Why Failing To Train Employees Costs More Than You Think - March 3, 2017
A CEO and department head were having a brief conversation after their monthly strategy meeting, where the focus was on employee training. The CEO asked, "What if we spend all this money training our staff and they leave us? And the department head replied, "What if we don't train them and they stay?"
In this issue of Promotional Consultant Today, we share a scenario as described by Evan Hackel, CEO of Ingage Consulting.
A franchise group, comprised of more than 2,000 stores, experienced the following training quandary firsthand. The head of sales had a simplified approach to hiring: he hired salespeople who had worked at other stores that sold the same kind of products as sold at his stores. His assumption was that the experienced salespeople he hired were pre-trained and that hiring them would save a lot of time and expense. Plus, there would be no need to acquire the tools that were needed to implement a training system.
His decision was flawed. The fact that those salespeople had experience didn't mean that they came armed with the best-selling skills or factual product knowledge. But after a few years of using his hire-the-experienced approach, he saw that he wasn't achieving the kind of results he wanted. Buyers were not becoming repeat customers. Plus, his stores were receiving negative comments online about the quality of his stores' customer service.
So he took the plunge and brought in an experienced training development firm. Its program of e-learning was used to train employees to increase the size of the average ticket size, to improve their closing percentages and to provide better customer service.
The performance of the salespeople his company trained was dramatically better than the performance of experienced salespeople he simply hired. Plus, he soon realized that training was giving him another benefit. Because he could hire high-energy, high-potential employees, not only those with experience, he was building a much stronger and enthusiastic salesforce.
After a year, the average annual sales made by company-trained salespeople had, in many cases, outperformed seasoned professional hires by $200,000 or more. When he factored in sales and contribution margin improvement, the people trained in-house produced about $80,000 a year more in profit. With an average five-year tenure for each employee, the training was worth $400,000 more in profit dollars.
That is another way of saying that the cost of not training each salesperson amounted to $80,000 a year for that company.
So, what really happens if you don't train people and they stay? It means you're going to be losing a lot of money. In simple terms, if a trained worker becomes 100-percent productive and an untrained worker is only 60-percent productive, you are losing $40,000 in value on every $100,000 of business you conduct.
Not training is far more expensive than training. In your company, you should look for all the opportunities where proper training can dramatically increase profits, reduce waste and provide an outsized ROI for every training dollar you spend.
Source: Evan Hackel is founder and principal of Ingage Consulting, a consulting firm focused on improving the performance of franchises by improving the relationship of franchisees and the franchisor.