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
Percentage of
Employers Reporting
Bottom-Line Benefits
(n = 55)
Increased
Profitability
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:
-
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.
-
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
Better
Health and Safety Record
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.
Increased
Customer Retention
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.
Retention
of Employees
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.
Enhanced
Corporate Image/Employer of Choice/Improved Recruiting
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.
For
problems or questions regarding this web site contact campbell@conferenceboard.ca.
Last updated: February 18, 2001 . |