In “Why Training Pays You More than It Costs,” a post I wrote on December 28, I laid out some numbers that clearly showed that profitability surges when salespeople are trained to close only 10% more sales.
Today, let’s explore another way that training can produce dramatic improvements in profitability.
As you know, losing employees is costly. But do you know how costly? According to a study by the Center for American Progress, the cost of replacing a worker who earns between $30,000 and $50,000 a year is 20% of annual salary, or about $10,000. And if you’re losing employees who earn more than $50,000, replacing each of them will cost you even more.
Let’s assume that you have 250 employees and that your annual turnover rate is 30%. So you’re losing 75 employees a year and spending $750,000 to replace them. You’ll also be losing money by paying unemployment benefits, losing sales during the time their jobs are not covered, and more, but let’s not figure that in.
Even Small Improvements in Retention Yield Big Savings
But what if you did a better job of training employees and cut your turnover rate by 5%, from 30% to 25%? That is very doable. That 5% improvement will pay you back more than you expect. If you have 250 employees, you will be losing only about 60 workers a year, not 70, a saving of about $100,000 a year.
Incidentally, the link between training and retention is well documented. Well-trained employees are happier and therefore less likely to leave. And because they do their jobs better, you will have to fire and replace fewer of them.
Which makes more sense – having a high turnover rate that costs you $100,000 a year, or investing in training?
Training Is a Profit-Producer, a Game-Changer and Much More
To learn more about putting the power of training behind your company’s success, contact a Tortal Training consultant.