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Training Gives 125% ROI

If you were guaranteed a 125% return on an investment, would you take it?

This is a great offer, and one that should be snapped up, but you may be surprised to learn that the means of achieving this result is through training. In these tough times, it's all too easy to perceive training as merely cost, without also understanding the direct and indirect measurable benefits of training.

For all business areas, both in public and private sectors, there is much more to training than increasing staff productivity.

Don't Train? Then Expect the Staff Turnover 'Hit'

The high cost of replacing employees is very real. Costs are estimated to start at 25% and easily reach 150% of the employee's gross annual compensation. In senior executive and sales positions, you can lose as much as 24 times the annual compensation. Yet, training is one of the key ways to reduce staff turnover, helping avoid:

  • Loss in Productivity From Leaving Staff - between notice given and departure staff productivity dips sharply
  • Costs to Recruit and Replace - posting, advertising, reviewing CV's and interviewing all take up considerable direct cost and staff time
  • Low New Staff Productivity - inexperienced employees often make mistakes whilst on their new learning curve. They need hands on coaching from other staff where appropriate
  • Costs of Fresh Training - most new staff will need some form of training to get them working effectively in their new role
  • Lost Revenue - without training there will be diminished productivity, lower customer satisfaction and potentially loss of customers and suppliers

By investing a few hundred pounds per employee you can increase satisfaction, lengthen employment term and avoid all penalties of lower productivity and higher staff turnover.

It's clear that we all need to look past simple cost accounting. Don't accept staff turnover as a necessary part of your business, but use training strategically to improve retention and job satisfaction.

Plan Ahead to Get the Best Result

We recommend not waiting for the last possible moment to invest in staff. Firstly, it can sometimes be too late once a staff member has become disenfranchised, and secondly the later you leave it, the less benefit from increased staff productivity and motivation.

Here are some areas to consider when choosing how to use training in the most effective way:

Focus on easy wins first... make sure your initial training efforts are planned and structured to produce solid, measurable and immediate returns. Estimate anticipated returns cautiously and ensure staff are aware of the expected outcomes.

Seek long-term sustained change... training must improve day-to-day performance over the longer term. Staff must sustain the good habits and skills learnt in their training. You must be confident that you will see the return on investment in the days, months and years to come.

Target 'unconscious competency' in staff... We all have a 'Joan in Accounts', she keeps herself to herself and, although she does a 9 to 5 she rarely makes a mistakes. Happy in her role and confident in her skills, she's been with the organisation for fifteen years and hopes to remain until her retirement in just over eight years time.

How Joan got to a level of 'unconscious competency' may have been a unique journey, but the end result is a key to the successful business: long-term, trustworthy and reliable staff members. Sadly, we also know that most businesses struggle to find quality staff. When there are serious concerns, often replacement is sought before asking the question 'can I invest in this person?'

Many staff, particularly ones who have just taken a new position, have much to learn and need support. They normally start from a place of reduced competency and some chaos, which is the most common situation. Training is the ideal means to fast-forward through the difficult early period in any new role, and it helps build staff up, rather than breaking them down.

Keep your eye on the bottom line... this article presents a commercial case and you need to continue to scrutinise the bottom line when evaluating your organisational training needs.

You’re only as good the people around you. Try to ensure that you are as productive as you can be. Don't write off staff without considering investing in them first. We see rough diamonds shine as a result of the confidence, knowledge and empowerment that comes from effective training.

So, get that 125% return on investment in your pocket before you pay another recruitment consultants' invoice!

... Source of 125% Figure?
Measuring Return on Investment Vol. 3 - Jack J Phillips & Patricia Pulliam Phillips
See the

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