Top 5 Risks Of NOT Training Your Employees

During a recent visit with a Boston client (CEO and HR Director), I witnessed an exchange that was both poignant and pretty funny at the same time. While we were discussing financial training for their team, the CEO had an appropriate and direct question. In response, the HR Director had a better question. It went like this-

CEO: "What if we train them and they leave in a year?"

HR Director: "Worse -- what if we DON'T train them and they never leave?!?"

The HR Director's response (sarcastic as it were) provided some humor, but there was also a lot of not-so-thinly-veiled truth in her answer to the CEO's question. It inspired us at Vair to do some more research on the fundamental benefits of "Learning & Development" and the dangers of not training your staff. Here's some of the data we found.

Top 5 Risks of Not Training Your Employees

1. Losing your best employees. In an AON survey, respondents ranked "opportunities for personal growth" as the main reason they took their current job and stayed in that job. Significantly, they ranked it ahead of salary. According to a study done by Louis Harris & Associates, companies that fail to train their employees are more than three times as likely to lose them. Moreover, if a current team member decides to leave, it costs an average of US$15,000 to replace that employee according to The Employment Policy Foundation, especially when considering the need to rehire and retrain someone to take his/her place.

2. Losing your organization's competitive edge. "Any company has to recognize that not only is the human capital of their employees a major asset, it is also a depreciating asset that needs continuing investment", Nobel Laureate Gary Becker, professor of economics and sociology, University of Chicago. Maintaining your team members' skills keeps them, and your organization, on the industry's cutting edge.

3. Stagnant employee productivity. Motorola calculated that every dollar spent on training yields an approximate 30% gain in productivity within a three-year period. Motorola also used training to reduce costs by over US$3 billion and increase profits by 47% (source: Tim Lane et al., "Learning to Succeed in Business with Information Technology," Motorola). If you don't continually educate your staff, increases in productively are not a given.

4. Ineffectively dealing with a hiring freeze. As many international organizations still face hiring freezes, most managers are resigned to thinking that productively will not significantly increase until more team members are added -- an assumption quickly negated by appropriate and targeted "hands-on" training for your current staff.

5. Wasting supervisory and administrative time & costs. With insufficiently trained employees comes increasing duplication of effort, time spent on problem solving, and time spent on correcting mistakes. The more time and money a manager has to spend on monitoring and guiding team members, the less time is freed up for more profitable activities. Time = $$$

Plus... 1 BIG reason to train your employees.

1. ROI. The American Society for Training and Development (ASTD) collected training information from over 2,500 firms. They found that companies that offer comprehensive training:

  • Have 218% higher revenue per employee than those with less comprehensive training
  • Firms that invest US$1,500 per employee in training experience an average of 24% higher gross profit margins compared with those that spend just US$125 per employee, and
  • Higher price-to-book ratios (by 26%) on average than firms in the bottom quarter

at 6:09 PM
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