When a company examines its recruitment strategy, it tends to focus on sourcing, the hiring process, the competitive landscape for talent, and other things directly related to identifying and securing new employees. Truly progressive companies are incorporating another element into their recruitment strategy: learning and development.
In fact, a 2019 report from findcourses.co.uk found that 72% of market-leading companies use talent development as one prong of their recruitment strategy.
Here, we’ll explore why learning and development (L&D) should be included in your recruitment strategy, the business case for a robust L&D plan, and how to measure the ROI to your business of the investments you make in this area.
What does learning and development have to do with recruitment?
Your learning and development plan is an integral part of your employer brand. It can be a differentiator in the marketplace - one that serves as a powerful magnet for talent. Talking about the L&D opportunities provided by your company - mentorships, workshops, conferences, paid training - in job postings, and on your career pages, can help you stand out from your competitors. This is especially true for candidates who are early in their careers and looking for opportunities to grow. People recruiting for your company should be well-versed in that plan, and it should be part of their pitch when speaking to prospective candidates.
In addition to helping you attract the best, L&D also directly impacts retention - the flip side of the recruiting coin. You won’t be successful recruiting the best employees unless you retain the best employees. A 2021 study by Lorman showed that retention rates are 30-50% higher in companies with strong learning cultures. According to the same survey, 34% of the respondents left their last job for career development opportunities, and 86% of millennials would stay in their current position if training and development were offered by their employer.
The costs are real, and they’re not insignificant. According to one 2014 report, spending on corporate training that year grew by 15% over the previous year, reaching $70 billion in the US and $130 billion globally. The average company at that time was investing around $1,000 per employee, and that number has surely grown in the ensuing years. If a business is going to make investments of that scale in their people, there must be a solid business case for doing so.
The case for Learning and Development
As the old story goes, one manager asks, “What happens if we train our people and they leave?” The other responds, “What happens if we don’t train them, and they stay?”
Business today is evolving more quickly than ever. That means that the knowledge and skills your people require to do their jobs well are also evolving more quickly than ever.
How long do you think it would take for half the skills an employee needs to perform their job would be obsolete? In 2005, that period of time - referred to as the ‘half-life’ of skills - was estimated to be about 15 years. Today, it’s less than 5 years. That number shrinks by half for technical skills.
In short: if you’re not investing in L&D, you’re not just standing still. You’re falling behind, and so are your people.
Younger employees - Millennials and Gen Z - have grown up through this period of rapid acceleration in evolving skills. That’s why, in part, a company’s commitment to L&D is a question of demand. Evidence shows that these younger employees expect that their employers will offer them opportunities to train further and grow in their careers. If one company doesn’t, they’ll find another one that does.
It’s not just about younger employees though; there are powerful mutual benefits for employers and employees alike in providing learning opportunities for people across the entire spectrum of experience. Upskilling and reskilling your existing employees allows you to retain the valuable experience they’ve built working for your company. You have the opportunity to retain corporate memory and build their capacity while also increasing the loyalty and commitment they have to your company. Including new employees in reskilling opportunities also allows you to expand your candidate pool - recruiting people who have experience and skills that are adjacent to those that are in short supply and high demand.
But the value of additional training doesn’t stop at attracting and retaining employees. Smart investments in this area are one way that a company can increase the value and productivity of its people, and the returns are quantifiable.
Measuring the ROI of Learning and Development
ROI is easier to calculate in some areas of the business than others. The return is tangible - linear, even - in Business Development and Marketing. Product and Operations are less linear but still fairly clearly calculable. HR, including learning and development, is the most challenging area of the business in which to prove ROI.
L&D programs produce tangible ROI for a business. But to determine the ROI, you must measure the outcomes. Which means that first, you must develop and define the expectations for the programs.
Begin with a company goal. It could be an increase in revenue, greater customer satisfaction, high levels of employee engagement, or something else. From that goal flow the KPIs that you use to measure your progress towards that goal. These might be quarterly revenue, average sales per employee, customer satisfaction scores, etc. From those KPIs, you can then derive the aspects of performance that impact those KPIs: mindset, behaviour, and skill. Those human elements are the areas where learning and development programs can affect the change you’re looking for, and the KPIs allow you to measure the outcomes.
In addition to quantifiable outcomes over time, it’s helpful to measure the experience of participants along the way. This can be done by surveying both the participant and their manager before and after the training, with questions about the extent to which the training created a positive shift in their mindset, their behaviour, and their skill level. Very few (if any) training programs are perfect for everyone, or remain that way. Measuring experiences and outcomes along the way will help you adjust your offerings to produce the best possible results for your business.
What results, then, should you expect? Investment in L&D programs can produce a range of positive outcomes; let’s look at two: profit and employee engagement.
Profit is a powerful motivation in business, and there is ample evidence that investments in L&D pay off in higher profits.
A study by Gallup found that implementing strengths-based training led to profit increases to the tune of 15-30%. Another study by Deloitte - conducted first in 2012 and refreshed in 2016 and 2017 reports - found that companies that invest in high-impact learning programs see three times greater profit growth than their competitors. Naturally, this is especially true in knowledge-based industries. A University of Washington study showed that intensive internal employee training is a “strategic necessity” for knowledge sector companies seeking to build and maintain sustainable growth.
For some companies, employee engagement is an equally important strategic goal, alongside profit. There’s data supporting the ROI of L&D programs in that area as well.
The Gallup ‘State of the American Workplace Report’ compiles data from more than 82,000 companies. For companies that had a high employee turnover rate, investing in employee development resulted in a 24% decrease in churn. For companies whose turnover rates were already low, the improvement was even greater, at 59%.
Another study, by Bersin, shows that companies that transform their learning and development - industry leaders like BP, IBM, Toyota, and Microsoft - dramatically improve employee engagement.
Smart investments pay off
Increasing revenue and profit, and improving employee retention and engagement, are worthwhile objectives for any company. Smart investments made in Learning and Development can help you attract and retain the talent you need, and produce tangible and quantifiable ROI for your business. As such, it deserves a prominent place in your recruitment strategy.
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