Develop Employees

How Neglecting Employee Development Affects Your ROI

When businesses need to balance the books, they tend to cut corners in areas where they find it difficult to prove a return on investment. For this reason, employee development is often an aspect that gets hit – if not by outright budget cuts, then by general neglect and a lack of increased investment.

While a ROI on employee development programs can sometimes be difficult to prove, making increased investment tough to justify, it is an area where businesses get out what they put in. Below, we take a look at how neglecting your employee development programs can negatively impact your ROI.

The Value of Employee Development

The primary reason for investing in employee development programs for your employees is to provide them with the knowledge and skills they need to carry out their tasks. However, there are many ripple effects as well, ranging from improved productivity amongst those who are well-trained, to a competitive advantage over your rivals.

Of course, the value of employee development also extends to the customer as well. Generally speaking, organizations that invest in comprehensive development programs can expect to see a higher number of sales, as well as improvements to customer retention resulting from superior service.

When people think about staff development, they often view it as a synonym for training, but continuous coaching also has a role to play. Indeed, the CSO Insights 2016 Sales Enablement Optimization Study found that formal and dynamic coaching processes improved sales reps’ quota attainment by as much as 10 percent.

Impact on Employee Retention

One of the biggest effects of neglecting the development of your employees comes in the form of staff turnover. There is a direct link between the amount of time and money you invest in development, and the likelihood of staff members choosing to leave your organization.

For example, businesses on the Fortune 100 “Best Companies to Work For” list provide almost double the number of training hours for full-time employees compared to companies that aren’t on the list. Those Fortune 100 organizations saw their ROI manifested in increased employee retention; they had 65 percent lower staff turnover than other businesses in the same sector.

In the CSO Insights 2015 Sales Compensation & Performance Management Study, it is revealed that turnover is five times higher among sales employees than the US national average. This is problematic, because a single salesperson leaving an organization has the capacity to disrupt that organization for up to a year.

Essentially, what this shows is that neglecting your development programs decreases your overall return on investment, while investing fully in development programs results in a much greater ROI.

The Consequences of Neglect

Crucially, however, it is not simply investment that wins the day. Continuous employee development is a vital part of talent management, meaning that development programs must be in a constant state of evolution, adapting as products, services, business practices and market conditions change.

Neglecting employee development by failing to update procedures, can result in outdated product knowledge, longer ramp up times and a competitive disadvantage when compared to other businesses in the same industry. Worse still, neglecting development by putting it off completely can result in poor morale and unskilled staff.

“Developing employees is the classic example of a management function that’s both highly valued and highly neglected,” says Victor Lipman, writing for Forbes. “For busy managers, generally with too much to do in too little time, it’s a very easy task to put off to some indefinite point in the future.”

Finally, it is crucial that investment in employee development extends beyond new hires, to experienced staff members. According to the 2017 CSO Insights Sales Manager Enablement Report, those who spend more than $5,000 per year on developing sales managers see increased quota and revenue attainment, and improved win rates. Nevertheless, sales managers are three times more likely to receive no training at all than salespeople are.

Important Takeaways

Staff development programs require significant investment, both in terms of time and money, as they must be high in quality and evolve along with business practices and market conditions. However, employee development is also an area where it can be difficult to prove a clear ROI, which is why it is often neglected.

While the most obvious form of neglect is the reduction or removal of development services, it can also manifest as a lack of increased investment when it is needed to meet business demands. Yet, high-quality coaching and training have clear benefits when it comes to improving win rates, as well as revenue and quota attainment.

The consequences of neglecting employee development are numerous and include lower levels of customer retention, out-dated product knowledge and poor quality customer service. Additionally, there is a direct correlation between training provisions and staff turnover, with neglect resulting in more employees leaving a company.

For these reasons, neglecting employee development has a detrimental impact on your ROI. The only way to generate the right level of return from your employee development program is to invest sufficiently, spend ample time on development practices and ensure development is continuous, rather than being targeted exclusively to new hires.

To learn more about employee retention, check out this fun infographic 6 Stats That Speak to Employee Retention

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About the Author  
Monika Götzmann is the EMEA Marketing Director of Miller Heiman Group, a global employee development and sales training firm. It helps organizations develop effective talent management strategies through talent ready assessment. She enjoys sharing her insight and thoughts on talent management strategies and best practices.


Improve Work Culture

Using HR Tech to Strengthen vs. Separate Your Company Culture

How many of us have ever been out to dinner and looked around to see that every person at the table is on a mobile device? Or observed a group of young people hanging out “together” while barely lifting their eyes from a screen? When we see technology being used this way (or are guilty of too much screen time ourselves) it can be easy to assume technology is pushing human beings apart.

And while internet addiction is a real thing (as one psychologist put it, we’re “carrying around a portable dopamine pump”) there is little evidence proving that technology as a whole is hurting our ability to communicate or empathize. In fact, when used correctly, it can improve these qualities.

In our personal lives, the proper use of technology can give us greater exposure to different perspectives and ways of expressing ourselves. In the workplace, HR tech can strengthen company culture by providing more avenues to engagement and socializing, while increasing productivity.

Here are five ways you can use HR technology to strengthen your company’s culture:

  1. Make Communication Comfortable (and Fun)

Many HR tech platforms include social feeds that allow employees to chat as a group, in smaller channels, or one-on-one. These channels are constantly adding fun features like emojis, reward badges, and GIFs that make using chat applications similar to how employees communicate with friends outside of work.

Far from making it less likely that employees engage with each other face-to-face, internal social channels enhance communication. They allow employees to connect, collaborate, and share a laugh, even during busy periods. They also create the freedom for employees who are introverted or not comfortable in a live, large group setting to be involved. And they create opportunities for employee recognition, particularly for remote teams.

  1. Create Transparency

Transparency is a bit of a buzzword in the modern workplace. It’s important to company culture because it implies trust, which is the basis of any strong relationship. But transparency can be hard to facilitate. First, leadership and managers across the organization must agree on what transparency means to your company. Next, a company must ensure that transparency is equitable. Is your CMO sharing profitability data with his team while your CTO is failing to share the same with hers?

HR tech can revolutionize the way you approach transparency. You can use social feeds to ensure the same messages are going company-wide, create universal trainings in your learning management system, and democratize access to your company leadership. You can also compile and share data on company culture itself, so employees can monitor progress.

  1. Prove the ROI of Culture Initiatives

When budgets are tight, it’s often employee-focused expenses such as team outings or performance awards that get the boot. These costs have long been considered as “nice-to-haves” that may bring out the smiles, but won’t bring in the revenue.

Using HR tech, you can disprove this line of thinking by tying real analytics to your company’s culture initiatives. After each culture effort, you can track real-time data to see how both performance and engagement have been affected. You can then use that data to discuss the ROI of these initiatives with your leadership. Happy employees impact the bottom line in a couple of ways. First, they are more productive. Second, they are less likely to leave (or even be absent) which means less money needs to be spent recruiting, hiring, and training replacements.

  1. Increase Benefit Engagement

HR teams spend vast quantities of time researching and implementing employee benefits that they believe will strengthen company culture. However, many employees aren’t taking advantage of those benefits from employer 401k matching to health and wellness to time off.

Often, lack of engagement with benefits is due to a lack of knowledge — the options, setup, or fine print are confusing; vacation days aren’t properly tracked; the right channels don’t exist to answer questions. HR tech can make benefits more approachable upfront and manageable in the long-term. You can use them to house benefits training opportunities, to make set-up simple, and to make it easy for employees to monitor their own usage. You can also automate reminders to both employees and managers, so that everyone knows, for example, when you need to push someone to take a vacation day.

  1. Revamp Employee Recognition

In our high-speed lives, it can be difficult to find time for “niceties” like employee recognition. And with only so much bandwidth available to focus on their teams, managers often turn their attention to employees who need extra support to succeed, assuming their top-performers are just fine on their own. While those people may be independent operators, it’s still vital that they’re acknowledged for their work. Recognition for a job well done is a huge component of employee satisfaction. In fact, 93% of employees hope to be recognized at least quarterly, if not more.

HR tech can automate both the reminders for and the process of recognizing employees. It can also track these efforts so you know if some employees are being accidently left out.

HR tech is no longer just about payroll and performance management, it’s about people. When you shift your thinking of HR tech as a help, rather than a hindrance, to communication and connectivity, you’ll see your company culture shift as well.

To learn more about the evolution of HR technology, check out Achievers’ blog post A Brief History and Future of HR Technology.

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About the Author
Taylor Burke is a contributor for She’s passionate about great company cultures. When she’s not in front of her screen, you can find Taylor reading, cooking, running, or hanging with her dog—but rarely all four at once. Connect with her on LinkedIn.


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