Engagement Matters: The Impact of Training on Employee Turnover
Employee turnover is a major concern for many organizations today. High employee turnover can have a devastating effect on a company, especially if the lost employees are high performers.
First and foremost, it is costly to replace personnel, and the proprietary knowledge that they take with them when they leave is impossible to replace. A ripple effect often occurs as well. When employees depart, they impact morale, spur rumors, and often open the door for others to leave the organization. According to the Saratoga Institute, which specializes in quantitative human resources measurement systems, the average company loses about $1 million for every 10 professional employees who leave.
Although there are several factors that influence the decision to leave an organization, one factor that is linked with the decision to stay is training. In 2002, American Businesses invested nearly $54.2 billion on corporate training according to Training Magazine.Some of this investment has been shown to impact retention of employees. However, the majority of studies examining the relationship between training and retention have focused on traditional hires and employees. Very little research has examined the role that training plays in the retention of experienced hires.
Although the cost of training was substantial, it was minimal when compared to the amount of revenue employees generated during the days they remained with the company.
Training can have a considerable influence on company finances as there are several potential training costs that companies may incur. But once a training program is completed, worker productivity is expected to increase. This will benefit both the company, due to an increase in worker output and productivity, and to the worker, as the increase in output should translate into higher wages and opportunities for career advancement. In addition to the direct and indirect costs of training, turnover plays a significant role in the amount of training investment companies will assume.
In order to better understand the relationship between the costs and returns, start by identifying two mutually exclusive forms of training – general training and specific training. General training is training that provides the worker with skill development not only applicable at the present employer, but also at other firms throughout the labor market. In contrast, specific on-the-job training is training that increases the workers’ productivity and output only at the company that provides it. The training is "specific" to that particular company. This suggests that the more specific the training provided is to employee, it will be less likely that the turnover would occur. Hence the time, energy, and effort that employees display in any type of training can result in a more invested and committed employee. This increased investment on the part of the employee ties them closer to the organization.
Similarly, organizations that invest in and provide general training make the participants feel like "insiders". The sense of being an insider is displayed in the employee’s exertion of more effort, improved work ethic, increased productivity and lesser likelihood that he or she will quit.
Once an employee is hired in an organization, training is typically the first human resource practice that organizations offer to the new hire. Training plays an integral role in the socialization process for many employees. Employees enter the employment relationship with many expectations and desires. When these expectations and desires are fulfilled, the employee is able to better identify with the company, resulting in a more committed employee. In turn, when a training program fails to meet these expectations, there is usually a negative attitude change. These unmet expectations can lead to a decrease in commitment and a greater likelihood of turnover.
Training that seeks to improve employee investment and helps the employee identify with the organization will enhance the overall employee’s commitment to the company and, in turn, reduce an employee’s turnover intent. This ultimately results in an organization that is better able to retain its workforce.
The research presented above supports the argument that training and development proves to be an important tool that can help companies reduce employee turnover to a great extent. Training serves as a motivator for an employee’s commitment level to the organization. Investing in its people gives a positive impression to the employee that the organization is concerned about their careers and advancements. It also gives the employee the sense of an being "insider" and an important resource in an organization.
Training builds an opportunity for personnel to find growth while remaining in the same organization that has invested in them. Organizations must consider training as an input which results in a greater return from an employee. The role of supervisors here is very important, as they should unfreeze the old concerns of employees through positive approach by communicating aggressively about the benefits of training. It has been observed in several organizations that where training was being conducted, the employees felt more secure about their jobs, had higher positivity, better productivity and ultimately showed commitment towards the organization by remaining part of it.
Training is a tool that can assist organizations in building a more committed and productive workforce. By helping to establish employee investment, reciprocity, identification, and by limiting alternative employment options, an effective training program can lead to greater commitment and less employee turnover. The result is an organization that is more productive, professional and wholly committed to its success.