Building Great Places to Work

October 23. 2012

Why Training & Developing Employees Matters More Than Ever

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October 23. 2012

Investments in training and developing employees may matter more than ever, based on new research findings by ERC. Not only does the 2012 NorthCoast 99 Winners Report report an increase in the average number of hours and the average monetary investment in training and development by employers of choice, but new analysis suggests that organizations are investing more time and money in training and developing employees and top talent, and that these investments pay off in lower turnover, higher tenure, higher employee engagement, and stronger promotion rates. Below are our key findings.

Finding 1: Investment in training and development, especially for top performers, is rising.

On average, this year, NorthCoast 99 winners reported that employees spent 47 hours on training and development, up from 41 hours reported by winners last year. Top performers spent even more time on training and development, with 68 hours reported on average per top performer - nearly 20 more hours than the per employee average and an increase of 11 hours from last year. Average monetary investment in training and development by winners followed similar trends, with the average dollar amounts rising for both employees and top performers.

Average number of hours that each employee and top performer spent on training and development at NorthCoast 99 winners

 Average monetary investment per employee and per top performer on training and development at NorthCoast 99 winners

 

 

In our research, these numbers are significantly higher than the averages reported by other employers, which typically hover around 30-34 hours and $1,000-$1,200 per employee, based on research conducted by the American Society for Training & Development.

Finding 2: Monetary and time investments in training and development are linked to turnover, tenure, and engagement.

NorthCoast 99 winners with the lowest investment in training and development showed 6% higher voluntary turnover of employees on average and 2% higher voluntary turnover of top performers than NorthCoast 99 winners with the highest investment in training and development. Similarly, NorthCoast 99 winners with the highest investment in training and development reported higher average tenure of employees, and more significantly, higher average tenure of top performers.

Additionally top performers at NorthCoast 99 winners with the lowest investment in training and development reported lower engagement and lower satisfaction with training and development practices at their organization, than top performers at NorthCoast 99 winners with the highest investment in training and development. Although both monetary and time investment in training and development were related to top performer engagement, larger differences in engagement and satisfaction with training and development were observed with comparisons of time spent on training. Thereby, those winners at which employees and top performers spent more time on training and development, reported higher engagement.

Finding 3: Organizations that spend more money on training tend to spend significantly more time on training, which tends to lead to higher promotion rates.

There appears to be a link between money and time spent on training and development by a significantly large margin. Although winners who made the lowest investments in training and development still spent an above-average amount of time on training and development, NorthCoast 99 winners who made the highest monetary investments in training and development for employees and top performers, reported spending significantly more time on training.

Average number of hours employees spent on training and development at NorthCoast 99 winners: Comparison of organizations making highest monetary investment and lowest monetary investment

 

 

Moreover, among winners that reported the most amount of time spent on employee and top performer training and development, the average percentage of top performers who were promoted in the last year was 7% higher (31%).

The bottom line: Training and development matters.

All of these findings, in addition to national research which finds that high-impact learning organizations outperform their peers (Source: Bersin & Associates), suggests that training and development matters - perhaps more than ever. More and more linkages are being found between investments in learning and actual business results, whether those are turnover, engagement, or profit margins.

Additionally, employers of choice like the NorthCoast 99 winners are raising the bar on investments in employee development, and the organizations making the greatest investments show quite distinctive and impressive results, so much so that not making the investment could be disadvantageous for your business.

Note about methodology: Winners cited as making high investments ("high investors") were winners that reported figures in the top quartile of monetary/time investment in training and development. Winners cited as making low investments ("low investors") were winners that reported figures in the bottom quartile of monetary/time investment in training and development.