Train More, Train Smart and Lose Less!

There have been significant and accelerated overhauls of what we have considered the norm in business, many of which were prompted because of the Covid-19 pandemic. We have seen the change from mostly in-person work to most of our employees working remotely. We are seeing a record number of Americans quitting their jobs for new opportunities. Some of this comes from a lack of training and growth opportunities, the employer wanting them back in the office and the lack of a flexible work schedule. 

Training is incredibly important for the company and the employee. Employees want the opportunity to advance and grow. To grow with their current company means they need to be involved in professional development programs designed around promotion opportunities.  

Unfortunately, many employees must seek this growth outside of their current company. At a time when there is a severe skills gap for American workers, employee retention is critical. According to the U.S. Chamber of Commerce, CEO and President, Suzanne Clark, “The demand for skilled workers is greater than ever, but availability is in short supply. Our study finds that 74% of hiring managers agree that there is a skills gap in the current labor market, with 48% saying that candidates lack the skills needed to fill open jobs.”

Regardless of virtual or in-office employees, training is an investment in the individuals on your team. Training is the most valuable thing to an employee even more valuable than a pay raise. According to LinkedIn's 2019 Workforce Learning Report, the percentage of employees that say they would stay with a company if they invested in their employees' learning was 94 percent, with younger employees expressing the most interest. This trend has been consistent in the American workforce for several years.

The pandemic has led many workers to reevaluate the work they are doing and consider other employment opportunities. Some of the main reasons are the ability to work virtually, the opportunity for growth, a more flexible work environment and professional development/training. 
It’s being classified as the Great Resignation, with over 4 million people leaving their jobs in January of 2022, a staggering 44% of employees are “job seekers”, the majority in search of better pay or better working conditions. According to ShifteLearning "70% of employees report that they don't have mastery of the skills needed to do their jobs." This trend is supported by a 2018 Gartner report, which identifies that 40% of departing employees cite a lack of future development as a factor in their decision. 

One of the most cited reasons is a lack of growth opportunities from a career and professional development standpoint. NerdWallet states, "If an employee has been doing the same job for years without any opportunity for growth and change, they're going to seek that growth and change at another organization."

Investing in employee training and professional development is vital to retaining valuable employees. It is far more cost-effective to cultivate your current employee base, and strengthen their knowledge and commitment through new opportunities within the company than it is to lose them and face hiring someone who does not have the same level of knowledge, experience and loyalty.   

Companies who choose to not invest in training and professional development will lose the opportunity to develop some great employees, who have a solid history with the company, experience in their position, and who have an immense amount of knowledge. By losing this critical workforce, they will face replacing them with someone who will need even more training, will not have the same corporate commitment and may even leave within a few weeks of joining the company. 

As reported by CNBC, "…according to LinkedIn's 2019 Workforce Learning Report, 94 percent of employees say that they would stay at a company longer if it simply invested in helping them learn."

Meanwhile, employers have been complaining about a skill gap in the workforce. In 2016, according to Adecco, 44% of 500 United States senior executives said that the American workforce lacks soft skills, such as communication, creativity, critical thinking, and collaboration. Another key takeaway from this survey is that: "89% of respondents think that corporate apprenticeship or training programs could help alleviate the skills gap."

Among some of the things the pandemic has done is the solidification that companies need to look at virtual training to become the norm. Between the high costs of bringing everyone together, the difficulty of scheduling, downtime for the participants as they travel to training, and the fact that these programs rarely meet their goals because there was no way to measure outcomes, the switch to virtual training makes sense for most companies. 

The Cost of Staff Turnover

There are numerous costs to consider when looking at staff turnover. First is the cost of replacing a team member. These costs include recruiting fees, advertising, interviewing, screening, and onboarding. Then add the soft costs of the hiring team’s time, reference checking plus the company resources’ time to onboard.   

Onboarding means new employee training, time spent with the management team and other employees to learn about the company, policies, and procedures plus the skills training for the position itself. 

It takes time for an employee to get up to speed and become proficient enough to replace a previous employee. This task is especially challenging when you lose an employee, who has been a strong team member. According to the Society for Human Resource Management (SHRM), "the average replacement cost of a salaried employee is six to nine months' salary. For an employee earning $60,000 per year, that totals approximately $30,000 to $45,000." 

That cost is in addition to the new employee’s compensation package, the cost of recruiting and the cost of training.  

Hiring a new employee does not come without risks. How long will they stay, how productive and engaged will they be, how quickly can they get up to speed and what level of company loyalty will they have?

BambooHR reported that, according to over 1,000 employees surveyed, "31% of people left a job within the first six months, with 68% of those departing within the first three months. For many new employees, it seems the first three months at an organization are the most precarious." The first three months are where employees learn what it is like to work for the company. They experience the culture and see the efforts spent on training and customer care. For companies that do not have good onboarding and ongoing training programs, these new hires will most likely leave quickly.  Then the process and costs start again.

Another cost of staff turnover is the loss of knowledge, productivity, and engagement. Along with these additional costs is the loss of relationships between the departing employee and customers. Building client relationships takes time and losing a critical employee can result in losing customers.  

The Cost of Training

In 2018, across all industries, organizations with 100-999 employees spent about $1,096 per employee, organizations with 1,000-9,999 employees spent about $941 per employee, and companies with 10,000 employees or more spent $1,046 per employee on training.

When evaluating the cost of training, adding things like the cost of the human resources (HR) or learning and development (L&D) teams as they plan the training programs along the time needed from others to assist in training. So, time is another cost to consider, plus the loss of productivity by those who are assisting.  This cost is defined by the decrease in revenue. 

According to the 2021 Workplace Learning Trends Report from Udemy, the main obstacle cited by respondents was a lack of time (61%). 

The trend in the corporate training world is that the majority, if not all, training will be virtual for the foreseeable future. It makes more sense from a timing and cost perspective. Virtual training, if using the right virtual training technology, increases participation, offers small group project activities, offers in-class assessments for evaluating learning real-time, and provides measurable outcomes.  The cost of the technology is a fraction of the cost of bringing the team together in a live environment.

With virtual corporate training, there is an opportunity for companies to increase and improve their training programs by offering more frequent training opportunities to their employees. Looking at the cost of $45,000+ to replace an employee and the “average cost to train - $1,046, there’s no question that increasing your investment in professional development and training programs would have exponential value to the company.  

Even if you increased your training cost to $5,000 per employee, based on the cost of losing that employee, it is significantly less than losing valuable team members.  

Using a virtual training solution, you can train more in a very cost-effective manner so while training budgets need to be increased, you eliminate the travel and out-of-office expenses.  The cost of virtual is significantly less, so your training budget can be used for training, not travel.  

Using the right technology is critical.  Web conferencing systems are not built for training and learning. Using a virtual solution that’s designed specifically for learning makes a difference in the level of engagement and outcomes of training.  

Train more, train smart and lose less!
 

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