There’s an age-old dilemma that stymies many leaders: How to decide if investing in employee development is worth it.
I recently saw a thought-provoking quote concerning employee development. It went like this:
CFO asks CEO, “What happens if we invest in developing our people and then they leave us?”
CEO replies, “What happens if we don’t and they stay?”
This is an interesting perspective and one that’s probably important to consider when it comes to ensuring that your organization’s talent pipeline is fully prepared to move into key leadership roles to sustain your company’s success.
Yet in many organizations employee training and development and leadership coaching are seen as “nice to have” but not necessarily essential. In fact, according to a survey from executive team consultancy Gap International, only 43% of executives planned to invest in leadership training and development.
In the spirit of debate, let’s assume the CFO’s point is valid.
To the CFO, investing money in training people and helping them gain skills that they might take with them to a different company is scary.
Why would you train someone only to have them leave? It feels wasteful.
And people do leave occasionally—they get promoted, change divisions, they even move on to different companies. The average job tenure before making a change is just over 4.6 years these days!
Employee turnover is costly to the bottom line. The average cost to replace an employee can easily be 150% of that employee’s annual base salary (or up to 250% for managerial positions).
To put that in perspective, let’s assume the average employee earns $50,000 at Company X. Using the 150% model, the turnover cost would be $75,000 per employee who leaves. For the mid-sized company of 1,000 employees that has a 10% annual rate of turnover, the annual cost is $7.5 million!
Given all these statistics, no wonder the CFO is freaking out!
But, consider the CEO’s point, “What happens if you don’t invest and they stay?!”
Have you ever heard the phrase “If you’re not growing, you’re dying?” That pretty much sums up what will happen if you don’t provide your employees opportunities through training and development.
Stagnation. Burnout. Absenteeism. Presenteeism!
All of these things will negatively affect your bottom line.
The cost of employee who stays physically, but is emotionally and mentally checked out is far greater than the 150% you might have to fork out to replace them.
To be blunt, if you don’t develop your employees they probably won’t stay anyway—At least, not the most talented and ambitious ones.
When you think about it, what exactly is your purpose as a leader? Is it to just oversee, or manage, other people’s work or is it to help each employee maximize his/her potential and grow them into our future leaders?
We are rapidly approaching a time when, for the first time in history, there will be five generations together in the workplace. At some point, the leaders in place will be ready to move on. To ensure the future success of organizations you have to keep your best talent onboard and engaged.
One of the best ways to demonstrate to employees that they’re valued is to invest in their growth and development.
Employees and leaders alike want to feel as if their hard work is recognized and that they are appreciated. Knowing what contributes to employee satisfaction is of critical importance to leaders.
So, now that you’ve been presented with the two sides of the coin, what to do? “To invest or not to invest?” that is the question!
Here are a few reasons to consider investing in the development of your employees (even if you can’t guarantee they’ll stay forever!):
1. To reiterate an earlier point, employee turnover is expensive!Yes, I’m using this fact again to bolster the opposite view.
(By the way, employee satisfaction is closely linked to turnover rates. Happy people stick around!)
2. When employees are given opportunities to train for career advancement, they are more likely to stay than seek out new jobs with other companies.
3. Employees want to feel valued, have autonomy in their jobs, and be given opportunities for development and advancement.
4. Training improves employee performance….in quality, quantity, speed, safety, problem solving, attitude, motivation, leadership, and communication.
5. A targeted investment in select individuals at the top can have a profound transformational effect across the whole organization.
(This is especially important to keep in mind if your T&D budgets are limited. Invest wisely in your top talent!)
Here’s the bottom line: If your company isn’t willing to invest in the development of employees another company will, plain and simple. Do you want to keep your best talent, or let them slip away?
If you’re interested in talking about the customized training or coaching needs for your employees, schedule a Complimentary Discovery Call with me today!
