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The cost of poor learning and development on the UK’s productivity

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Learning and development has held the centre stage of HR conversations for years, but now its importance is becoming ever more apparent as the workforce alters and situations shift.

27th Jun 2022
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While countless hours and pounds have been invested in enhancing L&D strategies, there is still a gap between where businesses believe their efforts have gotten them, and the reality of the situation. At the end of the day, the process and planning stages become obsolete if results don’t come to fruition. 

The cost of failing to deliver on L&D promises can be high, and if strategies are being built upon rocky foundations, then organisations will struggle to maintain structure. Capita Learning commissioned a report with Norstat, polling 1,500 office workers and 1,000 HR decision makers (DMs), to get to the bottom of the L&D gap, and examine the true cost of poor results. 

Without a sturdy foundation, employees begin to question the commitment of their organisation, with some feeling forced to jump ship in search of greater opportunities

Attrition rates, recruitment, and business growth

One of the most concerning results of Capita’s study is that a mere 28% of HR DMs and 25% of employees believe their business offers a strong learning culture, aimed at driving continuous growth and development.

Without this sturdy foundation, employees begin to question the commitment of their organisation, with some feeling forced to jump ship in search of greater opportunities. In 2021, we witnessed a mass movement of this nature, in what economists called ‘The Great Resignation.’ Spurred on by the pandemic and the changing workforce, people around the world began to re-evaluate their priorities when it came to ways of working. 

Needless to say, if business L&D efforts weren’t up to employee expectations, it would simply fuel their decisions to leave. Capita’s study showed that 32% of respondents believed poor L&D resulted in increased attrition rates.

To make matters worse, there is a circling belief that these shortcomings are also a contributing factor to restricted business growth, which – in the long run – will be far more costly for an organisation than the initial investment in L&D initiatives. 

Increasing expenses 

There are several hidden costs associated with poor L&D initiatives, and it doesn’t take much for the total figure to skyrocket. If we take Glassdoor’s verdict that the average employer spends roughly £3,000 and 27.5 days to hire a new worker, combined with the 14% increase in attrition rates and labour force figures of 28.3 million, we’ve calculated that poor L&D costs the UK economy around £2.43 billion in rehiring costs.  

And while the estimated productivity loss is almost 2 GDP/hour, we can determine that the overall impact is far more substantial. And unless this reality is addressed, we can expect this figure to grow – especially in the face of frequent technology deployment. 

Upskilling staff to manage the flow of technology 

A significant part of modern L&D initiatives is offering employees training for new technologies and processes being brought into the business. However, traditional approaches of hauling workers out of their daily routines to sit through hours of mind-numbing training sessions no longer hit the mark. Disruption and productivity do not go hand in hand. 

But businesses need to act. The skills gap across industries continues to kick up challenges, and only by deploying a learning-based approach to employee upskilling and tech adoption will organisations overcome the constant flow of problems.

Innovative tech solutions, like AI and robotics, are transforming ways of working and internal processes at a rapid pace, so employees must be given the means to educate themselves and partake in further learning opportunities to develop their current skill set. A failure to do so will only result in a decrease in productivity – which is already a significant risk given that less than a quarter of HR DMs believe their workforce is empowered to benefit from incoming technology.

Furthermore, only 28% of employees believe they will be supported in all reskilling required to meet the needs of their jobs. We, therefore, urge organisations to turn their gaze inwards and open a discussion about ways to improve their L&D efforts so that all demands of the modern landscape are addressed. 

Employees need to feel empowered to own their personal development, but with the confidence provided by a culture founded on learning

Increase efforts, lower the cost 

In such a volatile climate, organisations cannot risk incurring unnecessary costs for something so critical as L&D. The initial price of enhancing strategies is nothing compared to the accumulative cost of increasing attrition rates, rehiring efforts, and dips in productivity. 

Capita’s study supports the notion that effective L&D initiatives are founded on relevance, breadth, and culture. All strategies must be tailored to specific business requirements and offer the necessary upskilling opportunities to all employees. And as productivity is one of the main foundations of business success, organisations cannot afford to let rates slip as a result of poor L&D. 

Employees need to feel empowered to own their personal development, but with the confidence provided by a culture founded on learning. If the workforce feels motivated, then businesses profit from their general productivity boost.

Interested in this topic? Read Isn't it time we rethought 'learning culture'?

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