Financial Benefits of Employee Training

Financial Benefits of Employee Training

 If you’re a training developer or are otherwise involved in learning and development for your organization, you want the employee training programs you develop to have positive financial benefits for your organization.

You want this for a few reasons. The first is that your organization almost certainly exists in large part to create positive financial benefits for stakeholders like owners, shareholders, and even employees. Your organization almost certainly doesn’t exist to create training programs—it wants those training programs to contribute to those larger organizational goals.

And you also want this because you want to ensure that your organization continues to fund your learning and development/training development efforts, including your own position. At some point, if your organization comes to believe you’re not contributing to the bottom line—and in fact may actually be adding expenses that drag the bottom line down—your future and the future of your department may not look so rosy.

At the end of the day, demonstrating that your training programs have a positive ROI comes down to determining their cost, determining a persuasive argument for the financial benefit the training programs brought, and subtracting those costs from those benefits. This assumes the costs are smaller than the benefits, of course. And that you can make persuasive arguments, including providing evidence for those arguments, about the financial benefits that you believe are the result of the training program.

In this article, we’ll list some of the ways your training program may be creating positive financial benefits for your organization. You can then investigate these factors to try to make your own training ROI calculations and/or to make your own persuasive arguments.

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Some Ways Training May Improve Your Company’s Financial Bottom Line

Below are just SOME of the ways a training program can create desired positive benefits for your organization. If you don’t really have a training program at your organization, you can use some of the points below to make an argument for starting one. Likewise, if your training programs are limited in scope, some of these points may help your department expand. And of course, if you just need to demonstrate the positive benefits of what you’re doing to your organization and justify your budget and current positions, these will help as well.

Attracting More Qualified New Hires

Current predictions are for US manufacturers to add a LOT of new jobs in coming months, and it’s expected many of these jobs will go unfilled.

So your organization needs every competitive advantage it can get to hire the right candidates. That’s true if the candidate is perfectly qualified and has all the job skills you need, but it’s even true if you’re going to have to provide training to upskill or reskill the potential new hire.

In a competitive hiring market, these potential employees have the luxury of being able to shop around. They’re going to care about things like salary and job location, of course, but they’re also going to be swayed by the training programs, career growth opportunities, and potential to learn and develop new skills your organization offers.

No employee wants to enter into a dead-end job in which the employer won’t partner with the worker and make an investment in training, learning, skill development, continuing education, and career growth. The training programs your department makes can help your organization hire the best people, and that’s very valuable.

Watch this recorded, on-demand webinar in which our customers CBRE talked about how they worked with us and their HR department to create a training program that improved hiring and retention.

Improving New Employee Onboarding

Your organization’s relationship with newly hired employees creates a foundation and sets the tone for the rest of the employee’s time with the organization. And while training isn’t ALL that’s involved in new employee onboarding, it is a significant part.

Sadly, some organizations hire new employees and just leave them to figure things out on their own. Predictably, this often goes poorly, or at least it’s far from optimum. The new employee is likely to flounder, trying to learn their job role, who’s who, what the company culture and job expectations are, and of course acquire critical information and develop necessary skills.

Your organization suffers when new hires are unsupported in this way. So do those new employees (and often they’ll leave, as we’ll discuss below).

By contrast, a well-designed training program can make the process of onboarding new hires much more efficient and productive. The new hire will be much happier, will settle in faster, and will also develop those essential job skills much more quickly. And ultimately, helping new hires develop those essential job skills and begin applying them earlier on the job is going to create huge positive financial benefits for your organization.

Remember that new employee onboarding may be one of the most impactful “moments of training need” (to borrow a phrase from Bob Mosher) the employees at your organization experience. And it’s a great way to prepare those employees for lasting success with your company.

For more, read our article on new employee onboarding.

Increasing Retention, Especially of New Hires

We mentioned that having a robust training program that supports workers can be a benefit when you’re trying to hire new employees. The same is true once those employees are hired, since you’ll want to retain them.

Organizations invest a lot of money into hiring and developing workers. That’s why retention is so important. It’s very expensive to lose workers and have to hire more, onboard them, help them develop skills to an introductory level of job competence, and once again help them develop expertise in their jobs.

Here’s another important way training and development efforts and create a positive financial benefit for your organization.

More Efficient Development of Job Skills

Of course, if your training program isn’t helping workers develop job skills, you’re going to need to step back and ask yourself what your primary purpose is. Because it should be focused around skill development that leads to desired business results.

A well-designed training program can help your organization identify necessary job skills for different roles and help employees develop those skills much more efficiently than they would on an ad-hoc, paint-by-numbers as they try to learn on their own, manner.

More Quickly Preparing Workers for Advanced Job Roles

Onboarding is very important and helping employees develop job skills to perform entry-level jobs is critical. But that’s not where employee growth ends.

It takes a long time and a lot of experience for a worker to progress from competent new hire with basic intro-level job skills to advance, senior worker with true expertise. You can leave workers unsupported and simply hope they’ll make it through this progression, but it’s likely some will never make it. Or, you can add training to help improve the chances that workers do develop this domain-specific expertise in their job roles as well as decrease the amount of time necessary for that expertise to be developed (see our article on deliberate practice and developing expertise for more on this).

Workers with true expertise are huge value creators for a company. If your training program can help workers develop advanced expertise more reliably, efficiently, and quickly, you’ll be making a great contribution to the organization’s finances.

Being Accepted as Business Partners by Other Organizations

This may not apply to all organizations, but it does apply to some. For example, your company may produce parts and sell them to another company that uses those parts to make a final consumer product. And that other company may want to know you’ve got a robust training program in place before they are willing to partner with you in that financial relationship.

Likewise, you may be a construction contractor, and the companies you work for may want to know about your training program as part of their contractor qualification process.

So making an investment in training your employees may allow your organization to enter into profitable business relationships like the ones we’ve described. And not making that same relationship may keep your company locked out of those valuable business opportunities.

Lower Insurance Costs

In a similar way, having a robust training program—and perhaps in particular a robust EHS training program—can save your organization money on liability insurance. Insurance is an important risk-management component for many companies, but that doesn’t mean you have to pay top-dollar for it. Many insurers will consider charging less for your insurance if you can prove you’ve got an effective training program in place.

This is yet another way you can point to how your training program affects the company’s bottom line. If you’re not familiar with the terms of your current business insurance, look into it (maybe make a lunch appointment with your organization’s risk manager).

Avoiding Costs Associated with No or Poor Training

We won’t go into this in detail in this article, but the flip-side of the coin here is that there can be many possible costs associated with no training or poor training for your employees.

Regulators may fine you simply for not complying with compliance training requirements. And of course, poor training may contribute to any number of incidents—injuries, illnesses, fatalities, property damage, environmental releases, and more.

Your organization could wind up getting sued by an employer for something like sexual harassment or discrimination that training might have helped avoid. Or maybe a lack of training could somehow lead to a scandal that hits the news and damages your organization’s reputation with suppliers, customers, and/or partners.

Whatever it is, you want to avoid these costs and you definitely don’t want any of associated with poor or no training at your organization.

Want to Know More?

Reach out and a Vector Solutions representative will respond back to help answer any questions you might have.