A new research report by DeakinCo. in partnership with Deloitte Access Economics, reveals why L&D should be a strategic priority for every Australian business, and the significant revenue gains associated with investing in L&D.
Key findings:
- Every $1 invested in Learning & Development (L&D) per employee is associated with an additional $4.70 in business revenue per employee on average
- Leading L&D organisations reported an average attrition rate of 14 per cent, compared to almost 25 per cent for organisations at the other end of the spectrum – 1.8 times greater
- 87 per cent of businesses in Australia could do more to improve their L&D, with just 13 per cent of businesses found to be leaders in the space
- 74 per cent of businesses agree L&D became more of an organisational priority due to COVID-19
- Investment in L&D is growing, with businesses expecting the amount of training to increase by 19 per cent on average this year compared to pre-COVID levels
Download the full report from the DeakinCo. website.
Beyond the significant financial benefits, L&D is proven to drive productivity, increase loyalty, staff retention, and help businesses tackle major challenges like rapid digitalisation and skill gaps.
Despite this strong case for L&D, the report found 87 per cent of businesses in Australia could do much more, with only 13 per cent classified as Advanced Learning Organisations – those at the forefront of investing skills and knowledge in their people.
While most businesses recognise the benefits of L&D, more than half want better evidence of the benefits of training for organisational performance- revealing a significant lack of understanding into the quantifiable benefits of L&D activities.
Of the 68 per cent of businesses who report they track L&D-related outcomes, the majority measure their ROI through employee satisfaction surveys or changes in productivity. Meanwhile, only one third of businesses report tracking returns to L&D through financial metrics. This suggests most businesses lack the necessary information about their programs’ efficacy to properly capitalise on the benefits of L&D.
Glenn Campbell, CEO of DeakinCo. said, “Until now, measuring L&D performance has been a guessing game for too many businesses. Our research very clearly demonstrates the financial benefits of L&D and we hope businesses can now feel more confident investing in their people knowing that every $1 invested translates to an additional $4.70 in business revenue per employee.
“What’s more, investing in L&D leads to better staff retention. Advanced learning organisations report an average attrition rate of 14 per cent, compared to almost 25 per cent for ‘Laggard’ organisations. In the context of the major skills shortages Australia is currently experiencing, this is an obvious opportunity for businesses who want to retain talent and tackle skills gaps.
“Skills shortages are here to stay, and Australian businesses need to take action. L&D will help to counteract this challenge – not only by improving employee innovation and productivity, but also by preparing businesses for the future state of work.”
David Rumbens, Partner Deloitte Access Economics said, “In 2022, Australian businesses rate ‘securing and retaining talent’ as their number one business risk. What better time therefore to invest in L&D for their own staff? As well as the productivity payoff, it’s a very visible signal of giving back to employees. We know that L&D strengthens employee engagement with a business – organisations who don’t focus on L&D have an attrition rate of nearly double that of advanced learning organisations.”
KEY INSIGHTS OF THE REPORT INCLUDE:
Rapid digitalisation and labour shortages increase urgency for L&D
The onset of COVID-19 accelerated the rapid digitalisation that Australian businesses were already grappling with, and this challenge has been compounded by skilled labour shortages. In fact, Australia’s Digital Economy Strategy 2030 notes the country vaulted five years forward in both consumer and business digital adoption in just two months of the pandemic.
Businesses divided between hiring and upskilling existing staff
When asked how they planned to fill skills gaps within their organisation, most businesses were split between hiring new people, and upskilling existing staff. Across the top five skills gaps – adaptability and flexibility, customer service, critical thinking and problem-solving, data analysis and digital literacy – 39 per cent of organisations plan to upskill staff, while 27 per cent intend to hire new people to fill these gaps.
A big perception gap exists
Only 13 per cent of businesses in Australia can be classified as Advanced Learning organisations – those at the forefront of investing skills and knowledge in their people. Of the 87 per cent who were not Advanced, 9 per cent were classified as Laggards, 36 per cent as Beginners, and 42 per cent as Intermediate. However, when asked to self-identify their L&D status, over 90 per cent of businesses believe they are learning organisations; indicating a significant disconnect between businesses perception of their L&D activity and reality.
Investment in L&D is growing
Despite this widespread perception and knowledge gap, the future is looking brighter for L&D; with businesses expecting the amount of training they will deliver to increase by 19 per cent on average this year compared to pre-COVID levels. And when it comes to the industries that plan to invest the most, retail and aged care come out on top.
Incentives and barriers for L&D
Given the demonstrated advantages of L&D, it is interesting to consider the factors which would incentivise businesses to undertake more training. Indeed, only 3 per cent of surveyed businesses cited that nothing would incentivise them to conduct further training. The largest incentive identified was training being relevant to current and emerging technologies (54 per cent) with increasing digitalisation and automation likely the propellant for this incentive. Many businesses were able to recognise the value of training for employee productivity, upskilling, and retaining current employees.
