Finding and keeping talent is no longer merely a human resources challenge. In an age when more than 70 percent of organizations cite capability gaps as one of their top five challenges, having a strong culture of professional development is now a strategic business priority. Here are the five big benefits of doing it.
1. Stronger Sales
A more qualified workforce is a more marketable workforce. A recent study found organizations that invest an above average amount of budget in training had higher profit margins, higher income per employee and higher price-to-book ratios. Boosting sales was the primary reason why Jiffy Lube decided to create Jiffy Lube University and place a big emphasis on increasing certifications among its workforce. In recent years, certification levels have gone up in ten categories and the total hours of training have more than doubled. As the workforce’s qualifications grew, so did the company’s revenues. Today, as Training Magazine reported, nine in ten Jiffy Lube stores have a certification level above 80% and stores with a 100% certification level have average sales 9% higher than other locations.
2. Increased Retention
A study published in the Global Journal of Management concluded that “job training is one of the most important factors in retaining employees in organizations.” Retaining employees was one of the big goals Discover Financial had in mind when it recently switched 70 percent of its training to an online model that introduced more self-study and video-based coursework. Through the new program, Discover achieved an impressive 42 percent reduction in attrition rates and employee satisfaction levels rose significantly. It’s not surprising. Workforce development programs not only help employees feel more confident in their day-to-day work, but tend to be perceived as a sign of company’s willingness to invest in an employee’s long term success. Another important retention study found that when companies can form psychological ties between organizational and employee goals, it acts as a major positive force for retention. What better forum for building such ties than training? Some companies like Starbucks even build learning and employee growth into their mission statement. Deloitte found mission-driven companies have 40 percent higher levels of employee retention and have a recruiting edge as well.
3. Reduced Costs
CHG Healthcare Services is another example of a company that not only boosted its revenue through workforce development, but discovered a huge cost savings benefit as well. In 2013, CHG created a new quarter-long certificate program on lean strategies. In one year, its lean training program helped CHG eliminate 1,626 process steps, saved over 20,000 hours in labor, and removed mistake opportunities from 41 processes. All this workforce-driven process enhancement resulted in a cost savings of more than 7 million dollars for the company . The program was a big hit among employees and contributed to CHG earning the number three spot on Fortune’s 100 Best Companies to Work For.
4. Reduced Risk & Error
For companies in which production is a high priority, a competency-centric culture is one of the most sure-fire ways to manage risk, reduce errors, and keep downtime to a minimum. McCarthy Building Companies, for instance, developed an innovative “pre-mortem” training program to help team members identify and manage risk. After going through the training, one team immediately identified a risk with a building exterior that saved the company $250,000 of risk exposure. At Capital One’s UK contact center, front line managers were noticing that even tenured agents didn’t always have the knowledge they needed to answer customer’s questions, so the company rewrote its training modules to be more robust and up to date, including a lot of interactivity and role-plays as a part of the new approach. The result was a 36% decrease in errors and unanswered questions.
5. Easier Compliance
Companies face an increasing burden in terms of compliance. New occupational regulations address an increasingly automated workforce while industries like healthcare continue to grapple with an ever-evolving set of privacy rules. One of the most strategic ways organizations are dealing with this is to move from a culture of mere compliance to one focused on competency. This takes the company beyond a “check the box” mentality and drives actual value. One study found that every dollar included in an organization’s compliance budget decreased damages, settlements, and fines by an average of $1.37. Be sure to build in some report-back for employees on how their new competencies are impacting the organization overall. One study found when organizations decoupled compliance training from business results, it decreased compliance related behaviors.