With labour markets tightening and the never-ending talent war making recruitment tricky (particularly in tech, where a nation-wide skills shortage is driving up salary premiums by 20 to 30 per cent) it’s worth taking a closer look at employee training and development. If you own a company, or work in senior management, you’re probably already engaged in some form of employee training. But is it enough? And are you putting your money where it generates the best return?
Let’s take a look at how employee training and development can benefit your business. And how to do it properly.
What is staff training?
There are several forms of staff training and development, ranging from internal mentorship programs to online learning and hands-on experience. For the purposes of this article, we’re talking about structured employee training with a dedicated budget. Not all companies embrace this policy, but it’s becoming increasingly important in the post-COVID world. In America, for example, training expenditures rose nearly 12 per cent (roughly $92 billion) in 2020-2021.
There are a few reasons for this. As mentioned above, we’re facing a well-documented tech skills shortage, which makes recruitment challenging and increases the value of staff training programs. Employees are also expecting more from their post-COVID employers, with development seen as a crucial wellbeing and retention tool. In short, if you’re not offering a competitive development and training package, employees will simply look elsewhere.
Why is it important?
It’s an age-old truism that it costs more to hire and train a new employee than upskill an old one. And the data keeps bearing this out. In fact, according to a local 2021 survey, the average cost of hiring a new employee doubled last year, rising from $10,500 in 2020 to a whopping $23,860 per worker (these numbers can be fuzzy, and vary depending on role and industry, but they usually take into account all sorts of factors: recruitment teams, time, efficiency, and advertising costs, to name a few).
So the simplest reason for training your staff is also the most obvious: money. It costs less money to train someone than it does to hire them. But this is a pretty crude (albeit important) metric. There are dozens of flow-on benefits to staff development and training.
Increase engagement at work
According to PwC, the cost of turnover in Australia is about $3.8 billion in lost productivity. Every time you lose a staff member, it literally costs your business – in time, in training, in recruitment, in lost productivity and revenue. As such, anything that reduces attrition and improves retention is not just a good thing, it’s an incredibly valuable thing. When it comes to training, some studies have found that solid development programs can increase employee retention by up to 14 per cent. That’s a huge net win for the average business.
Improve skills and knowledge
When you look at staff training as an investment, rather than a cost, it starts to make more sense. Training and upskilling your staff is the same thing as upskilling your business. It improves the knowledge bank of the entire company, making it more robust, more agile, more competitive and more resilient to change. According to a 2019 LinkedIn report, 74 per cent of employees want to learn during their spare time at work. The demand is already there. By training employees, you’re boosting their professional development, helping them feel valued, and improving overall productivity. It’s a win/win.
Speaking of productivity, studies have shown that employees who have undergone training are more than 8 per cent more productive. Many even favour training over increased pay, as their new skills can help expand their employment prospects in the future. Furthermore, companies that embrace employee training have a 24 per cent higher profit margin than those that don’t, according to the American Society for Training and Development. The results are pretty clear: training is not only good for staff, it’s good for your bottom line, too.
Plug skills gaps
Struggling to find a top-notch UX professional who also writes Python and dabbles in data management? You’re not alone. According to RMITO latest research paper, roughly three in five companies say their employees’ digital skills are outdated. Meanwhile, 2.6 million workers in Australia need digital skills to perform their role. The good news is, with targeted training and online short courses, you can quickly upskill existing staff to plug these skills gaps. Finding that unicorn tech worker might be tricky, but upskilling your marketing manager into UX, or teaching your copywriters to code, is easier than ever.
We’ve already touched on this one, but it bears repeating: training and development have a direct relationship with staff retention. If you’re struggling to attract new staff, it’s probably because of your Employee Value Proposition (EVP). Your EVP is basically what makes you different, or attractive, from an employee’s point of view. You can improve your EVP in all sorts of ways (remuneration being the crudest). These include workplace culture, leave, work/life balance, perks and, of course, training and development programs.
You can look at Australian company, Who Gives A Crap, as an example. By investing in training, along with work-life balance and flexible work arrangements, the company was able to shrink its turnover and attracted top-level candidates, even in a challenging jobs market.
Looking to upskill your team online? Start with a shortcourse from RMIT Online. We’ve also written an upskilling guide over here, if you’re looking for tips to get started.
For more information about Australia’s digital skills gap, check out our research paper, which we co-funded with Deloitte.