What the lack of training

costs your organization

What the lack of training
costs your organization

When it comes to providing training for employees, there are a lot of seemingly contradictory
ideas about its effectiveness and business outcomes. Do businesses that provide training have
an advantage over those that don’t? Who benefits more, the business or its employees? Does
training provide measurable financial outcomes? Is it cost effective?

To answer these questions, we took a look at the latest reports and research to learn what experts
and scientists really think about the efficacy of training. The results may surprise you.

Training increases productivity and return on assets

Researchers found that employees at organizations providing the most training are nearly
twice as engaged in their work as employees who receive little or no training (43% versus 83%).
Engaged employees are more productive, more effective and more profitable. Which is why the
organizations that provide the most training also see a significantly higher return on assets (ROA)—
three times more—than companies that don’t engage in ongoing employee training programs.a

increase productivity | 2
 RETURN ON ASSETS

12%

10%

10.18%
8%

R OA %
6%

4%

2%
3.41%

0%
B OT TO M 2 5 % O N T R A I N I N G & D E V E LO P M E N T TO P 2 5 % O N T R A I N I N G & D E V E LO P M E N T

source: a

But training does more than increase employee
engagement and ROA. It also has a significant effect
on productivity. Better still, the impact goes up as the
amount of training increases.
Researchers evaluated 16 business sectors in 21 western
countries and found that every hour of training an
employee received increased labor productivity by
.55%. That quickly adds up to a significant percentage.
The difference was so impressive they concluded
that continuous training “is a relevant driving force
of productivity growth” in today’s global economy.b
Other studies measuring the impact of training on
productivity have shown the “marginal product of a
trained worker is on average 23% higher than that of an
untrained worker.”c
Further research shows that the increase in productivity
translates directly into higher profits. Bersin by
Deloitte, a research consultancy focused on talent
management and learning, reports: “Our research
shows very clearly that companies with High-Impact

increase productivity | 3
 The advantages of training are clear:
higher productivity, increased return on
assets and bigger profits.

Learning Organizations outperform their peers. These
organizations delivered profit growth three-times
greater than their competitors over the last four
years. Why is this? Simply put—if you can keep your
employees current and skilled, you can evolve and
perform better than your competitors.” d
and…are willing to stay in one company longer. With
lower turnover, employees are more likely to improve
productivity and profitability. The reverse is true where
lack of employee training can negatively influence both
productivity and satisfaction.”f

Given the costs of recruiting new talent, which

Employee training reduces turnover one expert estimates can be as high 150% of an
and recruiting costs
employee’s salary when considering all the costs

While some organizations worry that providing training (reduced productivity, overworked staff left behind,

simply pays employees to improve their skills so lost knowledge, interviewing and onboarding costs,

they can get a new job somewhere else, the truth is recruiters, and time spent making it all happen)g,

actually quite different. People are more likely to leave anything a company can do to increase retention is a

companies that don’t provide them with development wise investment in the future.

opportunities.e Today’s employees see training as an

important benefit, one that keeps them happy in their
current jobs.

A recent study published in The Global Journal of

Business Research reported that employee training
is highly correlated with job satisfaction and a lack
of turnover. “Better-trained employees work harder

reduce turnover and costs | 4

“People think we are a great
marketing company, but
in fact we spend very little
money on marketing and
more money on training
our people.”
—Howard Shultz, CEO Starbucks
Trained employees are better candidates Training provides a competitve advantage
for promotion
The research is clear. Access to skills training improves
When it comes to acquiring new leaders in an employee engagement, productivity and company
organization, there are two options: hire from the profits. It helps reduce expenses associated with
outside or promote from within. Companies that fail turnover and retention. What’s more, new technology
to help employees gain new skills are typically forced has changed the way training is delivered. Online
to look outside for qualified candidates for leadership training is as effective as in-person training and
roles. Current, untrained employees simply don’t have significantly less expensive. Collectively these benefits
the skills to move up when the opportunity arises. offer a significant advantage for smart companies
looking to compete and grow in the 21st century.
But organizations that invest in growing employees’
technical, leadership and interpersonal skills have a
capable candidate pool to choose from when openings
occur in the leadership ranks. Promote-from-within
policies contribute to higher workforce morale and better
retention as employees find viable career paths inside the
organization. And leaders promoted within a company
spend less time learning a new culture or company
policies. Instead they’re ready for work on day one.
best candidates for promotions • the competitive edge | 5
 Ready to empower your team and say goodbye to class-
room-based training? Contact us:
Real training. sales@pluralsight.com

Real business. 1.888.368.1240 | 1.801.784.9007

Real results.
If you want an elite technology team, give
them the training they can take seriously.

Sources
a “Investing in Training and Development Pays Off—Literally”, Hyiyan Ahang, Kenexa (IBM Smarter Workforce),
2013.
b “Labor Productivity and Vocational Training: Evidence from Europe”, Hector Sala and José I. Silva, Discussion
Paper Series, Institute for the Study of Labor, November 2011.
c “The Impact of Training on Productivity and Wages: Firm Level Evidence”, Jozef Konings and Stijn
Vanormelingen, Discussion Paper Series, Leibniz Information Centre for Economics, Jan. 2010.
d “The New Best-Practices of a High-Impact Learning Organization”, Bersin.com, Sept 4, 2012.
3 “An Evaluation of the Effectiveness of E-Learning, Mobile Learning, and Instructor-Led Training in
Organizational Training and Development”, The Journal of Human Resource and Adult Learning, Vol. 10, No. 2,
December 2014.
f “Corporate ELearning Impact on Employees”, Prince Ellis et al., Global Journal of Business Research, Vol 8,
No. 4, 2014.
g “How Much Employee Turnover Really Costs You”, Suzanne Lucas, Inc., August 30, 2013.
h “Spending on Employee Training Remains a Priority”, 2014 State of the Industry Report, Association of Talent
Development.
i The Corporate Learning Factbook 2014: Benchmarks, trends, and Analysis of the U.S. training Market, Bersin
by Deloitte, Karen O’Leonard, January 2014.
j Powering E-Learning in the New Millennium: An Overview of E-Learning and Enabling Technology”,
Information Systems Frontiers, April 2013.
k “Benefits of Training and Development for Individuals and Teams, Organizations, and Society”, Herman
Aguinis and Kurt Kariger, Annual Review of Psychology, 60:451:74, 2009.
l “The Financial Benefits of eLearning”, Mark Nichols, Journal of Distance Learning, Vol. 8 No. 1, 2004.

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