Organizations which side line learning and
development efforts face the risk of reduced employee productivity, low
engagement levels and reduced profitability.
Training is a part of most organizational
agendas, yet companies still grapple with fundamental questions when it comes
to truly embracing a learning culture. A primary point of contention is whether
investing in training makes a significant difference? HR and businesses experts
have seen that training offers many people-centric advantages- higher
engagement levels, ability to attract the right talent, and better
productivity. But do all these gains translate to business benefits? This may
be hard to decipher, considering that learning outcomes are often intangible
and embedded subtly in the people-outcomes. Business leaders who are often
skeptical ask the question, “Does more training lead to more profitability?”
The answer is “yes” and organizations that do not take up training as a key
priority stand to suffer.
Sujatha Das, Director – Sapient Consulting
notes that “the speed at which the technology and business landscape changes in
a disruptive marketplace has made it inevitable for every individual to make
“continual learning” as the mantra of life. With the growing competition among
businesses in every industry, lack of training in the employees may replace the
success stories with failures.”
The
training-productivity linkage
Research indicates that employees of
organizations providing the most training are nearly twice as engaged as
employees who receive little or no training (43% versus 83%), which, in turn,
shows that engaged employees are productive. As per a paper on “Labor
Productivity and Vocational Training” by Hector Sala and Jose Silva, every hour
of employee training increased labor productivity by .55%. Another research by
Jozef Konings and Stijn Vanormelingen indicates that the “marginal product of a
trained worker is on average 23% higher than that of an untrained worker”. This
indicates a clear linkage between training and productivity. And productivity
directly translates to higher profitability. Research from 'Bersin by Deloitte'
found that high-impact learning organizations were three times more profitable
than their non-learning competitors. This direct correlation is very real- the
more the training, the better are the business outcomes. This is especially
true in the highly dynamic VUCA world that we live in, where employees are a
critical business asset. This strong training-profitability correlation
highlights the compelling need for organizations to invest in training.
Organizations that provide training see a
significantly higher return on assets i.e. three times more than companies that
don’t engage in ongoing employee training programs - IBM Smarter Workforce report (2013)
•
Reduces turnover: Learning
opportunities are being seen in new light, and no longer as a skill enhancement
tool alone. Employees, especially modern millennials, consider learning
opportunities as an indispensable tool that is in line with their life philosophies
of continuous development and growth. Such employees look upon training as a
much-valued benefit, an opportunity to advance one’s career without having to
switch jobs. Hence, contrary to the popular perception that well-trained
employees will scout for better opportunities and leave, training acts as the
glue that makes employees stick. Such employees stick around as better engaged,
loyal, and productive assets that can take the company to new heights.
•
Reduces recruitment costs: Many leaders think that investing in training
is an expensive affair. The reality is that the cost of recruitment is often
higher, and can go up to 150% of an employee’s salary. This is because hiring
is a high investment when factor like costs of lost productivity, lost knowledge,
interviewing and onboarding, and time and effort investment of recruiters and
hiring managers are accounted for. A better alternative is to build capability
internally, it is often cheaper and easier to do so.
•
Boosts employee morale: There are two ways of filling a vacancy- promote
from within or hire from outside. Promoting a person from within requires the
company to build the person’s capability for the next-level role. So a company
that ignores employees’ development won’t have future-ready employees who can
take on higher roles.
Make training future-centric; predict
skills required for higher-order and future roles, and build a capable
candidate pool that can be plugged into the right positions, as and when
required. This train-plug-and-play approach to succession planning will foster
better employee morale because employees will now see real opportunities for
career growth. Also, a leader hired externally often requires more time to
settle in, because he or she needs to understand and assimilate the company
culture. On the contrary, an in-house leader is productive from day one. This
is better for the employee as well as the organization.
Training is often seen as a cost-center,
and business leaders may be unwilling to dedicate time and resources to train
their people. The reality is that today new models of training delivery have
emerged which are highly time and cost effective and result-oriented. Online
learning, mobile learning, social learning, massive open online courses are offering
smarter ways to learn. HR must showcase the real value of these training
mechanisms through productivity and profitability dashboards. When they see the
direct and tangible value-add to business, leaders are more likely to
proactively take the plunge and invest in training their most competitive
advantage- their people.
About the Author: Arun Rajamani and Rhucha Kulnkarni
Article Source: