Bottom Line Benefits

Employees' basic skills gains yield direct and indirect bottom-line benefits for employers:

• Increased Profitability

• Better Health and Safety Record

• Increased Customer Retention

• Increased Retention of Employees

• Enhanced Corporate Image/Employer of Choice

• Improved Recruiting

The ultimate measure of bottom-line benefit for corporate employers is increased profits. It is highly significant, therefore, that 56 percent of the employers interviewed stated that they increased their profits as a result of higher performance of employees who gained skills in WEPs. Some WEP training seems to help more than most in some business sectors. For example, one employer noted that ESL and communication training has a "phenomenal potential" to affect profitability in the service industry. Across all sectors, employers’ estimates of increases typically ranged from 5 – 25 percent.

"I have invested in my employees. They’ve given back. That is profitable."

"Employee turnover is very costly. It is profitable to have happy employees."

- Chief Executive Officer
Small Western Hospital

The recipe for higher profitability varies from workplace to workplace.  The examples below illustrate some of the possibilities for concrete bottom-line benefits:

• In a medium-sized Family Health Centre, the combination of treating more patients per day and radically improved customer relation services has lead to a 75 percent increase in profits. Some of the increase is attributed to two specialized medical terminology courses taught through a WEP.

• In a large equipment manufacturing company, profit increased by 15 percent through a combination of new technology that brought the cost per unit down and the capacity of skills-trained employees to use the technology effectively.

• A small instrument manufacturer found that reduced scrap, reduced labor and lower material costs were the key elements in increasing profit; two out of three were a product of WEP training.

• A self-employed milk producer found that profits increased 30 percent when she upped milk production due to a combination of a WEP and other actions taken.

• At a sheet metal fabricating plant, employees' skills gains led to enhanced profits due to reduced overheads, a requirement for fewer supervisors and a sales increase of five percent.

• A waste management company used WEP training to increase profits 25 percent by lowering expenses for overloading and traffic tickets and enhancing employees’ truck computer understanding leading to fewer truck breakdowns.

• An electronics manufacturing firm gained on the bottom-line due to a mix of increased on-time shipments, reduced number of defects, increased quality, and a gain of customers, because employees improved their skills in WEPs.

The common feature of all these explanations of increased profits is that employees perform better because training changes them in more than one way. Typically, their WEP experiences give them a winning combination of better skills, behaviors and attitudes; it is the combination that creates higher performing employees.

Less frequently, employers identified a single key factor in higher profitability.

• A self-employed beef farmer whose profit depends on the number of cattle processed per hour found that reduced absenteeism increased profitability; when absenteeism is low, they run 15 - 25 more cattle per hour, a gain of $150-250 per hour in profits.

• A hospital increased cash flow in its commercial accounts billing by 25 percent in three years because billing staff get the billing done faster, thereby reducing the number of accounts that "age out" with direct bottom-line gains.

• Another employer cut recruiting costs of $5,000, including initial training, thereby increasing profits.

• Lastly, a manufacturer of precision instruments saw its WEP graduate employees identify defects earlier in the production process, thus decreasing costs due to wasted work and improving profitability.

"The end product is an empowered and better-skilled employee ready to not only take back excellence to the workplace but to dream realistic dreams regarding career and education goals as well as job advancement. This process then reflects a remarkable return on the hospital’s investment."

- Co-ordinator, Skills Enhancement Program,
Large Eastern Hospital

Many employers who invest in workplace education programs take it on trust that the programs make them more profitable. Sometimes, they are convinced because they see an obvious advantage, such as saving the costs associated with recruiting and training a new employee by upgrading an incumbent worker through much cheaper WEP training. This is especially true where unemployment is low and the pool of skilled talent is highly sought after, thereby increasing the chances that new hires will need extensive training in order to perform at a high level. Other employers have bought onto the concept of training as a tool for raising performance and performance as the key to profit.

"The training helps employee morale—they are more motivated. In this way it helps profitability as well."

- Human Resources Coordinator,
Large Electrical Manufacturing Company

Overall, employers who choose to look at the performance data often find measurable gains in profitability from their more highly skilled and adaptable employees who have completed WEP courses. Even employers who have not invested in tracking impacts on profitability are frequently confident that changes in employee performance in the workplace are yielding bottom-line profits. In workplaces that are undergoing significant change this is particularly true, according to the employers interviewed.

"Even though we tried, it was hard to measure with concrete certainty the impact the training had on the bottom line. At some point we just accepted the fact that this was the right thing to do for our business and we didn’t need to prove it. That is why we had the program for nine years."

- Human Resources Representative,
Large Aircraft Equipment Manufacturing Company

Improvements in health and safety in the workplace yield indirect bottom-line benefits for employers, over half of whom reported a better health and safety record in their workplaces due to the impact of WEP training on their employees. Training gives employees a better grasp of workplace dangers and safety issues and a better understanding of procedures, rules and regulations regarding safety as well as access to information and safety training. It also improves employees’ safety skills including their capacity to read and follow safety requirements and procedures; it helps them to make fewer errors in following safety instructions; and enables them to make better use of their workplace benefits packages. As a result, employers are benefiting from reductions in the number of accidents and incidents, less lost work time due to injuries, reduction in workers’ compensation payments and better compliance with OSHA (Occupational Safety and Health Administration) requirements.

All these gains have an impact on the bottom-line, as safe and healthy employees accomplish their work tasks in a timely and accurate fashion. As a result of WEP training, employers report a wide variety of improvements in the quality and costs associated with production and heightened job performance by their employees which, in turn, translate into more income and greater profitability.

Customer retention increases when WEP-trained employees do better work and interact more successfully with customers. Employers’ estimates of the scale of the increase in customer retention rates ranged from 10 - 80 percent.

"An 80% increase in customer retention is a concrete result of three of the WEP courses: the customer service, the interpersonal skills and the orientation course. "

- Health Information Officer,
Medium-sized Midwest Health Center

For one employer this benefit was so important that it spelled the difference between business failure and survival. He happily reported that his very volatile clientele were no longer leaving him since his employees took their WEP courses. Several employers said that customer loyalty has risen since their employees took WEP training and credit these courses for much of the improvement.

A new or improved relationship with customers is a key to increased customer retention, according to many employers. To take full advantage of improved employee skills, some employers have changed their business practices to increase direct contacts between customers and employees. One employer operating a processing plant where customer retention increased 25 percent noticed that customers who inspected his plant were very impressed with employees’ knowledge of their needs. Their favorable impressions convinced some of them to remain customers instead of taking their business elsewhere.

"Without WEP training, I don’t believe we would have the relationship we do with two key customers."

- Operations Manager,
Small Central-U.S. Metal Fabrication Company

A hotel manager who saw higher customer satisfaction in improved guest satisfaction scores and higher guest return rates, ascribed some of the improvement to ESL training which developed happier and therefore friendlier, and more communicative staff who interacted much better with customers.

As well as improved interaction with customers, WEP graduates are more likely to follow instructions properly with the result that customers are more likely to get correct orders, thereby increasing satisfaction and, ultimately customer retention. As one employer put it, " If we get the product out the door correctly packaged and labeled then it keeps the customer happy", and a happy customer tends to remain a loyal customer.

Skills gained through WEP training can build customer bases by improving product quality and delivery standards. For example, it has helped two electronics manufacturing companies in different cities pass their audits and gain ISO 9000 certification and win supplier awards. A large manufacturer of automotive systems measured a seven percent increase in the quality of work, which was reflected in fewer customer complaints about missing parts or inferior quality. The improvement increased customer retention.

"If you can sell a better quality product and you can deliver it on time and at a lower cost, you will retain clients. We have increased our market share because of all that. WEP factors in very directly."

- Assembly Department Manager
Large Northwestern Electronics Manufacturing Company

Overall, better employee skills lead to increased customer retention. When customers find that the quality of the employees they deal with is better, they gain confidence in their work and are more likely to continue their business relationship with the employer. The bottom-line impact is higher revenues from a larger customer group.

WEP training has increased employee retention in 40 percent of workplaces, according to employers. Rates have increased for both long-standing employees and new recruits. A follow-up study of participants in one company found that the WEP had a significant impact on the retention of all employees. Participants were 19-25 percent more likely to remain for one year than non-participants: 77-83 percent for participants versus 58 percent among non-participants. Retention of new hires was even higher: 70 percent of new hires who took WEP classes stayed with the company at least one year compared with only 23 percent of those who did not. Employers in other organizations typically reported that overall employee retention rose from 20 – 50 percent.

Improvements on this scale can have a major impact on the bottom line. Improving retention increases customer satisfaction due to better trained, more experienced and highly skilled employees doing high quality work and instilling customer confidence. Higher retention also means lower recruiting costs and lower initial training costs associated with preparing new hires to work effectively in their new job.

Offering WEP programs can enhance employee loyalty. In an agricultural produce company where job turnover among a highly transient workforce is 100 - 200% per year, retention has improved by 33 percent among employees offered WEP literacy programs because they feel more loyalty to the company, which has shown concern for them by funding the programs. WEP training also helps to increase employee retention because employees feel appreciated in their work.

"I believe that the training helps us to keep employees. I think that employees appreciate that we are offering the program. They tell their friends about the program."

- Human Resources Generalist,
Large Eastern Electronics Manufacturing Company

Greater trust also helps increase employee retention. For example, in a hotel that, in the early 1980s, had a high influx of employees from Cuba and Eastern Block countries who had a lot of difficulty trusting anyone, ESL training helped replace suspicions with trust, which increased retention.

"Most of the people going to WEP are still with us and we have gone through huge changes. WEP training gave them the confidence that they needed to stay and the tools to go to a different job."

- Instructor, Large Northeastern Medical Center

WEP training builds employee optimism about their career prospects within the organization that can stimulate them to stay in the job longer. A hospital manager noted that training increased retention among employees who saw the training as giving them skills that create opportunities for promotion and career advancement. Another employer noted that people they would have lost prior to WEPs stayed because they see a career track before them with potential for advancement.

In some workplaces, employers feel that a combination of changes have contributed to enhanced retention. One medium-sized electronics company that traditionally has lost many employees to big aerospace companies it supplies found that WEPs have cut the losses because employees better understand their job, see a viable career path, and gain more job satisfaction, all of which motivate them to stay with the company.

"As long as the company has positions for them to move into they will be part of the growth. Before, people use to be housekeepers or dishwasher of 20 years."

- Director of Human Resources,
Large Northwestern Hotel

"They were very motivated. Even students on vacation or out on sick leave often managed to come to class."

- Co-ordinator, Skills Enhancement Program,
Large Eastern Hospital

Training is such a valuable tool for enhancing employee retention that one employer, a medical center, uses the fact that it has WEP training in its recruitment brochure.

By supporting workplace education programs, employers create environments that are more appealing and satisfying to their employees. These improvements help differentiate them in a positive way from other employers who may be competing for new employees. As one vice-president of human resources of a manufacturing company operating in a region with two percent unemployment put it, "We want to be a better place to work so that it makes us stand out from the competitor down the street." Workplace education is so appealing that he uses it as a recruitment tool and features it in his recruiting materials. The company even allows spouses to join the WEP classes if there is room.

For employers like this, WEP courses enhance their corporate image as an employer of choice within the communities in which they operate. In conjunction with enhanced loyalty and retention among existing workers, WEP activities constitute a significant strategy for enhancing the skills and performance of employees. This, in turn, yields bottom-line benefits.

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Last updated: February 18, 2001 .