How to leverage professional development to become a more profitable organization

Employee professional development is crucial if your organization wants to be competitive and profitable. While professional development ensures your employees can learn and grow, it also has significant benefits for your organization.

The more opportunities employees have to grow, the more they can improve their efficiency and productivity, leading to more effective ways of working, more innovation, and an overall happier and more satisfied workforce. Ultimately, this will contribute to your organization being more profitable.

Accordingly, we’ll explore how your organization can leverage personal development to become more profitable, including how professional development improves performance and how you can better understand learning ROI.

How can you understand the value of professional development?

The value of professional development can’t be overstated. Providing your employees with the tools, resources, and time they need to develop may come at a cost, but ROI for learning and development can be substantial.

Consider the following points to see  how much value professional development holds:

• It provides your employees with new skills and knowledge that align with both their goals and the goals of your organization.
• It improves the performance of employees across your organization.
• It creates a culture of learning and development.
• It showcases that your organization values its employees. 
• It offers you more opportunities for career advancement and internal mobility, thereby reducing the need for expensive and lengthy recruitment processes.
• Adopting a growth mindset motivates employees to proactively develop themselves.
• It improves employee engagement.
• It improves your organization’s flexibility and adaptability.

How does developing your employees allow your organization to become more profitable?

Professional development has numerous benefits for both employees and your business. To summarize, the benefits for employees include:

• Improves performance
• Improves efficiency and productivity
• Improves morale, job satisfaction, and wellbeing
• Improves confidence
• Offers more opportunities for progression

Further, business benefits include: 

• Ensures your business can adapt to a fast-paced landscape
• Improves teamwork and collaboration
• Ensures more creativity and innovation
• Allows your business to offer new products and services
• Allows your business to recruit and retain top industry talent

As such, the benefits of professional development lead to both lower costs and higher revenue, meaning your organization can become more competitive, more successful, and more profitable.

How does workplace learning improve performance?

The more an employee knows and the more refined their skills are, the better they’ll perform.

In 2019, the International Journal of Business and Management Research found that 90% of employees agree or strongly agree that training and development programs improve their job performance. Similarly, a 2023 report from LinkedIn revealed that 94% of employees would stay with their employer longer if they invested in their development.

It’s hard to argue with stats like these. When businesses offer their employees more opportunities to develop, employees feel more valued, more confident and are less likely to seek roles elsewhere. As a result, employees will use their continued progression and skills to deliver better results and reduce costs.

How do you calculate learning ROI?

Highlighting that training leads to better performance is one thing, but how do you calculate the ROI of your learning and development program?

The quick answer is to work out the percentage using a simple calculation:

ROI = (total benefits - total costs) / cost of learning * 100

For example, if you work out that your training has directly led to $5,000 of additional revenue off the back of training that cost $3,000, it would work out as this:

(5,000 - 3,000) / 3,000 * 100 = 67%

As a result, you could work out that the return on investment was 67%.

However, the ROI of training goes way beyond this simple calculation. The following points should also be considered when measuring the true ROI of your professional development program:

• Set clear and measurable objectives beyond revenue, such as customer satisfaction scores, average order value, and timescales.
• The impact on retention and the money saved on recruitment. A study found that hiring an employee costs an average of $7,645.
• Establish business-wide KPIs, such as conversion rates. 
• Collate and organize relevant data regularly to ensure you can refine training strategies where necessary.
• Calculate wider development costs, such as materials, time, and technology.
• Consider the cost-saving benefits, including increased innovation and productivity.

For further reading, check out our blog posts on how to calculate the ROI of your LMS and improving ROI metrics to showcase L&D’s value.

Why measure the ROI of training?

It can be easy to assume that all types of training will positively impact employee performance, but this might not always be the case. As we’ve highlighted, your employee development strategy must align with the overall goals of your business. If it doesn’t, you may be upskilling employees in areas that don’t directly impact their performance in the relevant areas. As such, your ROI will suffer. 

Additionally, measuring the ROI of training increases transparency, which allows you to adjust your learning and development program to benefit employees and your business.

What’s more, personalized learning at scale is a vital part of creating an effective L&D strategy. That way, your employees will be more engaged, and your business can improve in different ways that drive continued success. Having data that demonstrates the impact and ROI of training justifies this crucial investment and ensures continued cooperation with key stakeholders.

How Go1 helps

At Go1, we work with leading learning providers to offer a vast library of online courses that you can utilize as part of your learning and development strategy.

Download our 50 tips for increasing L&D business value, or speak to one of our experts today to find out how we can help your organization build a culture of learning.