The Real Cost of Not Training Your Employees

The Real Cost of Not Training Your Employees

Most organizations see their corporate training as a cost center, rather than a profit center. That makes sense if you look at a company’s typical offerings—their goods and services—but profit can also be made if a particular investment saves the organization money in the long run.

That’s exactly where the justification for training lies. Good training does not bring in dollars directly, but it prevents money from going out the window. Even if training your employees is expensive, the cost of not training your employees will be even higher.

Not Training Employees Costs, Big Time

How much, exactly? That is exactly what we set out to learn for a number of different training areas, from safety and cybersecurity training to customer service training to productivity and skills training, and more. The full results have just come out in our eBook, What Are the Costs of Not Training Employees?, which you can download for free.

Here are the raw numbers to give you a sense of what it costs to skip a particular kind of training:

Naturally, there are many assumptions that go into each of these numbers, and the exact costs will be different for every organization. The eBook goes into a lot more detail about how these numbers were calculated, and what is driving those particular costs. It’s also full of useful statistics and studies you can use when making the case for training internally.

There were a few things that surprised even me:

#1: Skills Training is Almost as Important as Compliance

True, lack of proper compliance training is, potentially, the most costly, especially when you factor in potential legal costs and penalties. But there was also a high cost associated with what I would call skills training, including customer service training and role-based productivity/skills training. So training shouldn’t just be a “checkbox” for ensuring compliance—actively working to improve the skills of your employees will have a big payoff!

#2: Soft Skills Training Has Some Hard Numbers Behind It

Many executives and heads of HR I talk to acknowledge that training for “soft skills” is important, but they assume there’s no way to directly measure the effect that training has on the bottom line. On the contrary, we found some solid research on the rate at which employees fail at their roles and the reasons they fail, including things like inability to manage emotions, lack of motivation, and inability to accept and use feedback. There is also a dollar amount one can attach to the employee turnover these things cause.

#3: The Need for Training is More Widespread Than You Think

Did you know that one in five Americans have been the target of a workplace bully at some point? That up to 60% of workers have experienced race- or ethnicity-based harassment in the workplace? That 10% of companies have employees that bring a lawsuit against them? Or that a typical U.S. company has a roughly 30% chance of experiencing a data breach in the next 24 months?

I had run across many of these statistics before, when my team and I looked into reasons for different kinds of training separately, like harassment training, or cybersecurity training. Seeing them all here, together in one place, brought home something new for me: Every organization is going to face something in the coming years. It could be a security breach, or a harassment lawsuit, or a wrongful death suit, or even just a “failure to post” safety violation. Will your employees be ready for whatever comes your way?

#4: The Costs Are Noticeable Even at a Smaller Size

Is corporate training just for enterprise-sized clients? Hardly. When we calculated the costs of not training in many of these categories, we found that they could be significant even for average-sized organizations with, say, only 100 employees or $20 million in yearly revenue. That means that putting learning and development systems in place has a positive ROI even for these smaller organizations—there is no “putting it off until our size justifies the investment.”

Find Out More

Again, if you are interested in the raw data and studies, I highly recommend downloading the eBook. We explore each category in detail and run the math behind the numbers above.

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