In 2015, small, midsize and large businesses within the U.S. spent a combined $70.6 billion on employee training and development programs. That’s a staggering 14.2% increase over training expenditure in 2014 (Training Magazine, 2016). And yet, despite the increase in employee development spending, the turnover rate increased in 2015 (Compdata Surveys, 2015). And, it’s not just limited to entry-level positions.
“One third of new hires quit their job after about six (6) months, (Ere Media, 2015).
What’s going on here? To understand, we need to shift the focus away from how much we’re spending on training and development to how we’re putting those dollars to work for our organizations and our people. After all, studies show that when employees are adequately trained, motivated and empowered to take ownership of their careers, retention soars.
By the time your new hire reports for their first day on the job, you’ve already invested considerably in their future with the organization. Fast forward six months and now this individual is acclimated to your company’s culture, understands your pain points and, hopefully, your goals for growth. How much is that worth to you?
You don’t have to guess. Karlyn Borysenko, an HR thought leader writing for TLNT.com, has already done the math for us. Her research shows that replacing entry-level employees costs between 30-50 percent of their annual salaries. Replacing mid-level employees costs upwards of 150 percent. And, for high-level employees, that number soars to 400 percent. Let’s say your company loses a total of 12 employees in one year. According to Borysenko, here’s a best-case scenario of what that looks like to your organization in actual dollars. It’s going to cost your company:
- $72,000 to replace the six entry-level employees,
- $96,000 to replace your four mid-level employees,
- And $72,000 to replace the two senior employees. (Ere Media, 2015).
Whether new or long-time employees feel uncertain, overwhelmed or bored with their responsibilities, the result for your company is the same. They’re leaving. Fast. And, they’re taking months or even years of knowledge and your financial investment with them.
That’s why a great employee onboarding and retention program should be a top priority for every company. Even if you already have a program like this, odds are it could be better. Custom training and development specifically tailored to help employees reach their full potential has been shown to reduce turnover when delivered consistently throughout an employee’s career with your company. With a better onboarding and retention plan, you’ll be handing your employees the answers they need to be more confident and more productive in helping to grow your business.
According to the Society for Human Resource Management, 75% of employees surveyed stated that the meaningfulness of their jobs helped them feel more engaged and committed to their work.
Whether your company is primarily using instructor-led employee training, eLearning delivered through a Learning Management System or a blended learning approach, the best employee training programs help individuals understand their importance to the success of the company.
This is especially important for Millennials, who now outnumber Baby Boomers and Generation X. Millennials love to feel like they are contributing to a greater goal. So, why not leverage this innate desire to drive success and growth for your company?
“...More so than previous generations, millennials place great importance on social causes and sense of purpose – and they define that purpose two-fold. The first is self-purpose; how do they fit into the organizational puzzle? How is their work relevant? Does anybody care? (Fortune.com, 2015)
You want to grow your business. Your employees want to grow professionally. Offering relevant professional development opportunities within your education and training program makes your team feel more motivated, more productive and more likely to stick around. Afraid they’ll leave after you invest in them? Give them a roadmap for advancement within your company and you’ll start filling your ranks with loyal, dedicated evangelists instead of transient job-hoppers.
You’re already spending good money on your learning and development program. So, if it isn’t enhancing retention to your satisfaction, or if you suspect there’s room for improvement, share our tips with your HR department before you think about increasing your budget.
You might find that you can reduce turnover with little or no additional cost simply by incorporating tips like these into your existing training program. And if not, we’re always here to help! Just give us a call or fill out our form. No risk. No obligation. Just our dedication to helping your resources go further.