6 Key Facts for Business Owners and Managers
For many small businesses and bootstrapping startups, owners and managers wear many hats, often engaging at deeply tactical levels from one mission-critical issue to the next. When in such a tactical mode, it can become hard to see the forest for the trees: strategy can help an enterprise anticipate the challenges and opportunities on the horizon, but if we don’t have a chance to step back and look upward and outward, we may never have a chance to instill our daily operations and work with meaningful strategic intent. This is directly true for employee learning and development (L&D), and we can see strong evidence in the spending and investment behaviors of large enterprises and high-performing companies.
We may intuitively know that there’s a reason why so many high-performing companies consistently prioritize L&D. As Forbes identifies in its recent annual Corporate Learning Factbook, US spending on corporate training jumped 15% from 2013 to 2014, reaching over $70 billion in the US alone. This jump followed at least two years of sequential 2-digit climbs in corporate L&D spending.
As US companies steadily boost investment in L&D, many additional indicators point to the values of employee engagement that great L&D efforts can deliver.
The Institute for Employment Studies notes that increasing engagement by just 10%, such as through L&D programming, can increase profits by approximately $2,100 per employee, per year.
The Corporate Leadership Council indicates that organizations can engage employees and team members through L&D and other efforts can reduce staff turnover by 87%.
For Coca-Cola Company’s bottle division, CCI, L&D investment is made to advance two main goals: build a highly-capable organization (proficiency and skills), and be the employer of choice for employees (talent recruitment and retention).
“However long an employee stays with us,” says a spokesperson for CCI, “investment in people is vital for sustaining our performance, innovation, and productivity growth; and for maintaining our talent pipeline — but it can also help us to be an Employer of Choice.”
It’s clear that high-performing companies are grasping the value of L&D and the role such investments play in recruiting, engaging, and retaining talent as well as increasing profitability.
Below are 6 key facts and trends that help us understand why L&D investment is considered so valuable to high-performing enterprises.
- The companies that "get it" with L&D are more likely to be high-performing. High-performing companies consistently spend more on learning and development per employee, and are more likely to invest in a total L&D strategy. Companies ranked as "high impact" by Forbes consistently average more spending on training.
- Leadership development is highly-demanded. As millennials and new leaders emerge into leadership roles, companies need to cultivate strong leadership skills at all levels. Spending on management and leadership training is the top priority and focus for companies investing in L&D.
- The next generation and a desire for continuous learning. Brianna Crabb, a data engineer with Capital One suggests that her decision to join Capital One was largely influenced by several aspects of the company’s culture of engagement and continuous learning. She notes that, especially for young and early-stage associates, professional goals may not yet align with technical and managerial skills and abilities. For tech and knowledge-based companies, or those in industries with rapidly-evolving markets, policies, and products, L&D is critical both to maintain technical skills and also to cultivate the next generation of company leadership in the context of rapidly-changing technologies, markets, and environments.
- The Toolkit is evolving. Explosive growth in training technologies, including self-developed video and presentations, online and social media communications channels, virtual learning platforms, and MOOCs (including Coursera, edX) are both revolutionizing today’s training toolkit and boosting accessibility of complementary curriculum and content for learners and companies. Among highly advanced companies, as much as 18% of all training is mobile.
- Technical evolution leads to greater engagement opportunities. Technology and increased access also encourages greater collaboration and engagement of learners and employees participating in L&D – ongoing and in-depth discussions of topics with learning groups and cohorts no longer must be restricted to the availability of brick-and-mortar classrooms and facilities. When considering the value of investing in L&D, the payoff of Return on Engagement (ROE) grows significantly in context of these increases in collaborative opportunity.
- Keeping pace with innovation. Technology changes rapidly. And as technological changes and improvements flood industries from aerospace to zoological logistics, companies must help team members keep pace with new and relevant services and tools that help them do their jobs, manage their teams, and support the mission and goals of their enterprise. Especially for companies that recruit talent with the promise of innovation, providing platforms for access and learning are critical for retention of that talent. And the payoff of ROE will only improve products and services as your team becomes proficient in technical use and begins to apply new technologies and tactics in innovative ways.
Research consistently reinforces the value of training, learning, and development investment. HR Magazine reports that profit margins are an average of 24% higher for companies investing $1,500 or more per employee annually on L&D. The American Society for Training and Development (ASTD) published trends from a survey of 2,500 firms. Of the sample of firms, those providing comprehensive L&D programming also had 218% higher income per employee, enjoyed a 24% higher profit margin, and generated 6% higher shareholder return for each $680 in employee training expenditure.
With facts demonstrating clear ROI, it’s no surprise that companies like Starbucks are prioritizing the recruitment, retention, and development of employees with dramatic gestures such as low-cost college degrees – even for part-time employees.
While not every company is able to muster such a grand gesture as Starbucks, some level of employee engagement and L&D should be considered. The non-profit Studer Community Institute offers a tremendous rotating catalog of programming for businesses and executives, on topics ranging from Performance Management to Developing Bulletproof Presentations. Local workforce development boards can also provide support for businesses interested in accessing a wide range of training programs. CareerSource Florida provides a single-point of access for employers in the Sunshine State to navigate local training providers and even grant assistance. Businesses in other states can locate their workforce development partners through the National Association of Workforce Boards.
For companies interested in setting their own benchmarks and measuring the ROI and efficacy of training processes and L&D programs, the Society for Human Resource Management (SHRM) provides a free course overview to help you analyze the effectiveness of your programming and its return value.
Interested in exploring how you can create a culture of continuous learning as part of your strategic growth? Connect with us - we're happy to help you take the next steps.