Why Training is a “Must Have,” not a “Nice to Have”

• October 17, 2019

Most business leaders know that effective training builds more consistent performance among employees, improves customer service, reduces the amount of time that managers spend training new employees, and provides other benefits that impact the bottom line.

But do those same businesspeople also understand just how much a company’s overall profitability will grow when a comprehensive program of training is put into action? In many cases, they don’t. Here’s a case study that gives some food for thought for companies that would like to quickly realize significant improvements in their bottom line.

Case Study: A Restaurant Chain You Know

Several years ago, a major national restaurant chain hired Tortal Training to perform a comprehensive analysis of their training programs for new hires and front-line employees. Before working with Tortal, most training there was being delivered by restaurant managers who had to take time away from their other duties to conduct one-on-one training or run training classes.

Tortal designed and implemented a comprehensive eLearning program. One year after the program began, profits had already increased in dramatic ways:

• At restaurants where 80% of employees had completed the eLearning training, overall business had increased by 4%.
• At restaurants where 50% or fewer of the employees had completed the training, business had increased too, but by 1.4%.

Now let’s crunch some numbers. Each of those restaurants does about $2 million of business every year. So using that as a baseline, we see that restaurants that had generated 4% more business had made $16,000 more in just one year. In contrast, the restaurants that had achieved 1.4% growth had generated $2,800 in more business.

If you roll out those numbers further, you will see that over a five-year period, the restaurants that trained 80% of their employees would see an increase of $80,000 in new business, compared to $14,000 in companies that had trained 50% of their workers. But in reality, the revised training would generate even a bigger ROI, because:

• Business growth is cumulative. Even if a business grows at a rate of 4% every year, that percentage is built on a bigger profit base. So even if the growth rate holds steady, the number of new dollars earned each year will increase.
• More efficient operations lead to greater profits and growth.In a restaurant setting, managers who are freed from training responsibilities can invest more of their time running their restaurants. The same principle applies in most businesses. And as we know, better-trained employees are more efficient, sell more, and generate increased profits.
• Retention rates among well-trained employees have been proven to be higher than for employees who are not well-trained.And as every company executive knows, the cost of hiring and training new employees is very high.

Training is a “Must Have,” not a “Nice to Have”

How much would your company’s profits increase if you were able to increase your annual business by 2%, 4%, 6% or more, and then keep building on those gains? If you don’t crunch the numbers, you could underestimate just how big the impact will be on your bottom line. But after you take out a pencil and paper and add things up, you will see that better training has the power to dramatically increase profits in both the short and long term.