An empowered learning and development team improves employee retention. In fact, 93% of employees say they will stay longer at a company when that company invests in their career development.
Employee retention is absolutely a key Human Resources (HR) objective, but there are many other benefits that learning & development provides that directly impacts a company’s bottom line. Training employees helps make employees more productive. Companies that spend at least $1,500 per employee annually report earning 24% more profit than those with smaller learning and development (L&D) budgets.
So, we get it. Learning and development is amazing. It helps companies gain and retain top talent, it improves productivity, and learning & development helps companies earn more profit. Before we go on then, it seems we need to understand what is learning and development and who are the key players.
Learning and development commonly referred to as training and development, is organisationally part of HR. The goal of Learning and development is to align employee goals and performance with that of the organisation’s. Those responsible for learning & development within an organisation must identify skill gaps among employees and teams, and then develop and deliver training to bridge those gaps.
The Learning and Development (L&D) function in today’s business world is emerging as an integral part of an organisation’s strategy. A greater number of businesses are recognising the need to invest in building the capabilities of its people. L&D is a key function that requires the same rigour and attention as any other strand of corporate strategy. Well managed L&D interventions can ensure that people have the right skills at the right time to meet and exceed business needs.
L&D initiatives are generally structured as per the standard training cycle illustrated in the figure below. Various models and variations of the training cycle are used within organisations depending on the corporate intentions and business needs, but the underlying principles remain the same.
Organisations are becoming increasingly aware of the principles and processes that govern the training cycle; however, the challenge lies within the application of such programmes in the day-to-day work environment.
With the awakening of many business leaders to the transformational power of learning and development, L&D leaders must re-evaluate their approach, focusing not just on upskilling and reskilling employees but also on transformational practices that drive business performance.
The COVID-19 pandemic has amplified this need and awareness. In March of 2020, many organisations had to shift their products, product development and collaborative models, and learning programs. This change revealed the stark contrast between the skills that employees have today and what they need to support future business success. The ability to learn is quickly becoming the most important skill for employee and organisational health.
Building employee capabilities and bridging skill gaps are vital processes. The pandemic has proven that organisations that cannot learn, iterate, evolve and grow will fail; many organisations that were unable, or unwilling, to change failed in 2020. The resilient ones that come out of the storm stronger than ever are what statistician and author Nassim Taleb calls “anti-fragile.” Anti-fragile organisations are successful in the long run, because unforeseen and stressful events propel them toward improved iterations.
A company’s capacity to learn, determines its capacity to adapt and innovate — and innovation is crucial for long-term survival.
Now that we have a little bit more information on what learning and development is, let’s now focus on the reasons why L&D is important for organisations today and tomorrow.
According to a 2016 Gallup report, 87% of millennials say learning and development in the workplace is important while 59% of millennials say having opportunities to learn and grow is extremely important when deciding whether to apply for a job.
Why is that important? Well, by 2025 millennials will make up 50% of the US workforce. By 2030, 75% of the US workforce will be comprised of millennials. In order for companies to compete for top talent, they will need to be able to offer a commitment to an employee’s development.
It is difficult to understand the actual costs of employee turnover, but we inherently understand that losing productive employees is not a good thing. In their 2018 Employee Retention Report, Work Institute reported that 1 in 4 employees will leave their job and nearly 77% of that turnover could be prevented by employers.
Regardless of the exact dollar value, retaining employees is more cost-effective than the costs associated with separation, recruitment, and the hit to productivity. As mentioned earlier, 93% of employees say they will stay longer at a company that invests in their development. That’s incredible.
This also means that companies are helping to retain their employees by investing in learning and development. L&D not only boosts employee productivity, but it is incredibly important to boost employee confidence in themselves and trust in their employer.
Employees are a company’s greatest asset. Right? Sure, they are! With the right team in place, the sky’s the limit. With learning & development focusing on filling in knowledge gaps and upskilling employees by focusing on the strengths of their employees, companies have reported anywhere between a 14%-29% increase in profit.
An IBM study found that well-trained teams increased their productivity by 10%. Equipping employees with the ability to do their jobs better is just a smart move. As managers, our jobs are to get the best out of every employee. Coaching and training employees is a great way to empower them to succeed.
So far, we have mostly spoken about how learning and development reduces employee churn, attracts new hires, and improves your bottom line by making companies smarter and more productive.
Also, in the same line of learning and development is risk mitigation, through compliance training initiatives and workplace safety training. Companies have a responsibility to ensure their employees work in a safe and welcoming environment.
Though proper workplace behaviour may feel like something people inherently know, companies can be proactive in training employees to maintain a safe and inclusive workplace. Implementing an effective ethics training program can help employees work better and minimize the risk of lawsuits for failing to comply with industry standards in safety and workplace behaviour.
Why does a customer get in contact with a company? Oftentimes all of the information they need is available on community boards or amazing knowledge centers that support teams create.
Customers look at company employees as experts in their fields with the ability to deliver information through dialogue. When a customer takes the time out of their day to wait on-hold or schedules a session to speak with someone, then it is critical that employees are knowledgeable enough about their company’s products to have a fruitful conversation. It’s ok to say, “I don’t have the answer, but I’ll get back to you.” However, it’s far better to be able to communicate an in-depth understanding with answers customers appreciate.
Empowering every employee to handle customer conversations effectively, has a remarkable impact on customer satisfaction. In fact, there is a 16% increase in customer satisfaction with companies that are using learning technology.
As G.I. Joe used to say, “Knowing is half the battle.” Once you understand what learning and development is and the importance of it within an organisation, you can start to take even small steps to boost its role in your organisation. Even if you are running a small company, training has its place.
Start to map out skill gaps and think about what you can do to help your employees get to where they need to be to do their job amazingly. Create a basic training program. Start with writing out learning objectives that build to clear learning goals.
Think about who you are training. Are these teenagers doing shift work or adults in their career? Remember, your employees are already working for you. They are an incredible asset for your company that helps you deliver real value to your customers. They want to stay and do an even better job, so invest in helping them, help you.