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Training That Pays For Itself

By Dan Bobinski

Too often companies look at training as an expense or a necessary evil. Some company leaders even view it as a waste of time. One business owner said to me, “Why should I train my people only to have them quit and take all that training that I paid for over to another company.” I shook my head. Not only did he not see it, he didn’t want to see it.

Let’s consider the role of training in the workplace.

First, the research is clear: According to the Emerging Workforce Study, which appeared in Business Week a few years back, in organizations where training is considered poor, 41% of employees plan to leave within a year. But in companies where training is considered good, only 12% plan on leaving within a year.

This means that companies where people get good training have a 29% percent better retention rate, on average.

Next, the Society for Human Resource Management (SHRM) has reported findings by the Saratoga Institute in Santa Clara, California, that the average cost of replacing an employee is equal to their annual salary plus benefits. My discoveries while working with various organizations are in alignment with these findings.

Now let’s do the math: Multiply your average employee salary (plus benefits) by 29% of your workforce, and you’ll see what no training could cost you.

My guess is that the cost of training is far less than the cost of not training.

Let’s also consider research conducted by the executive search firm of Christian & Timbers, polling “past employees” on why people left their last place of employment. Here are the top five reasons (in order):

1. Boredom or Lack of Challenge
2. Limited Opportunity for Growth / Advancement
3. Lack of Appreciation
4. Low Expectations and Standards for Their Position
5. Inferior or Ineffective Co-Workers

As the risk of sounding narrow minded, I’d say training could be an integral part in addressing at least three of those top five.

In essence, you could probably provide decent training and have 29% less turnover. Still not convinced? Plenty more information exists emphasizing the value of training.

In the April 2000 edition of Training and Development Magazine, it was revealed that firms training more than 80% of their workers were able to attract and retain employees better than competitors of similar size and purpose.

Want more? The United States Council on Competitiveness found that a 10% increase in education has a more positive impact on productivity than a 10% increase in work hours or stock options.

Those are some pretty amazing statistics, and all of them coming from different sources!

So much for the theory of pay being a main motivator. In fact, you’ll notice pay wasn’t even in the top five of Christian & Timbers’ list of why people leave (noncompetitive compensation was listed at #9).

What pays off is training.

A company could even use Christian & Timbers’ top five reasons people leave as a guide for establishing training. Review the reasons people leave, and compare them to these ideas:

1. Provide training that challenges current abilities.
2. Provide training that leads to personal / professional growth, and training that is necessary for advancement.
3. Give recognition for each employee’s efforts in their training.
4. Establish high expectation workplace standards in the training.
5. Make sure everyone gets trained to a level of competency.

In the end, training that challenges people to think and improve doesn’t cost you in the long run. It actually saves you money, which means training should pay for itself.

© 2003 Dan Bobinski / Leadership Development. Dan Bobinski is President of Leadership Development. He can be reached at (208) 375-7606 or by Email at dan@leadershipanswers.com.

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