There are a host of reasons why it makes sense for an organization to invest in the development of its existing talent. Perhaps the most persuasive argument is that it costs a lot more—some estimates put it at as much as 150 percent of an employee’s annual salary—to recruit new talent than it does to develop existing employees. The costs of recruiting a new employee include selection costs such as interviewing, reference checks, drug testing, on-the-job training, etc.
Investing in talent development is vital for employers because it directly affects employee retention, motivation, engagement, and productivity. Talent development investment reduces staff turnover because employees are more engaged and satisfied with their jobs and are less likely to leave the organization. Millennial employees, in particular, are interested in learning and have indicated that they are likely to look elsewhere if their employers fail to give them opportunities to learn and acquire new skills (See UNC white paper: Managing the Multigenerational Workplace).
The cost of turnover and its link to talent development investment should not be overlooked. While there are physical costs involved with turnover, like separation processing costs, overtime, the hiring of search firms and temporary agencies, there are also hidden costs. These hidden costs include lower productivity, lower employee morale, overburdened employees, lost knowledge, and training costs. These real and hidden costs of employee turnover can be significantly minimized when employers invest in their existing talent.
Take a moment and read our research on the topic in our white paper titled The ROI of Talent Development.