Employee Investment: What Is the Actual ROI?

Saturday, January 20, 2018, 6:00 PM | Leave Comment

You need to actively invest in your employees in order to reap the most benefits for your business needs. It is the smartest business move you can make.

Employees are the foundation of the business’s prosperity, why wouldn’t you invest in their training and development?

And although professionals working in HR understand the talent and capacity of people, it is difficult to convert that into a precise return on investment (ROI). This difficulty to band together with the employee power and ROI often leave business owners and managers labouring to build a case for substantial investments in employee engagement and corporate culture.

However, a recent survey indicates that 40% of employees who get mediocre job training leave their job posts within the first year. They point out that the insufficient skills training and development are the principal reason for departing.

At the same time, another study shows that by 2030 Millennials will make up to 75% of the workforce and 87% of them claim that “professional development and career growth are very important”.

With that in mind, you should start thinking of creating an employee training program that should help employees advance their skills and further their career.

Bringing together the training that promotes employees toward stable career goals can also develop higher job engagement and satisfaction. A content employee is more likely to be more productive and even stay longer while on your team.

  • Strategic Approach

    The importance of implementing a strategic approach to employees’ training for driving the success is well known, but ROI is perhaps more than you can imagine.

    Companies that take a strategic approach see:

    • 40% lower turnover

    • 38% higher engagement

    • 2X the revenue per employee

    On the other hand, deficiency of investments in your manpower can end up yielding much more than investments in training and development would have.

    When employers neglect to invest in employees, it can have a bad effect on the bottom line, staff morale and the brand. For instance, the expense of replacing an employee can be anywhere from 30-400% of their annual earnings.

  • Staff Retention

    Take the cost of turnover into consideration.

    To replace a salaried employee, it is estimated that it costs an average of six to nine months’ pay. On top of that, with one less employee, your company’s efficiency slips. You have dropped in sales.

    The ones who stayed with you must work additional hours. Morale may be affected. You spend a lot of time and energy on screening piles of CVs and interviewing applicants to find a suitable replacement. Once you find and employ that someone, you need to train him/her.

    The cost of workforce retention increases and it is across the board price to pay for not investing in the staff training and professional development. Therefore, a small investment in an employee development plan can save a great deal in employee retention.

  • Tips & Tricks

    Where should you start to measure employee development ROI? You can start with defining the company’s strategic key performance indicators (KPI) and take them in part into individual employee level expectations. You need to ensure that these are plainly transmitted to the employees.

    After determining KPI, align them with the management performance survey system in order to be able to measure the achievements and development against performance demands.

    Establish an employee questionnaire regarding a potential or existing training programme coupled with questions appertaining to employee satisfaction to get employees’ feedback.

    You may also include the training for improving language skills like English lessons and/or communication skills training to spread your business worldwide. Investing in new language skills required to operate in other countries will bring a straightforward ROI.

  • Increase ROI

    Whether the company grasps it or not, each one is investing in human capital. Your employees’ salary, gains and bonuses are all an investment. Paying this hard cash, but not giving a little more for the development of your employees is similar to paying a serious amount of money for a social media campaign, yet declining to spend it to make a great reach.

    To boost the return on employee investment you need to give some to get some. Spend money on professional training and constantly develop your workforce. Improve your employees by providing them with the possibilities for learning and growth as it will eventually improve your profit.

  • The Advantages Never End

    In-house skill training demonstrates your staff that your company pays attention to their careers. Furthermore, the employees are more likely to be content with the job when they see that their employer cares about their professional growth.

Furthermore, the feeling of being valued shows in the employees’ work as well as across the company’s accomplishments. The advantages never cease. Intelligent investments in employees will continually generate big things for the company.

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