By Frantz Belot, Ph.D.
Training is key in driving desired systematic improvement in any organization. Yet many businesses see training as an optional cost rather than as a necessary investment with a significant return. Consequently, training often drops to the very bottom of companies’ priorities.
Prioritizing training, however, makes your employees more productive, more profitable while at work, and more committed to your organization.
The Hard Costs of Training
At first glance, investing in employee training may seem like a high-priced expense. Most businesses understand the need to help new employees get up to speed with a basic understanding of their role and responsibilities, but many mechanical contracting companies struggle to see the benefit of ongoing training outside of weekly toolbox talks or an occasional mandatory safety training.
The Society for Human Resource Management reports that it costs roughly $4,100 each time a new employee is hired in the United States—most of this is spent training and onboarding until the new employee becomes productive at around five to eight months. This is what it costs for that employee to be successful in the new job. (You can find a link to the 2016 Human Capital Benchmarking Report here: https://www.shrm.org/hr-today/news/hr-news/pages/shrm-benchmarking-report-$4,100-average-cost-per-hire.aspx).
When it comes to ongoing training, companies spent an average of $1,071 per employee in 2021 in the United States (according to TrainingMag.com’s 2021 Industry Training Report, available here: https://pubs.royle.com/publication/?i=727569&pre=1). While this amount is down $215 from 2019, this figure has been considered the baseline of what companies should spend to empower their employees and make them successful.
Using these two spending figures, we learn that it is 73-percent less expensive to invest in current employee training than it is to hire new employees. Effective microlearning tools, like Tyfoom, are even less expensive to implement. We’ll explore this further in a moment, but untrained or undertrained employees can become a significant liability for the company, affecting quality of work, safety, productivity, customer experience, employee turnover, and even the company brand.
Most of us know this, but ensuring that we invest in employee training when times are difficult can be a challenge. So, what happens to mechanical contractors who spend little or nothing on training?
The Cost of Not Training
Employees have become more demanding of their employers for training and engagement. Engagement in this context means employees feel a two-way connection to the organization and leaders that employ them and are committed to mutual success. As a result, employees naturally want more touch points with leaders who can mentor them. They want to shrink the skills gap, and they want to become more expert at what they do. If they do not feel their organization is investing in them, they become unengaged with the business and uncommitted to their work environment. And the consequences can be cataclysmic—especially for mechanical contractors.
One study by Gallup asked what employees want from their jobs. Number three out of the top six things reported was “the ability to do what they do best.” (You can read more about the study here: https://www.gallup.com/workplace/236261/better-health-best-every-day.aspx). In fact, according to another Gallup study, 87% of millennials—the single largest demographic in the workplace – say professional development at work is important to them. (Learn more about the poll of millennials here: https://www.gallup.com/workplace/236438/millennials-jobs-development-opportunities.aspx) And nearly 70% of other generations also see jobs as opportunities to learn and grow.
The Gallup study of millennials in the workplace also specifies that when employees are trained, they enjoy their work and remain engaged. Engaged employees are 87 percent less likely to leave their place of work (according to data from the The Muse, cited by TechJury here: https://techjury.net/blog/employee-engagement-statistics/#gref), while disengaged workers have an 81 percent increase in absenteeism, 64 percent more safety incidents, 59 percent higher turnover, and are responsible for 41 percent more defects than highly-engaged teams (according to other Gallup data, found here: https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx). In our industry these numbers are game changing.
The linchpin for employee engagement is training and development. When employees feel that the organization is developing them both as individuals and as workers, they feel valued and they become engaged, leading to higher productivity and ultimately more profitability. Gallup estimates between $450 billion and $550 billion is lost each year in the United States due to disengaged employees. (See Gallup’s report, State of the American Workplace, for additional insights: https://www.gallup.com/workplace/238085/state-american-workplace-report-2017.aspx)
In our industry, employees who are not trained work inefficiently and are at the root of many preventable issues and injuries in the workplace. In fact, the Occupational Safety and Health Administration reports that more than $1 billion a week is spent by U.S. businesses on serious non-fatal workplace injuries—resulting in nearly $59 billion in direct U.S. workers’ compensation costs. (Read the agency’s business case for safety and health: https://www.osha.gov/businesscase.)
The risk of not having development opportunities in your organization far outweighs other concerns when it comes to your employees.
The Return on Investment of Training
On the other end of the spectrum, effective and profitable mechanical contractors are systematic at employee engagement, disciplined at sharing of best practices, and laser-focused on developing employees in order to become operationally efficient as an organization. The heart of this approach is an emphasis on training.
One landmark study found that companies that invest $1,500 on training per employee can see an average of 24 percent more profit than companies that invest less. (Get the details from HR Magazine: https://www.shrm.org/hr-today/news/hr-magazine/pages/0101wells.aspx.) While this study is 20 years old, new research shows that profitability for companies who engage is statistically the same at 23 percent two decades later. (See more here: https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx.)
Another study by IBM found that a 10-percent increase in educational development produced a 9-percent gain in productivity. (Read the full story here: https://elearningindustry.com/training-engagement-boost-bottom-line.) Most organizations would be quite happy with this amount of productivity gains and double-digit profitability improvement. Yet, we trade that $1,500-per-employee investment for less effective and untested programs that have not been proven again and again over time.
Aside from keeping employees productive, profitable, and committed, training helps organizations standardize work processes and outputs so that the things a company produces are uniform, wastage is reduced, and safety is improved. It also optimizes and reduces the time it takes to complete a task. From an employee-morale standpoint, training improves job satisfaction, increases loyalty, empowers employees, and develops future leaders. Each affects your organization’s brand.
Excellent products and services are delivered by well-trained employees. Happy, loyal, and productive employees are well-trained, and organizations need a platform that will help them get their employees well trained.
Investing in Training
So is training an unnecessary cost or a crucial investment? You decide. The data is, however, conclusive that employee training improves engagement, thereby increasing the productivity and profitability of an organization while making employees happy.
For more information, visit www.tyfoom.com.