The returns from an investment in upskilling your workforce come from multiple directions. The obvious benefit is that in most cases you will fill vacant roles more quickly, sometimes immediately.
But recent headlines uncover a historically overlooked aspect. Nearly three-quarters of those considering leaving their current job are dissatisfied with the career advancement opportunities available to them. Companies that offer a comprehensive career development training program are less likely to lose employees.
So what does a vacancy cost? Some years ago, Harvard did a comprehensive study of the cost of vacancies. They concluded that the value of an employee is roughly three times their position’s salary. This means that if a position is open for four months (one-third of a year), the cost to the organization is equal to the position’s salary.
Let’s say you have 10 vacant positions at an average of $60,000 salary. If these positions go unfilled for four months, that equates to a cost of $600,000. If instead, you fill just three of these roles immediately, the cost is only $420,000, a difference of $180,000. And if another two of these vacancies never happened because the employees never left, the cost is cut in half, to $300,000.
What are the potential costs associated with a vacant role?:
- Loss of production
- Overtime to cover for the vacancy
- Offloading workload
- Lost revenue from sales or inability to fill orders
- Underutilized productive assets (equipment, etc.)
Adding to this pain are the components of replacement cost, including: recruitment, onboarding, impact on team engagement and morale, and training costs. And as you know, average cost to train new employees falls between 10% to 25% of salary.
Of course much depends on how you train for the lost positions. If a new employee can jump in after reading a handbook, then of course the costs are minimal. But even in that case, there is lost productivity. Most roles require hands-on training from managers and/or peers or, at the very least, some hand-holding. That’s the rub.
Lost productivity has always been the sticking point. Whenever a strategically-sound, cost-effective training plan is scrapped or set on a shelf, it’s a good bet that management felt uncomfortable about the loss in productivity from the training hours. A tale as old as time….
Do you need a solid ROI case for your plans? Absolutely. But perhaps what you most need is to show a reduction in lost productivity. Develop learning that can be embedded in the work flow or completed after hours. If your LMS does not enable dynamic, adaptive learning, find one that does.
Emphasize to your managers that career-building programs are the key to retaining workers in today’s economy. Create task-focused micro-learning courses built into adaptive matrices that include aspirational options and make them available to everyone. Build job typologies that clearly, graphically show how training plans lead to new roles.
Sometimes, all an aspiring employee needs is a roadmap.