Businesses are driven by a multitude of factors that define their mission. Some businesses want to provide good apparel to their customers while others want to empower people using technology. Regardless of the mission, each company has to be able to do one fundamental thing to be successful – make money.
To increase the bottom line, a company can do two things p increase their revenue or decrease their expenses. In the short run, most companies try to decrease their expenses. Quite often, the Learning and Development (L&D) department, and ultimately the learning culture, endures the biggest hit. In fact, three out of five learning managers said that cost-cutting measures hit their department first.
Companies reduce their L&D spend to save quick bucks, improve their bottom line, and impress shareholders. But what they don’t realize is that while this saves money in the short-term, it often ends up costing much more in the long run.
How Nurturing a Learning Culture Impacts Your Bottom Line
Yes, cutting the learning budget helps improve the bottom line by reducing a potentially large expenditure immediately. But what this immediate L&D budget cut doesn’t account for is the long-term impact it will have on your bottom line. Here are 4 ways that investing in a learning culture can impact your bottom line.
1. The Cost of Not Training
In a survey conducted by PwC on what they look for from their employers, a good training program features as one of the key requirements. Employers who ignore this for long end up losing good employees. Plus, hiring new talent costs too. The impact of these to your top- and bottom-line could potentially be huge.
2. Better Training Results in Better Sales
Better training = more sales. This must be quite straightforward, yet it’s amazing how many managers don’t understand this. Here are some data that help explain this point. Companies with an effective learning culture and training programs are able to achieve:
- 8% increase in achieving sales quotas,
- 13% higher win rates,
- almost 35% higher customer satisfaction, and
- almost 10% lower employee turnover.
The data is indeed impressive and speaks for itself. But then, it’s a no-brainer that a fully supported L&D department actually improves your top line by enabling your sales staff to perform better and bring in more revenue.
And that is just going by the numbers. What finance managers often don’t realize when making these budget cuts is the fact that your learning culture contributes so much more to your employees and customers by the value it enables you to create.
3. Training and Customer Support
Regardless of which industry your company is part of, you will agree that your customers today are spoiled for choice. They don’t have to be loyal to you. Times like these dictate the need for a much more customer-centric approach, something that only training can help achieve.
Investing in (and nurturing) a learning culture ensures that your employees receive the training and development needed to provide your customers with adequate support. Increasing the likelihood that they will remain your customers.
4. Learning programs result in increased productivity
The objective of training is to enable employees to perform better. An effective learning culture will result in your employees knowing what to do and how to do it, and how their work fits into the big picture. This understanding and knowledge help in making fewer mistakes and save valuable resources, be it time or money.
A comprehensive survey, conducted by IBM, presents some valuable insights:
- 71% of CEOs cited human capital, ahead of products, customer relationships and brands as the leading source of sustained economic value.
- When preparing for a project, teams receiving 40 hours of training per member met their significant project objectives three times as often as teams that received 30 hours of training or less.
- Organizations with effective learning programs see a 10% increase in productivity and $70,000 in annual savings compared to those that lack such training interventions.
- 75-80% of managers attributed training as a crucial contributor to project success.
And this list goes on!
Fostering a Learning Culture
Often, we tend to get lost in the numbers and forget that we’re talking about people. When fostering a learning culture, keep this in mind the following:
- Don’t think of training as an option, but rather as a necessity. This is the approach that helped Singapore Airlines do so well.
- Ensure you have a very robust training plan for all employee levels across the organizational hierarchy.
- For most organizations, the 70-20-10 learning model is a good fit. Provide employees with multiple learning opportunities on-the-job since this is where they would end up learning the most. The best way to foster this is to give them enough just-in-time learning material that they can use whenever they get stuck at a certain place and can find a way out of it.
- Align your L&D strategies with your business vision. If the focus of your business is on improving your tech capabilities, then focusing L&D on frontline employee training would not provide the desired results.
- Reward continual learning by giving them incentives to learn more. Many companies consider what the employee has learnt over the past year as a crucial indicator of their career growth and whether or not they are ready to be promoted.
Embrace the Power of Learning and Development
At the end of the day, learning and development is about making your employees capable of performing their jobs with ease and competence. We live in an era of automation and digital disruption, where it is hard for most people to keep up with new trends. In these dynamic and challenging times, the onus is on learning professionals to ensure the company is ready for the future. You must ensure that you have the learning culture in place to do just that.