Recruiters and human resources professionals face a pretty tough challenge these days. They’re tasked with identifying, recruiting, hiring, onboarding and retaining talent to round out the skillsets and job requirements that drive the organization. But even with a wide range of automated tools at their disposal, it’s still tremendously time-consuming and resource-intensive. This is particularly true in high-tech industries where jobs can outnumber candidates and higher salaries are needed to close the deal. The process of acquiring talent is certainly necessary, but it can be a drain on money and resources, and it also takes time for new employees to ramp up and become productive members of the team.
Fortunately, many successful companies are finding new ways to address these challenges by focusing on skills acquisition, rather than just hiring. Training existing employees with new skillsets to fill necessary internal roles – and building a culture of continuous learning along the way – can pay off in a big way.
The Real Cost of Hiring and Onboarding New Employees
The cost of recruiting and training new employees is quite high when you factor in multiple factors. Simply replacing an employee is expensive on its own. Although different studies draw varying conclusions on actual costs, many agree that there is a significant cost to replacing employees that leave. It can cost up to 213 percent of an annual salary to recruit and retain employees in the upper echelons, such as executive positions. A mid-level manager earning $60,000 annually can cost up to $45,000 to replace, and even replacing employees in the lowest pay brackets comes at a price of 16 percent of annual salary.
However, the financial impact of employee replacement goes even deeper than that. It can also take up to two years to fully train a new employee, according to industry analyst Josh Bersin. During that two-year period, your new employee is only working at a fraction of their full potential—yet they are earning their full pay.
A Culture of Continuous Learning Helps Retain Existing Employees
A business that develops a culture of continuous learning will discover they can slash the need for (and costs of) recruitment and training by ensuring the talent pool they already have stays put—rather than watching good talent walk out the door. Employees who are offered an opportunity expand their skillsets are much more likely to stay with your company for the long term. In survey after survey, employees have indicated their desire for continuous learning to give them greater fulfillment with their current jobs. Employees that are happiest on the job are engaged with company’s business objectives, help drives better organizational value, and feel good about living up to their real potential. An article in CED Magazine says 70 percent of employees report they are more likely to stay with a company when they have opportunities for training and development. Imagine slashing recruitment and training costs by building a culture of continuous learning and building your own pool of talent instead.
Continuous Learning Attracts the Brightest Employees
A continuous learning culture helps to not only retain the employees you already have; it can be used as a recruitment tool as well. Employees today yearn for opportunities to expand their skills and deepen their knowledge, especially younger employees who have come of age with self-directed learning widely available to them. When your organization can offer a potential employee the opportunity to continually improve their professional development with important new skills, you gain a key competitive advantage over other employers.
Executives See the Value in Learning and Development
You shouldn’t need to convince anyone at the upper levels of your organization of the need for learning and development. According to a survey by Deloitte Insights, 84 percent of executives view learning as important, and more than half of those (44 percent) ranked learning as very important. The C-suite sees the true value in learning and development, and their conviction stems in large part from a need to stay one step ahead of the competition. Accordingly, the amount of money spent on corporate training has increased dramatically in recent years. In 2014 companies spent over $70 billion on corporate training in the U.S. and $130 billion worldwide, an increase of 15% over the previous year, according to Bersin.
Long-term Employees Enhance Your Company’s Value
A culture of continuous learning does more than cut your recruitment and training costs. It also adds significant value to your organization. The longer an employee stays with your company, the greater their value to your company. They build intellectual capital over time that a new hire simply can’t replicate any time soon, if ever, and it’s easier for them to learn new skills that build upon the in-depth knowledge they already have. Also, consider the value of the social capital that an existing employee contributes to the rest of the workforce. The payback of learning and development is similar to compound interest—savings grow at a faster pace when the interest earned stays in the account and begins to earn its own interest.
Continuous Learning Offers a Competitive Advantage
There is yet another advantage: A culture of continuous learning also positions your company to respond to sudden industry shifts in technology or market demand with new skillsets. Skills in data and analytics, cyber security, digital marketing, cloud computing and other rapidly evolving areas, for example, can be mastered by employees you already have with skills training. The continuous learning path is certainly faster and more cost-effective than recruiting and training a new employee. When you can respond to change faster, you gain a competitive edge. And with each new skill your employees learn, they add to the knowledge pool, human capital and overall value of your organization.
A culture of continuous learning can be transformative, as it changes your focus from one of constant employee attrition and re-hiring to one that invests in, retains and increases the value of loyal employees. This kind of transformation not only helps slash recruitment costs but also builds an environment of continually growing human capital that no amount of new employees could ever replace.