The impact of neglecting employee training.
Neglecting employee training is common than we think.
Here is a story I tell company owners and CEOs. “One day, a senior manager in HR had a truly outrageous idea. During a group meeting for cost-cutting, he confidently declared, “Let’s scrap employee training altogether! Why bother wasting our precious time, money, and resources on teaching people how to do their jobs? They should already know how to do them, right? After all, that’s why we pay them, isn’t it?”
“The entire room, including the CEO, was shocked by the HR manager’s suggestion. On the surface, it seemed like a no-brainer – why spend time and money training employees to do their jobs when we’re already paying them to get the work done? But at the same time, something about the idea just felt wrong. After all, employee training had been a cornerstone of the organisation for years, and yet nobody seemed to know how to respond. The team looked at each other in confusion, wondering how they could justify the continued investment in employee development.
“The CEO of the company was a seasoned business leader, and he knew a bad idea when he heard one. Despite the HR manager’s attempts to appear smart and forward-thinking, his suggestion to abandon employee training was short-sighted and potentially disastrous for the company’s long-term success.
Do you know what was the result of the meeting?
The HR manager was promptly fired for his foolish suggestion to abandon employee training. The CEO, a wise and savvy business leader, recognized the danger of such a short-sighted and potentially devastating proposal and took swift action to protect the company’s long-term success. Not only did this move demonstrate an important lesson: sometimes the best way to save money and protect a company’s reputation is to get rid of individuals who could potentially harm. In the same meeting, the CEO explained to everyone why employee training is so important and how it can lead to increased productivity, lower turnover rates, improved customer service, and so on.
In this blog, we will look at the consequences of neglecting employee training and why it’s critical for any organisation that wants to stay competitive and successful.
Here are some of the consequences that organisations can expect when they neglect employee training:
One of the most immediate and obvious consequences of neglecting employee training is decreased productivity. Employees who are not trained or who have outdated skills may struggle to complete tasks efficiently and accurately, leading to reduced efficiency and productivity. According to a study by the American Society for Training and Development, organisations that invest in employee training see an average of 22.8% higher profitability as a result of increased productivity.
When employees don’t receive proper training, their motivation and work performance suffers. This can lead to lower productivity and reduced efficiency, which can in turn result in slower turnaround times or lower-quality products and services. Additionally, when employees lack confidence in their skills and abilities, they may be less likely to take on new challenges or contribute ideas, resulting in lower overall morale.
High employee turnover:
Another consequence of neglecting employee training is high employee turnover. Employees who feel that their skills and knowledge are not being developed may become disengaged and may be more likely to leave the organisation. High employee turnover can be costly, as it requires time and resources to recruit and train new employees. According to the Society for Human Resource Management, the cost of replacing an employee can be as high as 50-60% of their annual salary.
The decline in customer satisfaction:
Content: Neglecting employee training can also lead to a decline in customer satisfaction. Customers expect a high level of service and expertise, and employees who are not trained or who have outdated skills may be unable to provide this. This can lead to negative reviews and a decline in customer loyalty, which can have a long-term impact on the organisation’s reputation and revenue. According to a study by American Express, a 5% increase in customer retention can lead to a 25-95% increase in profits.
The financial impact
The financial impact of neglecting employee training can be significant and far-reaching. As mentioned earlier, poorly trained employees can result in decreased productivity, lower morale, and a higher rate of employee turnover.
Some estimates say that the average cost of training an employee is around $1,200 per person. Additionally, money isn’t the only resource that can be lost when employee training is neglected. The organisation’s reputation and customer loyalty can also suffer, which could have long-term consequences for the bottom line. Consequently, recognizing the risks of failing to invest in employee training is essential for enterprises that want to make educated choices about their investments in talent development.
Though the cost would defer for every business, here are some steps to help calculate the financial impact of not training employees:
Identify the costs of employee training:
The first step in calculating the financial impact of not training employees is to identify the costs of the training itself. This includes instructor fees, materials and supplies, travel and accommodations, and any other direct costs associated with the training. It’s important to be as thorough as possible when identifying these costs, as they will form the foundation of your calculation.
Estimate the impact on productivity:
The next step is to estimate the impact of not training employees on productivity. This can be difficult to quantify, as it involves considering factors such as the complexity of the tasks being performed, the skill level of the employees, and the potential for mistakes or errors. However, there are a few approaches you can take to estimate the impact on productivity:
Use data from past training programs:
If you have data on the productivity of employees before and after training, you can use this data to estimate the potential impact of not training employees. For example, if you have data showing that productivity increased by 15% after training, you can estimate that productivity would decrease by 15% if the training were not provided.
Use industry benchmarks
If you don’t have data from past training programs, you can use industry benchmarks to estimate the impact on productivity. For example, the American Society for Training and Development reports that organisations that invest in employee training see an average of 22.8% higher profitability as a result of increased productivity.
Estimate the impact on employee turnover:
The next step is to estimate the impact of not training employees on employee turnover. This can be difficult to quantify, as it involves considering factors such as employee engagement, job satisfaction, and the availability of alternative employment opportunities. However, you can use data from past training programs or industry benchmarks to estimate the potential impact on employee turnover. For example, the Society for Human Resource Management reports that the cost of replacing an employee can be as high as 50-60% of their annual salary.
Estimate the impact on customer satisfaction:
The final step is to estimate the impact of not training employees on customer satisfaction. This can be difficult to quantify, as it involves considering factors such as customer expectations and brand loyalty. However, you can use data from past training programs or industry benchmarks to estimate the potential impact on customer satisfaction. For example, the American Customer Satisfaction Index reports that customers are 30% more satisfied with products and services when they have received adequate training.
Now that we have a better grasp of the associated expenses, let’s explore ways to reduce the cost of employee training instead of shutting it down altogether.
Tips for minimising the cost of employee training:
Here are some practical strategies for reducing the cost of employee training:
Use in-house trainers:
Instead of hiring an outside instructor or trainer, consider using internal employees who are experts in their field to lead the training. This can save on instructor fees and travel costs.
Offer training during slow periods:
Schedule training during slow periods to minimise the impact on productivity. This can also be a good opportunity to offer training to a larger number of employees at once, which can be more cost-effective.
Leverage online resources:
Online training resources, such as webinars, e-learning courses, and video tutorials, can be a cost-effective way to provide training to employees.
Use free or low-cost materials:
Instead of purchasing expensive training materials, consider using free or low-cost resources such as articles, videos, or case studies.
Offer smaller, more targeted training sessions:
Instead of offering long, comprehensive training programs, consider offering shorter, more targeted training sessions that focus on specific skills or knowledge areas. This can be more cost-effective and can also be more relevant and impactful for employees.
Encourage employee-led training:
Encourage employees to share their skills and knowledge with their colleagues through peer-to-peer training sessions. This can be an effective way to provide training without incurring additional costs, and can also foster a culture of learning and development within the organisation.
Utilise internships or apprenticeships:
Consider offering internships or apprenticeships as a way to provide training to employees. This can be a cost-effective way to train employees, as they are often willing to work for a lower salary in exchange for the training and experience.
Negotiate group discounts:
If you are hiring an outside instructor or trainer, consider negotiating group discounts for training multiple employees at once. This can be a cost-effective way to provide training to a larger number of employees.
Overall, there are many strategies that organisations can use to reduce the cost of employee training. By being creative and proactive, it’s possible to provide valuable training to employees without breaking the bank. Finally, never consider abandoning employee training as it can be detrimental to the growth and success of your organisation. Investing in your employees is an investment in the future of your business!