The Importance Of Effective Staff Training

Organisations who fail to adopt a comprehensive and cost-effective approach to staff training suffer significant financial and non-financial consequences.

A host of recent research into public and private enterprise has found effective staff training to be crucial to the long-term success of any organisation. High quality training has been shown to improve staff satisfaction and productivity, enhance customer satisfaction and loyalty, and reduce operating costs by reducing staff turnover. In this document we explore the evidence behind these claims and examine why many organisations chronically underinvest in staff training despite knowing the many benefits it can deliver.

Quality Staff Training Is Vital To Staff And Customer Satisfaction

In the business world, some ideas are more easily understood than others. A good example of this is the correlation between staff satisfaction and customer satisfaction. It’s intuitive to us that a satisfied workforce is likely to be a driving force for a satisfied customer base, and inversely, that a dissatisfied workforce is likely to have negative repercussions for customers. Another intuitive idea is that changes to a business model should be tested before being rolled out in full. Combining these two ideas leaves us with the conclusion that organisations should promote staff satisfaction to improve business outcomes, but only if the data supports doing so. In that case, what does the data say?

The link between staff and customer satisfaction has been fertile grounds for researchers in recent decades. Consider for instance a 2002 meta-analysis by researchers Harter, Schmidt, and Hayes. In their publication, the trio describe the results of an investigation into almost 8,000 business units across 36 American companies. They found that staff satisfaction correlates strongly with customer satisfaction and is linked also to staff productivity and retention. In the years since Harter et al, researchers have continued to reaffirm the link between staff and customer satisfaction, and have begun to explore nuances, such as how satisfaction with individual elements of a sales team’s working conditions correlates with customer satisfaction and loyalty.

In general, the data here has been clear: staff satisfaction leads to customer satisfaction. Which is important to know as customer satisfaction is widely recognised as being vital to customer loyalty and business success.

When organisations come to this realisation they quickly begin to look for ways to improve staff satisfaction. Historically this has involved providing perks, improving salary packages allowing flexible hours, etc. Increasingly however, smart organisations are turning to staff training to improve employee satisfaction.

The link between opportunities for staff training and overall staff satisfaction is a natural focal point for many high achieving organisations. Household names including Google, Microsoft, GE, and Nokia are so focused on providing high quality staff training that they have whole departments and programs dedicated to the task. But where these industry success stories recognise the value of investing in staff development, their competitors are often blind to the opportunity – and the science says it’s costing them.

In 2007 Steven W. Schmidt, Professor of Adult Education at East Carolina University, published his now widely cited study entitled The Relationship Between Satisfaction with Workplace Training and Overall Job Satisfaction. In his study, Schmidt sought to discover whether the availability of job training was important to the satisfaction of professional service workers, and to what degree factors such as training type, quality, and duration influenced satisfaction levels. Through an extensive literature review and comprehensive survey directed at over 500 customer and technical service employees spread across North America, Schmidt discovered that satisfaction with workplace training accounts for up to 55% of overall staff satisfaction; noting also that the time organisations allow staff to spend on training and the method by which training content is delivered greatly influence this result.

If you think Schmidt’s findings were a fluke, consider the following.

  • In a 2001 North American study of bankers, 80% of respondents declared that receiving training that increases their skills and abilities was a key component of what they looked for in jobs.
  • A study of 271 network professionals showed that the most important factor in job satisfaction was the opportunity to learn new skills.
  • A network Computing survey of fourteen hundred information technology (IT) professionals found that IT employees felt educational and training opportunities were critical in their job.
  • A survey of 575 IT professionals found that dissatisfied employees attributed their job dissatisfaction in part to inability to get the training they wanted1.

Bottom line, when it comes to ensuring your staff are satisfied at work, it pays to ensure they have access to quality training opportunities.

Inadequate Staff Training Increases Staff Turnover

For organisations who don’t take workplace training seriously, consequences extend far beyond the somewhat ethereal measure of staff satisfaction. In fact, by influencing rates of staff retention, the provision of high quality staff training directly impacts the availability of necessary skills within an organisation, a factor consistently recognised by organisational leaders as being crucial to their success. Here’s the evidence.

In 2017 the research company Towards Maturity published their 10th annual Benchmark Report. As always, TM’s annual report summarised the results of a survey directed at thousands of organisational leaders which queried aspects of their organisation’s approach to workplace training as well as other typical measure of organisational success. Among other discoveries, Towards Maturity found that the top 10% of training organisations achieved a 7% higher rate of staff retention compared to the average training organisation.

For some a difference of 7% may not seem worth stressing over, but consider that Toward’s Maturity’s findings are conservative compared to results from their peers:

  • A 2013 research paper published technology giants IBM found that staff new to an organisation intended to stay on only 21% of the time when they felt they were not being trained adequately for their job role. A figure in stark contrast to the 61% of new recruits who intended to stay on when they believed they were being sufficiently trained.
  • Cleveland State University Researcher Umer Ahmad found that when employees from both the public and private sector were asked why they left an organisation, 98% a lack of training was noted as a primary cause.
  • In a study of white collar workers in Malaysia, workplace training accounted for as much as 43% of the of overall commitment employees felt towards their workplace. This study also found that training accounted for 56% of the affective commitment staff felt, and 33% of all normative commitment.

Whichever way you cut it, it appears that the availability of quality staff training influences staff retention. We’ll discuss why that matters in the next section.

Staff Turnover Is Costly

Buried within the internal financial reports of medium and large organisations across the globe is an expense both insidious and commonly overlooked, staff turnover. Organisations often underestimate the costs associated with replacing lost staff because of how multifaceted the expense is; not to mention how difficult determining the scale of associated non-direct costs can be.

To illustrate the point, consider some of the common expenses incurred during staff turnover.

  • Separation costs: Include the expenses associated with removing a staff member from your organisation and include exit interviews, administrative costs, separation pay
  • Vacancy costs: refer to the expenses incurred in temporarily covering for the work a departed staff member was previously handling, e.g. additional staff overtime or contractor work.
  • Acquisition costs: covers the costs for one new hire such as advertising, agencies, employee referrals, travel, interviews, assessments, background checks, reference checks, physicals, bonuses, and relocation.
  • Placement costs: such as new supplies, onboarding days, training days.
  • Output reductions: covers the reduction in organisational output incurred by position vacancies, non-specialist contractors, temporary staff, and new hires.

In total, these costs mean that organisations are often left to fork out upwards of 20% of a position’s total salary package each time an employee leaves and must be replaced.

For most organisations, such costs aren’t noteworthy from the perspective of a single employee departure and replacement. They quickly become troublesome however when they’re multiplied by an organisation’s total rate of staff turnover for the year, which often exceeds 15% of an organisation’s total staff workforce. In these real-world cases, it’s not unusual to observe organisations devoting hundreds of thousand or even millions of dollars to addressing the various staff turnover costs. On top of this, low staff retention costs businesses in other ways, such as reduced productivity, and customer loyalty.

Business Leaders Often Underestimate How Much Training Frontline Staff Require

If staff training is so obviously vital to the satisfaction of staff and customers, why is underinvestment in training so common? According to technology giants IBM, the answer may have to do with a peculiar difference in expectations between managers and front-line staff.

In their 2013 Smarter Workforce study, IBM set out to discover whether a link existed between the seniority of an employee and the belief that front-line staff at the employee’s organisation were receiving sufficient training. Their work revealed that up to 78% of senior organisational leaders believed that front-line staff received appropriate training, while only 53% of front-line staff held this belief. IBM’s research was damning. A clear disconnect existed in the minds of staff and organisational leaders as to how much training the former should be receiving. Given the relationship between staff training and satisfaction, this wasn’t a great position for organisations to find themselves in. It did help explain however why undertraining is such a chronic issue among many organisations – why should leaders allocate additional resources to staff training when they believe the training currently provided is sufficient?

Where To From Here?

Let’s quickly review what we’ve learned:

  • Access to quality staff training is a significant contributor towards an employee’s overall job satisfaction.
  • Using training opportunities to increase job satisfaction can positively impact employee retention and productivity, as well as customer satisfaction and loyalty.
  • Managers often underestimate how much training front-line staff require.

Considering these facts, what steps should you take in your organisations to ensure you’re maximising the value staff training can provide offer?

If you’re a front-line employee searching for more training that management is reluctant to provide, your best bet is to present management with the facts. Show them the evidence that proves staff training can improve business KPIs across the board.

If you’re part of the leadership team, look for ways that you can empower your staff with high quality training. Think carefully when selecting training solutions. As with any service, not all training providers are created equally and ad we’ve learned, when it comes to educating your staff, it pays to get it right.