No Execution = Wasted Money!

In 2018, a staggering $87.6 billion was spent on corporate training and development across the United States.

According to the 2018 Training Industry Report, the breakdown of this figure is as follows;

• $11 billion spent on outside products and services (content like LinkedIn Learning.)
  
  
• $29.6 billion on training expenditures (i.e. travel, facilities, equipment, etc.)
  
  
• $47billion on training payroll (internal staff, freelancers, contractors, partners, suppliers.)

Unfortunately, after investing in the training, there is often no planned next step beyond execution. Leaders are always hopeful that what has been taught will be absorbed and that the cost won’t be in vain. But plans aren’t put in place to ensure this is the case. Follow-up and reinforcement are necessary to ensure the new knowledge is being applied.

Cultivate Your People

Not following up is like carefully planting and never watering seeds in your garden.

• You can plant the finest seeds - by training employees with great potential.
• You can plant them in the richest soil - by providing them with the best training materials.
• But, without consistent watering in the form of regular follow-ups and evaluations, your garden - their skills and knowledge - will never flourish.

The initial effort and planning you invest in employees is fruitless, and the money spent on training is wasted.

Untrained = Unretained

As our previous blog covered, inadequate onboarding and training of new hires is another major cost to companies.

Domino Effect
This neglect triggers a domino effect of disengagement and high turnover. When you’ve found the right people, you should do everything you can to keep them, or they might walk.

Forbes states that 70% of employees would consider leaving their current job for another organisation that would invest in their development and training.

At What Cost?

Companies can't afford to lose employees involuntarily. According to Gallup, the U.S. voluntary turnover rate sits around 25%. The cost of that is 1.5 to 2 times the employee’s salary (an employee earning $50,000 a year costs the company $75,000 to $100,000 in lost work and training when they leave). The costs can be direct and indirect.

Direct costs include;

• ad placements,
• recruitment agencies,
• temporary staff
• travel and relocation expenses.

Indirect costs include;

• productivity loss
• on-the-job instruction
• correction of mistakes
• slower output due to unfamiliarity with equipment and procedures.
  
  

The numbers are quite striking, and if you have struggled to build a business case before, then you can be certain that this blog will assist you. If you need help or an expert opinion on this, please don't hesitate to contact our team.

The real cost of employee turnover (randstad.co.uk)