importance of employee training

Any investment in business is measured by its return. When businesses invest in a product or an initiative, they expect that the profits created by the investment will outweigh the cost of the investment.

This fact is hardly lost on training program managers, who often have to work hard to make cases for their employee learning initiatives. We understand that presenting the value of employee development to executives can be difficult, which is why we wrote this post on training statistics that will help get leadership buy-in.

Essentially, investing in employee training increases profits by lowering expenses, which happens in the form of benefits like reduced turnover or fewer fines due to incompliance. Training also helps to increase revenue, which comes in the form of accelerated sales growth and higher productivity.

On our website, we have a very useful turnover calculator that shows exactly how costly employee turnover can be for an organization.

Although training can have a huge impact on turnover, that’s still only scratching the surface when we look at all the ways implementing an effective training program can benefit an organization.

Training can demonstrably increase profits through a strategic process that aims to:

  • Lower turnover rate
  • Increase productivity
  • Shorten the sales cycle
  • Increase upsells
  • Improve client retention

Here’s why your organization should be investing in people and should understand the importance of employee development.

The Data That Makes a Case for Employee Learning

In the late 1990s, ATD published a study which showed that organizations investing in comprehensive training saw 218% higher income per employee than companies that didn’t have formalized training.

That number may seem high, but when you break down what goes into that higher profitability, it begins to make sense.

Here are some things to keep in mind when you evaluate the effectiveness of your learning program.

Employee Turnover is Costly

The Center for American Progress released a report that revealed exactly how costly turnover can be – an employee earning $75,000 or less costs about 20% of their salary to replace. That means that replacing an employee who earns $50,000 would cost your organization $10,000 – and that’s just one employee.

Employee training is one of the most effective ways to increase employee retention – a 2013 study from the Global Journal of Management and Business Research concluded that when employees are rewarded for undergoing training, 70% of them agree that they feel more loyalty to their organization.

Quality Sales Training Is an Imperative

Hubspot conducted a survey of 287 sales professionals, concluding “The survey results indicate that respondents at companies with more effective training programs have higher win rates, higher levels of job satisfaction, and faster ramp-up time for new hires.”

Sales training, unsurprisingly, increases your sales volume. For a business looking to grow, sales growth is crucial – and that means so is good sales training.

The data tells us a few key things about employee training – here’s a brief recap:

  • Training is linked to profitability
  • Training reduces employee turnover
  • Companies with great sales training close more deals

Beyond these metrics are the less tangible (but hugely important) benefits like improving your company culture, empowering employees to develop themselves and improve performance, and closing skill gaps that exist within your organization.

Using stats like the ones we just shared can be a great baseline to help leadership understand the importance of employee training and development.

Why Leadership Needs to Be Actively Involved in Your Program

Training must be effective to create a significant ROI. The job of training program managers isn’t just to administer training, but to optimize their program around best practices so that each training event is as effective as possible, along with the training process overall.

One of the most effective practices is to get managers involved in their employees’ development. Not only will this practice improve the efficacy of your training program, you’ll also allow leadership and management to see first-hand the potential that training can offer.

Macrothink Institute writes in a research summary, “…line managers should adopt a focused approach towards TNA [training needs analysis] and remain fully involved in making policy decisions for training, being in line with HR. They must accept their responsibility in this area as front liners when compared with HR managers, because they are also accountable to their reports for training and development…”

Finally, employees should be involved in their own development as well. A 1998 survey of 60 middle managers and their teams participated in an experiment where one group was given training through a seminar about how to receive, interpret, and give feedback, and one group was not given the training.

The study discovered that involving employees in their own training and development – unsurprisingly – improved the results of training, as shown through testing.

Effective employee training is incredibly beneficial to your organizational strategy – investing in your people is one of the best business decisions you could ever make!

To learn more insights on why and how to use employee training effectively, check out our new ebook, full of learning and development research and statistics.