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10 Reasons Why Your Small Business Should Invest in Employee Training

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Read Time: 12 min

Why invest in employee training programs? There are so many reasons, and in this tutorial we’re going to go through the top ten. 

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Employee training can provide a strong return on investment. (Image source: Envato Elements)

Sure, I get it—money's often tight for a small business, and you've got a million other priorities like acquiring new customers, developing new products, and just keeping the lights on. It’s easy for employee training to slip down the to-do list beneath more immediate short-term goals.

As I’ll show you, employee training and development can have large, very tangible benefits for your business. As well as looking at ten good reasons to provide it, we’ll also go through some good examples of training and development programs for employees at various companies, and we’ll cover some tips for creating an effective employee training plan.

The Top 10 Benefits of Employee Training

Not convinced that you should spend your precious investment dollars on employee training? Here are ten reasons why you’d be crazy not to.

1. Employees Want More Training

Survey after survey shows that people want more training than they get

For example, a Randstad study found that:

“while 82% of employees believe lifelong learning is important, close to 40% report their employers don’t provide opportunities to upskill.”

And in an InterCall study, two-thirds of employees said training plays an important role in their decision to stay with their current company or position.

If lots of employees want training and are prepared to move on if they don’t get it, that’s one good reason to provide it.

2. Strong Return on Investment

It’s a mistake to think of employee training and development simply as a cost. Instead, think of it as an investment that'll generate a return.

A widely cited study by the American Society for Training and Development found that more expenditure on training led to a higher total stockholder return (TSR). (TSR is a measure of a company’s financial performance, based on share price and dividend payments.) Companies investing the most in training had a 37% TSR, while companies investing below the average had a 20% TSR.

So, if you want to generate more profits tomorrow, invest in employee training today.

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Investing in employee training pays off. (Image source: Envato Elements)

3. More Consistency

Have you ever wondered how some companies manage to produce a consistent customer experience, even across many different locations?

The answer lies in employee training. People are trained to follow the same procedures across the whole company, leading to a consistent level of quality. Customers know what to expect, and employees complete their tasks more efficiently. 

With 83% of companies reporting skills gaps, training is an essential way of closing those gaps and producing better, more consistent results.

4. Better Alignment With Company Values

When you’re training new employees, it’s a perfect chance to get them up to speed on your company values. Make it clear what kind of company this is. Provide diversity training to help them work effectively with a diverse workforce and customer base. Outline any behaviour, such as discrimination and harassment, that has no place in your company, and give examples of what that looks like.

A good orientation program can set employees up for success and avoid a lot of problems further down the road. And refresher programs for existing employees can help reinforce these values. Learn more in these tutorials:

5. More Flexibility

Cross training for employees teaches people to do a different type of work from their normal job, and it can have great benefits both for the employee and the company.

For example, let’s say you've got two employees: Jean is focused on acquiring new customers, while Alex works on developing new products. 

Overall, the division of labour works well, but spending some time on cross training can have major benefits. Jean gets to learn more about how the products work, while Alex learns what customers are looking for. They can apply these lessons to do a better job.

Cross training for employees also leads to more flexibility: employees are able to cover each other’s positions during periods of absence, and they can have much broader career opportunities. Jean may discover that she likes product development, for example, and move into that role when Alex leaves. Employees get more variety and exposure to different areas, and managers get more flexibility in covering the roles they need.  

6. Higher Productivity

When you know what you’re doing, you can be more productive. Employees don’t have to waste time trying to find out how to do their job or distracting coworkers with questions on how things work—they can just get on with their work and be more productive.

Learning new skills can also increase productivity in so many ways. It’s easy to fumble around and find a way to do something, but training can lead to those “Aha!” moments when you realise that by following a more efficient process, you can get the same work done in half the time.

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Training makes your employees more productive. (Image source: Envato Elements)

7. More Innovation

Technological change is accelerating and affecting so many industries, and those that can’t adapt are in trouble (remember Kodak?). 

An important function of employee training and development is to help employees stay on top of the latest technology and industry changes. Innovation doesn’t come out of the blue—your employees need access to the latest knowledge to inspire them to invent new solutions.

8. Reduced Employee Turnover

Given what we discovered earlier about the number of employees who want more training, it should be no surprise to learn that companies experience lower employee turnover and increased loyalty and satisfaction after they start providing employee training programs.

One study of a hospitality company found that overall turnover was reduced from 89.6% before the training program to 56.7% afterwards, a particularly impressive result given the generally high turnover among part-time hotel workers. The study also found significant increases in employee satisfaction.

Learn more about employee loyalty and why it matters so much in this article:

9. Better Quality

Let’s say you run a coffee shop. You want to produce cappuccinos and flat whites to make your customers drool, so you invest in a state-of-the-art Italian espresso machine. Do you think you’ll get quality results? 

Not unless you train your barista in how to use the machine. 

The same goes for any other business. You can spend big bucks on the best equipment, the best raw materials, the best software systems, but if your employees don’t know how to use them, you won’t get the results you want. Effective employee training programs are the only way to ensure high quality in everything you do. 

10. More Promotion Opportunities

When you train your staff and give them better skills, you make them candidates for promotion to higher levels in the company. 

That’s great for them in terms of career advancement and satisfaction, but it’s also great for you as a business owner or manager. You end up with a pool of skilled internal employees to choose from so that, when a vacancy comes up, you can simply dip into that pool instead of having to conduct a long and expensive external search.

What Good Employee Training Programs Look Like

Let’s look at some practical case studies now. What are some examples of training and development programs for employees that are successful, and what distinguishes them?

Wisconsin Public Service: Effective External Partnerships

Utility firm Wisconsin Public Service has been winning plaudits for its employee training programs since back in 2000, when it won an award for its innovative partnerships with local technical colleges.  

It still pursues a similar training strategy today, organising more than 190,000 training events in 2018 and partnering with the Sheldon B. Lubar School of Business at the University of Wisconsin-Milwaukee to provide leadership training.

The company also takes a long-term approach by supporting training in the wider community. It's also awarded more than $4.8 million in scholarships to local students since 1964 and provides grants to schools in the area for projects in the “STEM” areas of science, technology, engineering, and mathematics.

Tyson Foods: Practical Skills for Migrant Workers

Sometimes, you may need to provide special training based on the characteristics of your workforce—even on subjects that aren't your core business.

Food company Tyson Foods employs many workers from outside the U.S., with up to 50 different countries represented at some plants. It won the 2019 Innovation in Talent Development Award from the Association for Talent Development (ATD) for its role in providing relevant training for these workers through its “Upward Academy" program.

Upward Academy provides free classes in English, high school equivalency, and U.S. citizenship, with classes in digital and financial literacy also coming soon. The classes are delivered in partnership with adult education providers but held on site at times when workers can easily attend.

For more on the importance of basic literacy skills in the workplace, see this article:

AutoNation: Training the Trainers

Another ATD award winner this year was car retailer AutoNation, which was recognised for its efforts to train its talent development staff.

At AutoNation, it’s not just employee training itself that’s important—it’s having the best people organising training and devising effective employee training programs. The company hires talent development professionals who are then encouraged to participate in professional development programs themselves and gain certifications such as becoming a “Certified Professional in Learning and Performance”. 

The firm’s leaders believe that:

“having certified talent development professionals on the team has elevated AutoNation’s approach to learning as well as the sophistication of its learning products.”

How to Create a Good Employee Training Program

So, if you’ve decided to make the investment in employee training and development, how do you go about creating an effective employee training plan? Ask yourself the following questions:

1. What Do You Need?

The first step is to decide what your employees need to learn. Do they need basic skills like the ones Tyson Foods teaches its workers? More advanced software skills? Management and leadership skills? There are so many possibilities. 

This can come both from the business side (what skills you need employees to have) and from the employees themselves (what they want to learn). So be sure to involve your staff in the decision-making process here.

Different employees will need different things, of course, so the idea here isn't to get a “one size fits all” answer, but to get a broad overview of what kinds of skills you’re looking at.

2. What Do You Want to Achieve?

Next, you should set clear goals. What do you want the training to achieve? What measurable outcomes do you want to see?

For example, you could set a goal of “80% of employees to be certified experts in a new software program by the end of next year”. Or you could set a quality-related goal such as “Manufacturing errors to be reduced from 5% to 0.5% by the end of April”. 

Use these goals later on to measure the effectiveness of your employee training plan and make adjustments where necessary.

3. What Kind of Training Would Work?

Training can take many forms, such as:

  • informal peer training
  • mentoring
  • online training
  • external training programs and seminars
  • on-site training using external facilitators
  • formal education, e.g. college, university, etc.

Which type would work best for you? External training programs can be effective but costly, while online training has the advantage of being constantly accessible and usually more cost-effective.

For example, an Envato Elements subscription gives your employees access to unlimited in-depth courses on key subjects like design & illustration, code, and web design.

Envato Elements subscriptionEnvato Elements subscriptionEnvato Elements subscription

In-person training can be very effective too, however. It’s about deciding what will work best for your employees and your business.

4. Who Will Organise It?

Remember the lesson from AutoNation: to run effective employee training, you need to have the right people in charge of it. 

A small business may not be able to hire certified talent development professionals, but you should think about who will be in charge of organising the training and whether they've got the skills they need to do it successfully. If not, then maybe you should start by training the trainers.

5. How Will You Reinforce It?

Employee training programs often fail because they're one-off events with no subsequent reinforcement. Employees go off to their seminar, learn a lot of useful things, and then go back to work and get immersed in their daily tasks and gradually forget most of their newfound knowledge and skills. 

To avoid this, come up with a plan for helping your employees retain what they’ve learned, e.g. through regular refresher programs, continuous online learning, having managers come up with a plan for embedding the new skills into daily work, etc.

For more detail on putting together an employee training plan, see this article:

Your Business Can Benefit From Employee Training Programs

As you’ve seen in this tutorial, employee training can have huge benefits for your business. We went through ten important benefits, and then we looked at some examples of training and development programs for employees and some tips for creating effective employee training programs.

The next step is to get started by putting together an employee training plan for your own company. Use what you’ve learned today to help your employees keep learning for years to come. 

Editorial Note: This content was originally published in 2019. We're sharing it again because our editors have determined that this information is still accurate and relevant.

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