Building the Workforce of the Future: The Case for Investment in Training

October 24, 2023
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Retention is a significant problem in the workforce at large. However, training budgets are often the least prioritized. Investing in digital training platforms can reduce skill gaps and keep the workforce up-to-date on the latest methods for success.

In the relentless drive to trim expenses and optimize profits, training budgets are often the first on the chopping block. The rationale seems straightforward: why assign resources to training when there are pressing needs that promise immediate returns? However, this perspective is risky. Skimping on training can cost companies more in the long run, both in tangible expenses and intangible losses, such as reduced employee morale and productivity.

So, why are training budgets often the least prioritized? One reason is the difficulty in immediately measuring the tangible impact of training initiatives. Unlike direct investments in technology or infrastructure, the return on training manifests over time, making it harder to quantify. Budgeting requires a detailed allocation of resources. Every penny counts, and every decision is weighed against potential returns. Immediate needs are prioritized first.

But here's the catch: investing in workforce training delivers true competitive advantages. Utilizing microlearning and AI, DeepHow enables personalized training content that evolves with employees' needs.

This scalable and cost-effective approach drives productivity, engagement, knowledge retention, and other metrics directly impacting the bottom line. Workforce training is not a cost center - it's a revenue driver and should be treated as such in the budgeting process. In fact, companies that invest in training programs see a 24% increase in profits or more.

It's clear that workforce training isn't just a budget line item but a crucial strategic need.

Stimulating Growth: The Inherent Value of Investing in Workforce Training

Workforce training is an investment that pays dividends. When employees are equipped with the right skills and knowledge, they don't just perform tasks; they excel in them. Engaged and well-trained employees not only stay longer but also become brand ambassadors, leading to enhanced retention and positive word of mouth. On the other hand, failing to provide proper and thorough training can result in expensive mistakes. The result? Low productivity and staggering costs of high turnover, which average 20% of an employee's annual salary.

A positive culture, the backbone of any organization, is nurtured through ongoing workforce training. These core capabilities and guiding principles become ingrained in employees.

For new skilled trade hires, comprehensive onboarding is key. An effective training program allows them to develop the technical abilities to meet quality standards quickly. It also immerses them into the workplace culture, ensuring they incorporate the organization's values in each process. Studies prove it: companies investing in robust onboarding see shop floor productivity rise by 70% and first-year retention of skilled workers improve by over 50%.

The business environment is in constant flux. As technology evolves and disrupts, ongoing training reduces skills gaps, ensuring employees are always ahead of the curve. This proactiveness isn't just good for the workforce; it's good for the bottom line. A competent, up-to-date team propels business growth,  better products and services, and improved customer experiences.

Unearthing the Hidden Costs of On-the-Job Training

In skilled trades organizations, hands-on, on-the-job training, where employees learn the ropes directly in their work environment, is the most prevalent approach. While invaluable for imparting practical skills, this method carries its own set of costs.

The immediate costs are discernible: the time invested by senior employees to mentor the newcomers, potential slowdowns in productivity, and loss of resources as novices learn and make inevitable mistakes. But, as we illustrated in our recent exploration of the hidden costs of hiring, there's always more beneath the surface.

The indirect costs of on-the-job training can be stealthy but significant. While there isn't a conventional 'venue' or external 'instructor' to pay, taking experienced personnel to train newcomers diverts them from their primary tasks.

Employees spend an average of 25 hours per year in internal training, leading to substantial opportunity costs from lost productivity.

Beyond these, there are the intangible costs. On-the-job training's effectiveness largely hinges on the trainer's consistency and the relevancy of their knowledge. If a seasoned worker is unaware of the latest techniques or best practices, they might inadvertently pass on outdated or suboptimal methods to the trainee. The result? A workforce that might need to catch up in modern practices, potentially leading to inefficiencies or missed opportunities in a competitive marketplace. In fact, only 12% of employees apply skills learned via informal on-the-job training to their actual work.

Understanding the full gamut of obvious and hidden costs is vital. While on-the-job training for skilled labor is essential, recognizing its comprehensive impact ensures businesses make informed, effective training decisions.

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DeepHow was founded in 2018 by a team of ex-Siemens innovation leaders and experts who saw an unmet need to transfer knowledge in the skilled trades labor market. We have a proven track record of driving successful digital innovation for various manufacturing and service industries.

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