It’s costing your company thousands!
As a trainer, I often speak to my clients and potential clients about the cost of not training their employees and I mention things like: low productivity, de-motivation, lack of communication & enthusiasm, high turnover and high absenteeism and so on. These are good examples yet they don’t reflect the true impact that they have on an organization. So, I sat down and started breaking things down and the figures scared me to the edge of my seat!
Did you know for every meeting your manager (considering an average managerial salary in SA) sits in, it is costing your firm about R 160.00 per hour? Sounds like nothing, right?
Now consider the salary of the secretary taking notes, the four other general workers involved and you are spending approximately R 500 per hour for them to discuss or sort out a problem (not making money, but spending money!).
Now consider the nature of the meeting, ‘to solve a problem / customer complaint’, and add in the hidden costs of; re-doing the work, brand damage, loss of customer / winning a new customer etc. How expensive do you think meetings and mistakes are now?
It’s too scary to even calculate!
Now, what about the employees that is absent today? Here are some crazy stats for you; did you know there is 4.5% of the South African workforce absent from work on any given day? Did you know that this costs the South African economy approximately R 12 Billion per year? Unfortunately this is one of the major contributing factors to South Africa slipping down global competiveness, and is most likely a major factor in your own company’s competitiveness and bottom-line. People are absent in SA mainly due to low staff morale and discipline, poor management (see the ‘soft’ skills coming in here), inadequate remuneration, poor working conditions and lastly medical conditions including HIV / AIDS, mental conditions (Stress / financial pressure). Poor productivity ultimately leads to job losses and faltering companies. A not so new phenomena that is also plaguing companies human capital in the form ‘presenteeism’, people who show up for work but are not productive as they dislike what they do and are not motivated.
Let’s look at the productivity loss (de-motivation) in rands example: In a lower-level job, the standard deviation (Productivity Loss) for a superior worker is estimated to be 19% more than an average worker, in a skilled job the figure is estimated at 32%, and in a superior manager/professional it’s estimated to be about 48%. Converting this to Rands, the following table shows the productivity loss of a small company with 100 skilled and semi-skilled workers, 50 skilled workers, and 25 managers (See image)
My question to you: “what can your company do if you had R 2,280 000.00 extra per year?” Now, let’s talk again about how ‘TRAINING YOUR STAFF’ is an investment and not an expense!
Now that we have sorted out the cost of not training your staff, let’s look at the other challenges you face for not training your employees like the fear that once you have trained them they will leave for greener pastures. This generally is a risk for an organization only if the environment is not conducive to keeping your employees, majority of the research indicates that by investing in the wellbeing of the employees they tend to me be more committed (not less) and more loyal. Research also indicates that they tend to go the extra-mile and feel important thus lifting their general morale. Being a company known for investing in their employees tends to also attract stronger candidates making it easier to hire the right people for the right seats!
Another real challenge for companies is the TIME factor for getting employees trained. I want to encourage you to consider a more ‘flexible’ approach to your training interventions. Instead of a 5 day, 8:00 – 16:30 approach, why not break down into daily bites. Remember, training can be customized and is more effective when it is continuous rather than a ‘once-off’ attempt. Training interventions should be a genuine attempt from the company to empower their employees, and since your Human capital is your most expensive expense and most valuable, it should be a priority. Consider that research suggests 24% higher profit margins for companies who invest in their teams and higher productivity, decreased staff turnover and absenteeism, decreased mistakes, improved communication and morale, increased reputation and more customers retained, decreased supervision, tension and conflict!
The great minds have been saying it for years:
“An investment in education always pays the highest returns.”—Ben Franklin
“Learning is the beginning of wealth. Learning is where the miracle process all begins.”- Jim Rohn” Zig Ziglar put is best, “What’s worse than training your workers and losing them? Not training them and keeping them.”
It’s clear that running a company without investing in your employees will cost you more in the long run and achieving your objectives may remain a dream.
Training is an investment not an expense.
author – Elzette Bargiacchi,
Tel: 017 638 0103, E-Mail: elzette@affinitygc.co.za