Employer spending on learning and development soared in 2015, swelling 14.2 percent to $70.6 billion, Training magazine reported.1 Employers value employee development because they see its return on investment. HR Magazine found that employers who invest $1,500 or more per employee annually see 24 percent higher profit margin on average than companies who spend less on training.2 In addition to this direct financial return, learning and development programs offer other benefits that indirectly boost revenue, including increased employee self-esteem, greater employee self-direction, better morale and a stronger brand culture.
Education Promotes Employee Self-esteem and Self-direction
Learning and development programs boost employees’ self-esteem, typically measured today in terms of employee engagement. William A. Kahn's pioneering definition of employee engagement linked it to the concept of self-esteem, defining engagement in terms of how much an employee invests their sense of self in their work.3 Globally, only 13 percent of employees are engaged at work, and in the United States, only 30 percent are actively engaged, according to Gallup research.4
Companies that invest in employee training can see significantly higher rates of engagement. For example, Deloitte reports that one small engineering company offered employees $100 for passing each module of a four-part online training series, along with another $100 and certification for completing all four modules.5 Following the launch of this initiative, employee engagement leaped from 62 percent to 90 percent, eventually leveling off at 85 percent, a net increase of 23 percent.
Improved employee self-esteem and engagement in turn promotes a more self-directed workforce. Self-directed work teams are 30 to 50 percent more productive than conventional work teams, according to research cited by Business Week.6
Increased Awareness Boosts Morale
The engineering company cited in Deloitte's study also reported an increase in employee morale, typically measured as job satisfaction. The increased self-esteem that employees gain through training imparts an increased awareness of their importance to the success of their company, strengthening employees' sense of purpose and boosting morale.
A Nabisco and Farleigh Dickinson University study of U.S. companies' training of sales professionals found that training clearly correlated with increased employee morale.7 Various studies in turn show that increased morale translates into greater employee productivity. For instance, a recent University of Warwick study found that productivity increases 12 percent on average when employees are happy, and some companies such as Google enjoy a productivity boost of as much as 37 percent from satisfied employees.8
Talent Retention Builds Brand Culture
The Nabisco-Farleigh Dickinson University study also found a correlation between training and employee retention. Thirty-five percent of employees say that increasing learning and development opportunities will make them more likely to stay with an employer, according to a CareerBuilder survey.9 Deloitte likewise found that millennials are most likely to stay with employers when they are satisfied with their learning opportunities and development programs.10 Retaining satisfied employees in turn helps build equity. When well-trained employees are satisfied with their job, they effectively serve as positive ambassadors for their brand, exemplifying company values and exuding competence and self-direction in their interactions with customers. Employee satisfaction generates customer satisfaction, promoting company success.
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