A good learning and development strategy is not just a ‘nice-to-have’ – it should be a key part of any business’s growth plan. The benefits of investing in a robust staff development training programme include improved staff retention and happier customers. But what does that really look like in terms of bottom-line results? Here are some key facts on the tangible benefits of having a well-trained workforce.
Train to retain: how L&D reduces staff turnover
A recent survey by Findcourses asked 180 HR and L&D professionals how much their company invests in learning and development each year. This was then compared to their employee satisfaction levels and staff turnover rates.
The average annual training spend per employee was £300. Companies with a higher-than-average L&D spend were twice as likely to say their staff were ‘highly satisfied’, based on their most recent employee survey.
7% of the companies who took part had an average staff retention rate of six months or less. All of the companies in this bracket had a lower-than-average training spend per employee.
The cost of replacing a member of staff
So what does staff turnover really mean in terms of cost to the business? A 2014 study by Unum found that replacing an employee earning £25,000 a year or more carries an average financial impact of £30,614. This ranges from from £20,113 for retailers to £39,887 for legal firms.
The study breaks this figure down into two components. The first is the cost of recruitment, including advertising, agents’ fees, employing a temp, interviewing candidates and inducting the new employee. On average, this amounts to £5,433. The second component is the cost of lost output while a new worker gets up to speed, which is significantly higher at £25,181. There is some variation in this second cost between sectors, ranging from £16,240 in retail to £35,307 in the legal sector.
Does learning and development increase revenue?
The Findcourses study found links between training and cash turnover. Respondents were asked whether their L&D department was seen as critical to business success. This was then compared to company growth.
It found that 94% of businesses whose turnover increased in the past year saw their L&D department as critical to business success.
A prime example of how companies can increase profitability through staff learning and development is the American electronics retailer Best Buy. Six years ago, the company was in danger of going out of business. With the rise in online retail, they were becoming one big showroom, where customers would identify what they wanted, then go and buy it more cheaply on Amazon.
The company implemented a number of initiatives to save their floundering business, one of which was to create a core team of product specialists called In-Home Advisors. Best Buy employees with a deep product knowledge visit customers’ homes and offer advice on how to make their homes more efficient through the use of technology.
Speaking of the project’s success, CEO Hubert Joly said: “Economically for us it’s attractive because it helps make customers happy, build a relationship and grow the revenue line.” He also explained that the service helps customers “unlock unmet needs” they didn’t realise they had.
Best Buy are also training their staff to provide tech support to customers as and when they need it, regardless of whether the product in question was bought from Best Buy. If a customer is having trouble watching a show on Netflix, for example, they can contact Best Buy’s tech support team, who will help them establish the cause of the problem.
As a result, Best Buy has turned its fortunes around. “We’ve had four years of positive comps. Our margins have expanded…We’ve become relevant again,” Joly said.
If you want to unlock the benefits of learning and staff development training in your organisation, speak to us about how we can help. Knight’s not only provides bespoke training on a wide range of topics, we can also help you build your strategy from the ground up. Get in touch via the form below or call us on 0207 112 8412.