While most define cost by the number written on a price tag, economists say that a truer measure of an item’s price is its opportunity cost. Opportunity cost accounts not just for an item’s market price, but includes the value of what must be given up in order to make that purchase. For example, the true price of going to college encompasses not just the already high costs of tuition, housing, and books, but also the value of the salary you would’ve earned if you had decided to go straight to work.
Many employees consider opportunity costs when deciding whether or not to leave their jobs. In order for workers to decide to remain in their positions, they must feel that their current job outweighs their next-best options. Countless organizations have high employee turnover rates because they fail to make their employees feel this way. In fact, 2 out of 3 millennials report that they want to leave their companies by 2020. Failing to retain these employees drains precious company time and resources. Fortunately, there’s a solution.
What’s behind high rates of turnover?
One major reason why employees, especially millennials and top hires, leave their positions is because they are dissatisfied with their professional development opportunities. The Harvard Business Review published that many companies have high turnover rates because their employees feel “they’re not getting much in the way of formal development, such as training, mentoring, and coaching.”
Employees desire development opportunities because they are seeking to better themselves as professionals and further their careers. If they see no opportunity for improving their skills in the workplace, they will leave their position for a job where this growth is offered.
Why organizations neglect development
While the impact and importance of a good employee training program is clear, organizations often neglect their employee development planning because they feel that it’s too costly and time consuming. However, because of a loss of human capital, the most important resource of any organization, it might actually be more expensive for companies to forgo employee development than to direct resources toward it.
This cost of losing valuable employees is made even worse by the fact that for every worker that leaves, the organization has to return to the hiring process. The recruitment of new talent can be lengthy and intensive. While this recruitment is ongoing, other employees may have to push some of their own responsibilities to the side in order to pick up some of the slack created by the unfilled position.
Even after finding an employee with the right fit, the onboarding process must be repeated. In the end, studies have found that the cost of losing just one employee can total $15,000. And that’s just for a worker who earns the median salary. Ultimately, high turnover rates pose great costs to companies both through the loss of a valuable employee and the cost of finding a replacement.
Learning is the answer
But luckily, there is an answer. Implementing a top-notch learning strategy can provide the professional development and growth opportunities that hirees desire, helping to lower turnover rates and save company resources.
In fact, the development of learning programs has been found to lead to a reduction in turnover as well as an increase in employee satisfaction. Implementing a learning strategy causes employees to be 43% more likely to remain in their positions. Learning programs have also been found to help attract and retain top hirees across industries. Even more, the implementation of learning programs increases employee productivity.
Still, not just any learning program will be able to have this impact. In order to achieve these results, it’s important to develop a learning strategy that harnesses the power of technology and design, and that is hand-crafted to fulfill the needs of your learners. If you’re worried about creating a learning strategy that will meet your business goals, consider working with an experienced learning partner who can guide you through the process.
Why learning works
Good learning improves employee retention and productivity because great learning programs grow and develop employees so that they feel more confident in their roles and better understand their responsibilities. When employees lack confidence due to unsatisfactory training, they are overwhelmed and do not feel motivated to perform. Offering comprehensive training through learning gives employees the reassurance they need and fosters commitment.
Furthermore, learning offers an opportunity for growth that cultivates employee loyalty. Having good training shows employees that they can develop as professionals and advance their careers through remaining at the company, giving them a reason to stay.
The benefits of developing a learning strategy far outweigh the costs. As learning presents an opportunity to reduce turnover while simultaneously saving time and money through increased productivity, it offers a seriously high ROI.
If you’re worried about employee retention at your company, make sure your employees know how much you value them by providing the professional development that they desire. Implement training programs that offer an opportunity for growth that can’t be found anywhere else. Don’t let your most important resource go—start investing in learning.
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