The cost of maintaining employees at less than full proficiency are much higher than you think.
Here’s an example:
A company runs a call centre with 200 employees. Turnover has been higher since COVID, so they are losing employees more rapidly. They have a training program that involves 4 weeks of classroom and on-line training courses. Then the new employees start working in the call centre. They rely on the proximity of nearby employees to help them when they can’t answer a question.
However, not all their employees are fully proficient. In fact, managers estimate that their average proficiency is about 70%. Employees with the most experience tend to be the most knowledgeable. So the length of time with the company tends to correlate with the higher performers.
They figure it takes an average of three years before someone really gets good at the job.
This means that the company is paying salaries to 200 people for three years to reach an average proficiency of 70%. When you estimate that time in cost, it works out that 3 years salary X 200 people. If the average salary is $40K, it costs the company $8 million a year for 3 years, or $24 million to train people to be two-thirds proficient on their job. Much of that time they are operating at less than 50% proficiency.
What this proficiency gap means is that errors are occurring due to lack of experience and proper preparation. Errors are costly to the company, both in terms of direct costs and the opportunity costs of losing customers to a competitor with better service. They are also probably experiencing highly variable results from agent to agent.
What would happen if you designed a better training program that got them up to 100% proficiency in 6-8 months? Let’s look at the impact of this. The company would save 29 months of salary time in getting their employees up to speed. For 200 people, that’s a savings of $19.3 M, 80% of their costs.
They would also experience the early and sustained impact of all employees performing at 100% proficiency, not 70%, and getting the value of the results of that performance. This in itself can be a larger figure than the salary costs, depending on what the job involves and its impact on sales and revenue. Employee retention usually increases because high performing cultures tend to do this. They would also probably increase employee attraction because they now have a proven track record for developing employee skills.
Now imagine this company was a national or international company had 2,000 or 20,000 employees in some division performing a similar function. The numbers add up here by adding 0’s to both costs and potential returns.
But what is this better training program? We all know it’s pretty hard to measure performance from courses.
But everything changes when the training is a Velocified development path designed for a particular job. This custom path contains an optimized array of learning and performance activities and measures at each stage of the process. It’s designed to take a new person or someone moving into that job from another department to 100% proficiency in the shortest possible time. This does not happen with hope and a few courses.
It happens with the attention and precision designed into the Velocified path. Most learning and skills development happen on the job, rather than in a classroom. Experience is the best way to practice and reinforce. By contrast, training courses where learning is not immediately put to use can be a waste of effort.
Interested in learning where your best cost-savings opportunities are? Arrange a complimentary Velocified Strategy Session and find out.