How Can Learning & Development Help A Business Gain Hefty Profits
While it is true that one aspect of profit deals with what your company is making over and above your expenses, the other deals with how well and for long you retain your employees. In fact, this aspect is paramount, yet often neglected by many organisations.
Different statistics claim that employee turnover is one of the costliest and most time-consuming processes as hiring top talent takes time and money. Plus, the way a business engages and develops that talent from the time they first get onboard, impacts retention and business growth.
That is why top players in today’s market are not hesitant to invest in learning and development and for good reason too; learning gives a business its competitive edge. These businesses realise that their most precious asset is their workforce and know that it’s unrealistic to think that the company can survive merely with talented workers whose skills aren’t periodically upgraded.
What is learning and development within an organisation?
Learning and development is a subset of HR that aims to improve group and individual performance by increasing and honing skills and knowledge. It focuses on providing and managing job-related training to employees and individuals.
In terms of skills enhancement, learning programs help employees gain knowledge or skills specific to improving performance in their current roles. Development, on the other hand, holds a broader spectrum and focuses on employee growth and future performance, rather than an immediate career role improvement.
Ensuring that employees are equipped to perform at high levels, and sustaining those high levels is an L&D goal. Those working in this field will usually be responsible for everything from the design and management of learning programmes, to the practical delivery of training.
A developed L&D department within HR will likely include specialists with expertise in areas of workshop curriculum design, external training and development resource identification such as seminars, off-site classes, or professional development associations.
As such, the scope of L&D in corporate settings is limitless. It works with every rung of the career ladder delivering everything from trainer training and virtual assistants training programs and certifications to corporate eLearning, and everything in between. An effective learning and development training program ensures that the business’s workforce possesses the right skillset to turn its efforts into profits for the organisation.
In terms of profit generation, companies know that managing their human capital and ensuring teams are appropriately trained takes time and resources. However, L&D is one of those rare types of business investments that eventually end up paying up for the company over time whether you are running a business that employees salaried or hourly staff.
Importance of employee retention
Employee retention can both be a huge challenge as well as an expense for employers. The same goes for the hiring process. As such, employee turnover is one of the biggest costs companies have to incur. Several statistics indicate that investing in learning and developing pays off as it is much more cost-effective to train employees and keep them on than it is to replace them.
The importance of investing in the professional development of employees can be gauged from the numbers that 94% of employees are willing to continue at their current place of employment longer if the company would invest in career development. This goes to show once again that the cost of replacing talent is higher than retaining those you already have.
Another Gallup report showed that the current US workforce, partly driven by millennials, is predicted to expand to 75% by 2025. However, the turnover rate among this demographic group is high, with only 50% planning to stay with their current employer within the next year. Gallup approximates that the cost of replacing employees can come to 150% of a worker’s annual salary, perhaps even more. Brought on by the absence of engagement in the workplace, employee turnover amounts to $30.5 billion annually. This internal economic damage is a harsh penalty for all organisations and a pricey mistake, which easily can be avoided.
Having a solid employee development program in place can make this less of a burden. For instance, when it comes to recruiting top employees, here is why a good development programme matters:
- Offers a competitive edge
Both prospective and current employees view L&D training as an attractive perk, one that the competition may not be offering. L&D programmes included in employment contracts confirm an employee’s sense of value within the company and promote loyalty which can ultimately lead to staff retention. This is something the bulk of employees, millennials, in particular, find very appealing.
In addition, hourly employees, in particular, don’t necessarily receive the same benefits that salaried employees are used to. Here, employee development can be considered a benefit and providing it as a component of the hiring package lends the company a competitive edge over other comparable jobs and wages.
- Brings in good people
The reputation that a company cares for its employees’ development is guaranteed to attract the best and brightest applicants. An employer who offers these opportunities raises their stock among job seekers searching for businesses that invest in their workforce.
It makes potential employees see that the business offers them a chance to grow with it. These are job seekers who are attracted by L&D opportunities and are looking for a place that will let them better themselves through such learning opportunities. These are also prospective employees who have identified professional goals they want to achieve and are the kind of employees you want working for you in the first place.
- Helps create promotable employees
Recruiting managers and other employees internally is not only a good idea, it is also considered a safer move than hiring externally. External hires typically get paid higher wages and are also more inclined to leave the company sooner. But when you hire internally, you are looking at someone who is already on familiar turf with the company culture and its various aspects including work environment, company mission, values, ethics, expectations, and goals.
That said, not all long-term employees are ready to take on the responsibility. Offering L&D training to all employees, on the other hand, can coach them to become better suited for promotion. For instance, a good employee development program will help the business filter out suitable candidates and those ready for promotion. At the same time, it can help the business pinpoint strengths and shortcomings within the employees.
As such, employee development trains both present employees for future promotion and tells managers which of them have the aptitude for advancement.
- Generates employee engagement
Workplace boredom can trigger dissatisfaction, restlessness, and negative work habits. It is easy for employees to take on pessimistic attitudes, present sloppy work habits, and impact relationships with management, co-workers as well as clients.
But implementing frequent training initiatives can check such workplace idleness. Holding regular training programmes is also a way to re-evaluate employee performance, skills, and other work processes. Learning and development can also impact company culture as it instils a focus on planning.
Dedicated L&D fosters employee engagement, and engagement is critical to your company’s financial performance.
- Boosts the company’s reputation
Being reputed as a good employer, someone who cares enough to provide training is helpful for recruiting new employees and how clients see the business.
Once word gets out in industry circles that you are a company that promotes employee development and education, it will boost your reputation. Not only will it impress potential hires, but clients love to hear about this kind of thing as well. They would rather trust their money to a company that invests in their talent than one which doesn’t.
- Ensures longevity
Providing L&D opportunities positions you as an employer who stays on the cutting edge of technology and industry advancement to progress your business goals. With new markets emerging, new technologies are sure to follow, and recognising these new skills and learning trends will help your company evolve and innovate for the future.
The primary consideration here is the people who make up your workforce, which in this case are millennials. As mentioned earlier, millennials are projected to make up three-quarters of the total workforce by 2025 and have their own expectations of workplace engagement, interactivity and learning. To ensure longevity, L&D opportunities need to cater to this demographic suitably.
For instance, breaking traditional ground with flexible hours, not having to commute, and the ability to work from home is something this group prefers. This makes options like offering online training courses, virtual assistant training and certifications, and virtual classrooms conducted in real-time very attractive for them.
As such, workplace learning practices need to include tools and systems designed to reflect the working style of the millennial user.
Despite there being so many options, L&D programs cannot happen without planning. It is an ever-evolving process where training that worked for the previous year might not work for the next. The company’s business culture may shift or they may need to engage a different kind of employee.
A solid L&D programme will lay the groundwork for fundamental and lasting change for both the employee and the organisation. Investing in one tie back to company profits and shows a return on the training investment over time.