When company executives take time to assess company resources and where to invest them, there are several items that are always at the top of the list, regardless of the industry. Staffing needs. Opportunities for expansion. Higher revenues. Finding efficiencies. Minimizing costs. Employee training?.
To get a good understanding on the value of employee training and its potential ROI, it’s important to know both the costs and the benefits associated with it.
Employee training is just like any other good or service because it can be done with a range of price points. The same is true around the quality of the training….it has different value points.
A survey by Training Magazine put the average cost spent on training for both new and existing employees at around $1,200 per year. That number varies according to different factors, such as company size, employees’ existing skill sets, and whether the training is delivered in-person or through a virtual training option. These costs are for the general workforce. When it comes to executive training, the cost can be anywhere from $150 to $500 per hour.
It should come as no surprise that bigger companies tend to invest more in training their employees. Here’s what the numbers were for the organizations included in the Training Magazine study:
- Large companies (10,000+ employees) invested an average of $17.7 million in 2019, a decrease of $2 million from 2018.
- Mid-size companies (1,000 – 10,000 employees) invested an average of $1.7 million in 2019, a decrease of $400,000 from 2018.
- Small companies (100 – 999 employees) invested an average of $367,490 in 2019, a slight increase over 2018.
What’s surprising is how much of an ROI the companies who invest in employee training see from their investment.
A trained workforce does more and does better than an untrained one. That’s because employee training fosters greater confidence in staff, who can then perform their jobs more nimbly, saving time and money. Not only are the employees better equipped, they feel valued because the employer is investing in them. This leads to higher productivity, better quality, and less absenteeism. As Henry Ford said, “The only thing worse than training your employees and having them leave is not training them and having them stay.”
Employees who are trained and supported tend to have much higher levels of engagement and morale. These qualities are priceless. If we were to put a price tag employee engagement and morale, it would be in the billions, since that’s what poor employee engagement costs companies across the US, upwards of $550 billion. What accounts for this sky-high figure? Disengaged workers simply don’t contribute positively to the company. They don’t bring their energy and creativity to help grow the company and they have no “investment” in the success of the company. Basically, they don’t bring their A game, they don’t even bring their C game.
Workers who receive training are much more likely to stay with a company, because they see a future and a clear path to advancement. Up to 40% of employees with poor or no training will leave a company within their first year of employment. The cost of staff recruitment is expensive. More importantly, when other employees and customers see constant staff turnover, they question the value of staying with, or doing business with, that company.
Investing in employee training just makes good business sense. According to HR Magazine, companies who invest $1,500 or more a year on each employee enjoy profit margins that are 24% higher than companies with low or no investment in employee training.
The results of a cost-benefit analysis of employee training are clearly indicates investing in training is important for company growth. With virtual training solutions like Jigsaw Interactive, you can have customized employee training that focus on engaged training and learning results. Using Jigsaw, the Zoom Zombies will not be in your training programs because employees have an opportunity to do hands on training vs just lecture style with a chat feature. Schedule a demo to see how it works.