Can an employee training program increase your profits?
When you’re a small business, every little cost feels like it’s eating into your profits. Once you add a staff member or two, then more — suddenly you need to increase your output significantly to keep up with the expenses. Employee training is often seen as a ‘nice to have’ but not obligatory expense, especially for cash-strapped ventures.
It’s all too easy to put training aside for that mythical ‘next year’ when things settle down and cash is more plentiful.
Training programs can include:
- On-the-job training
- A mentoring program
- Short courses
- Formal study
- Conferences and industry events
Let’s start by looking at what you stand to gain from training your workers, then talk about the types of training that are most useful to businesses.
Related: How to transition remote employees back to work
So why should you invest in training for your staff?
Small ventures often start out training new employees one by one, never bothering to write anything down. And this can work fine for a while. But as the business grows, training can get lost in the rush to get everything done.
Here’s why employee training is worth paying attention to:
1. Increased productivity
Giving your workers the skills and resources to do their jobs well can have a payoff for your bottom line.
When staff understand the work they do, and how to do it, they’re less likely to make costly mistakes and can master their work with ease. Having a training program also means new workers are up and running and able to perform their roles faster.
The increase in productivity, work quality and customer service can quickly outweigh the initial costs of training.
2. Innovation and continuous improvement
As a small business owner, it can be hard to let go of the reins when it comes to growing your business.
It’s often smart to invest in employee training in key areas such as:
- Project management
- Leadership and management skills
A few hours of training can greatly speed up the work process, minimising errors. It can also allow you to hand off key tasks to trusted employees.
At the same time, showing your staff they are valued members of the company will make them more likely to stay on. Although it’s hard to measure, team morale often improves when employee training is a priority.
3. Increased profits
The most compelling reason to invest in employee training is because you’ll make more money if you do. That’s right. Spending as little as $1,500 per employee can see an increase in profit of more than 24%.
Look at companies with training programs so robust they have their own universities, like:
These highly successful chains provide employee training on every facet of the business. All provide high levels of customer service and consistent service delivery because every staff member knows the business inside out and is invested in the continuous improvement process.
4. Better job applicants
In a competitive job market, employers need to ensure they’re making their company an attractive place to work. Offering staff training programs and the benefits that go with that — paid study leave, opportunities for promotion, a greater voice in shaping the direction of the company — can all give your company the edge when it comes to attracting the best staff.
Next to career opportunities and wages/benefits, having quality training and development packages is seen by Millenials as a big plus.
5. Improved team morale and retention
It’s not only important to attract the right staff in the first place, but keep them as well.
Some estimates suggest that it can cost up to 20% of an annual salary to recruit and train someone new for the role.
That’s a huge cost for small businesses that is easily avoided. Staff who are happy with their workplaces are more likely to stay, and having long-term employees who are loyal gives team morale a boost.
6. Lower risks
Think you can’t afford training for your staff? Instead ask yourself, can I afford the costs of not training them?
In every organisation, there are risks that untrained staff will do something that could cost time, money or business standing. These range from:
- Unsafe work practices
- Cutting corners on safety
- Sexual harassment or bullying
- Breaking the law on everything from discrimination to not processing refunds
It’s your responsibility to protect yourself and your business by reducing the risks that come with running a business. One way to do this is through employee training.
7. Fewer nagging issues
Take a look at your strategic plan for next year — what things are added on there year after year without being addressed properly? Chances are it includes some common issues for small businesses such as:
- Moving to digital ordering and payment processes
- Improving your customer service
- Creating a set of policies and procedures for dealing with complaints
- Getting project management systems in place so you’re not always running behind schedule and budget
Giving staff the opportunity to upskill and take responsibility for issues like these will finally get some of those ongoing challenges off the ground and ticked off your to-do list.
Most popular types of training
When considering the training needs of your small business, it helps to understand the different types of training, and then create an organisation-wide training program.
Some ideas for your training plan might include:
- Systems and processes
- Diversity training
- Leadership and management
- Quality improvements
- Workplace health and safety
- Industry-specific training and events
Don’t forget to include every member of the organisation in your training program. It will show you value every team member’s contributions and expect everyone to continuously improve their own skills and knowledge.
Reap the rewards of an employee training program
Once you’ve set out what you want your employee training program to focus on, don’t forget to set goals and track the improvements. Staff performance planning sessions are a great way to start measuring job satisfaction and track how your team is working through their training goals.
As a company, make sure you track and measure how your profits are increasing as a result of staff training, and celebrate everyone’s hard work at the end of each quarter as well.