Closing the "skills gap" to improve performance and increase revenue is perhaps the most discussed topic amongst human resources managers, and 67% of hiring managers have withheld a job offer because the IT candidate lacked soft skills. While some of these gaps are technical in nature and take time to address, many organizations could bridge the gap between the skills required for the job and the actual skills possessed by the employees in less time by developing the soft skills of their staff.
In a 2019 research study done by the Society for Human Resource Management (SHRM), 83% of human resources professionals said they had difficulty recruiting suitable candidates. Soft skills, such as strategic thinking, teamwork, analytical skills, and leadership strategies, were the most in-demand skills.
In this competitive job market, hiring and retaining talent has become increasingly difficult for organizations, but professional development training can help solve this problem. Most organizations tend to think very casually about training, and consequently, they do not organize seminars and training programs to invest in their most valuable assets: People, IT Security, and Talent Development.
Here are my two business case scenarios that show why and how professional development training is one of the best solutions for closing the skills gap within an organization to improve performance and increase revenue:
BUSINESS PROBLEM #1 (EMPLOYEE TURNOVER): According to an employee retention report published in 2018, employers paid $600 billion in turnover costs that year, and companies are expected to pay $680 billion by 2020. The top three reasons for high employee turnover are related to the employee's perception of career development opportunities. According to the data compiled from the study, 77% of the 234,000 exit interview respondents said their employers could have retained them if career development plans were implemented in the organization. The lack of both hard skills and soft skills training was noted as one of the top three reasons why they left the organization. Additional evidence showing the negative financial impact on corporations is emphasized in the findings from a Center of American Progress (CAP) study. As reported by CAP, the average costs to replace an employee are 16% of the annual wages for entry-level staff, 20% of the yearly salary for midrange positions, and approximately 213% of the annual salary for highly educated executive positions.
TRAINING SOLUTION FOR EMPLOYEE TURNOVER: The strategies and tactics learned in career development soft skills training courses such as Adapting Your Leadership Style, Time Management, Coaching for Development, Critical Thinking Skills, Practical Project Management, and Productive Work Habits translate into a more efficient workforce. These courses can be linked to the business retention strategy because they improve productivity and help the company avoid the loss in revenue associated with replacing an employee.
BUSINESS PROBLEM #2 (EMPLOYEE DISENGAGEMENT): According to a recent research poll conducted by Gallup, approximately $500 billion is lost every year due to employee disengagement. Ironically, the same research provides a solution to this costly problem. The data reports that 68% of workers claim that training and development opportunities offered by the organization would boost their morale and increase their job satisfaction, thus improving their engagement.
TRAINING SOLUTION FOR EMPLOYEE DISENGAGEMENT: Team collaboration courses such as Navigating Difficult Conversations, Ideas into Action, Increasing Your Emotional Intelligence, Taking Control of Conflicts, and Understanding Generational Differences provides actual approaches that reduce the issues in organizations that lower morale and hinders job satisfaction. When employees are learning new skills and sharpening their existing skills, they are satisfied with their jobs and are motivated to work harder, which encourages employee engagement and increases revenue.
Simply comparing the numbers becomes an even more convincing argument to show how using training to enhance the performance of employees can increase the profits of a business. According to the Bureau of Labor Statistics and the American Society for Training and Development (ASTD), approximately $166.8 billion is spent by employers on formal outsourced training annually. In contrast, the total cost of employee turnover and disengagement is roughly $1,100 billion annually.
PEOPLE + PERFORMANCE = PROFIT
Enhancing the performance of the people (the most valuable asset to the company) through professional development training (improving their asset value), ultimately increases the organization's financial bottom-line (delivering a return on the investment).
Red Door Consulting offers each of the soft skills courses mentioned in this article in both classroom and eLearning formats.
Tarshish Jordan | President and CEO of Red Door Consulting
We help organizations hire, develop, and manage their talent through Human Resource Consulting Services, Soft Skills training, Private Coaching, and Scientific Behavioral assessments.