Investing in Training for Sustainable Growth

The risks of workforce skill shortages

A report by the UK Government's Department for Business, Innovation and Skills highlights that around 20% of job vacancies are due to skill shortages. And according to the Confederation of British Industry (CBI), 77% of businesses believe access to skills threatens the UK’s current labour market competitiveness.   These figures underscore the urgent need for targeted employee training programs to equip the workforce with the necessary skills to meet current and future job demands. Failure to address these gaps can lead to several detrimental outcomes:

• Reduced Productivity: An underskilled workforce can significantly hamper productivity. Workers may struggle to perform tasks efficiently, leading to delays and increased operational costs.  The Office for National Statistics (ONS) reports that UK productivity has been stagnant since 2008, and inadequate investment in training and the development of skills have been a major contributing factor.

• Lower Innovation: Innovation is the lifeblood of business growth, yet a workforce lacking in up-to-date skills and knowledge is less likely to contribute innovative ideas and solutions.  The Government's UK Innovation Survey 2023’ indicates that companies investing in employee training are 33% more likely to introduce product innovations.

• Increased Turnover: Employees who feel underskilled or unsupported in their career development are more likely to seek opportunities elsewhere (in fact, according to LinkedIn a whopping 94% would)! And we all know that high turnover rates are not only costly, they also disrupt business operations.

• Customer Dissatisfaction: Poorly trained employees may deliver subpar customer service, leading not just to dissatisfaction, but also a loss of business.  Research by PwC shows that 73% of consumers say customer experience is an important factor in their purchasing decisions and one in three (32%) would walk away from a brand they love after just one bad experience.

Multiple benefits of investing in employee training

Take heart - investing in employee training is not just a necessity, it also creates a strategic advantage. The benefits of a well-trained workforce are extensive and can lead to enhanced business performance and sustainable growth.  Research by the Association for Talent Development (ATD)  shown that companies offering comprehensive employee training programs have a whopping 218% higher income per employee than those with less comprehensive training. Additionally, the ATD also found that companies that invest in training enjoy a 24% higher profit margin than those that spend less on training.

• Enhanced Productivity and Efficiency: Training quite simply equips employees with the latest skills and knowledge, enabling them to perform their tasks more efficiently and effectively.  A study by the National Institute of Adult Continuing Education (NIACE) found that workplace training can increase productivity by up to 50%. 

• Increased Employee Engagement and Retention: The CIPD reports that companies with strong learning cultures have the best employee engagement and retention rates.  Keeping your employees engaged and satisfied with their jobs with regular training and development opportunities leads to higher retention rates and reduced recruitment costs.  Great engagement also leads to increased profitability - up to 21% according to a Gallup report on employee engagement, that’s a huge addition to annual revenue….

• Fostering Innovation: There’s no doubt that training programs encourage a culture of continuous learning and innovation. And people are much more likely to contribute creative ideas and solutions when they feel confident in their skills.  According to the government's UK Innovation Survey, (UKIS) organisations that invest in training are 10% more likely to innovate, but sadly the report showed a significant decrease in businesses that were “innovation active”, which means that any organisation that has continued to invest in training and innovation is currently enjoying an increasing competitive advantage.

• Improved Customer Satisfaction: Well trained employees provide better customer service, leading to increased customer satisfaction and loyalty.  Studies on the costs of attracting and retaining customers have shown that training pays for itself; as investing in new customers is between 5 and 25 times more expensive than retaining existing ones, and increasing customer retention rates by just 5% can increase profits by between 25% and 95%.  Salesforce research has also shown that if a company's customer service is excellent, 78% of consumers will do business with them again following a mistake.  Whereas a study by American Express found that 78% of consumers have not made an intended purchase because of poor service experience.

Government initiatives to invest in training and workforce development

These are just some of the factors that have led the UK government to prioritise the critical need for workforce development and bridge the skills gaps. One of the most notable is the Skills for Sustainable Growth strategy, which emphasises the importance of skills training for economic recovery and growth.

Key Training Initiatives:

Skills England: Aims to create new jobs and invest in high-quality training and development. Focused on building a skilled workforce that can meet modern demands.

Apprenticeship Levy: Introduced to encourage employers to invest in apprenticeship programs

National Retraining Scheme: Designed to help adults whose jobs are at risk of automation gain new skills and transition into new careers.

The path forward

For business owners and managers, the message is clear: investing in training and development is not simply beneficial - but essential for sustainable growth. A skilled workforce drives productivity, fosters innovation, enhances customer satisfaction, and boosts employee engagement and retention. By addressing the skills gap through targeted training programs, businesses can not only survive but thrive in an increasingly competitive and dynamic market.

As the UK government continues to support workforce development through initiatives like Skills England and the Apprenticeship Levy, businesses have a unique opportunity to leverage these resources and build a robust, skilled workforce. The benefits of training far outweigh the costs, making it a strategic investment that pays dividends in the long run.

For more information on how Skilltec can help your organisation with comprehensive training programs, visit our training courses page or contact us. Together, we can ensure that your workforce is equipped with the skills needed to succeed, innovate and grow.