CFO asks CEO: “What happens if we invest in developing our people and they leave?”
CEO: “What happens if we don’t, and they stay?”
I saw this quote many years ago and it really stuck with me (and trust me, now a days, not much sticks!) The CFO in this quote is focusing on the cost of developing people, whereas the CEO is focusing on the business impact if they don’t. Unfortunately, yes, there is an upfront cost to providing education and development classes to your employees. But does that upfront cost eventually “pay itself back” (and even end up earning the company more money)? The answer is yes!
Here are three reasons that back up my answer of yes!
- Employee Retention
For every new employee that comes on-board, you have read their resume, checked their references and conducted an hour-long interview. Now they are at your company exposed to your customers, employees, financials, equipment, etc., You truly have no idea how they will perform or if their morals align with the companies. Every new hire is a risk. The “higher up” the role, the higher the risk. By developing your current employees, they will be ready to be promoted when an opportunity arises. Wouldn't you rather send Joe (who has been with the company for five years, never called in sick and has consistently been a top performer) to leadership development classes and promote, over that person you met with for an hour last week? By promoting Joe, you just saved money on recruiting costs, loss of productivity while recruiting and lowered your overall risk.
“Approximately 63% of U.S. employees aren’t fully engaged in their work,” says Forbes writer William Craig. If 63% of your workforce is not performing at 100% - I would say that is a major issue, especially in smaller companies. By providing employees an opportunity to grow and develop it can engage them to perform at their highest capacity. When employers invest money into an employee, the employee grows a greater appreciation for the company, and in-turn will produce more. Think of it as a “snowball effect.” Company invests money into an employee’s development. Employee is happy and feels appreciated. Employee is more productive at work. Employee meets sales quota by 150%. Company has now profited more money than that development class cost. Win, win for everyone!
- Business Value
By adding skill sets to your employees, not only are you increasing their knowledge, you may also be able to increase your scope of business. Let’s say you own an HVAC company and you sent one of your employees for specialty training on ground source heat pumps. Now you can market and advertise that you offer ground source heat pumps. This offering makes you unique and stand out from your competitors. This could bring in more customers, more sales, while at the same time, boosting the morale of this employee (ties back to engagement!). I would call this another win, win for everyone!
These are just three examples of how developing your people can improve your business and positively impact your financial situation. The next time your accounting manager questions spending money on employee development & education, be sure to show him this blog post!