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Business owners often must make difficult decisions regarding how and where to invest their time and resources. The end goal is usually to increase profitability and efficiency while reducing friction, bottlenecks, and problems in general. Although there are many good investments a business leader can make, one of the best is employee development. In this blog, we will break down all the key reasons why you should strongly prioritize investing in your staff if you are a business leader.
1. Employees are the Future of the Company
If you want your company to have a bright future, you need to focus on developing your staff because your staff is the company's future. The better trained, more efficient, and more skilled your staff is, the better that your employees will perform. This is true all the way from administrative assistants and receptionists up to managers and executives. Developing your staff can mean investing in training programs, providing tuition assistance, giving them mentoring, etc.
When you invest in your staff, you create promotable employees. Promoting from within the company can be ideal because they already know the ins and outs of the company. Ideally, your employees will also be good culture fits. If you spend the resources to invest in your staff, you can strengthen your internal talent pipeline, which will set your company up for long-term success and make the process of finding talent for vacant roles much easier.
2. It will Help You to Retain Your Top Talent
The last thing you want as a business owner is for your top talent to leave your company. This is because your most talented employees help your company bring in revenue and operate at its highest level. Employees are significantly more likely to stay at your company if you invest in them.
In fact, according to one study, 93% of employees reported that they would stay at a company longer if the company invested in their careers. It makes sense that this would be the case because if employees feel that they can advance their careers within their own company, then they will not have as much incentive to leave in order to move up in their industry. Keeping hold of your top talent is ideal because it will keep your company strong and prevent employees from moving to your competitors, which could potentially strengthen your competition.
3. It Saves You Money
On average, it will cost you ½ to 2 times an employee's annual salary to replace them if they leave the company. This is extremely expensive, and if you can avoid dealing with these costs, you will be better off. This is also a conservative estimate. It commonly costs more than this in most cases.
Investing in your staff can help you save money on these costs because if you invest in your team, they are more likely to perform better and less likely to leave the company. This means that your turnover and firing rates will be lower. In turn, this means that you will not have to spend as much money replacing employees. You save roughly 1-2 times their annual salary for every employee you do not have to replace.
4. It Keeps Employees Engaged
Your employees will feel more engaged if they believe that your company is investing in them. Investment creates loyalty and excitement, which in turn helps to boost engagement. Employees tend to become more interested in their work and the company when they feel that the company shows a lot of interest and appreciation for them.
On the other side of the equation, if employees believe that the company, they work for is showing no interest in them, they are likely to become bored, withdrawn, and disengaged from their work. These things can all lead to higher turnover rates, lower employee morale, and more stress for the business owners.
There are many employee engagement statistics that business owners need to be aware of. Here are some of the most important of these:
Companies with high employee engagement are 21% more profitable
Employee engagement reduces employee absenteeism by 41%
Low employee engagement costs businesses $450-$500 million every year
Because employee engagement has so many significant benefits and is so costly if you do not, you should strongly consider boosting employee engagement by investing more in your employees.
5. It Will Help You to Attract Top Talent
Investing in your employees is not just good for them, but it is one of the best ways to attract new talent. Prospective employees also highly value and benefit a lot from investment. If you invest in your employees and provide them with additional training, education, and resources, word will get out to people looking for jobs in your industry.
You should not just think of your employees as employees, you should also think of them as brand ambassadors. This is because people talk to each other, and employees also commonly leave reviews on sites like Glassdoor.com. In these reviews, employees will often be extremely blunt about how they feel the company treats them. So, if you treat your employees well and invest in them, they are much more likely to leave positive reviews than negative.
The more favorable that your company’s reputation is amongst prospective employees, the easier it will be for you to attract top talent in addition to being able to retain it. This is because most people naturally want to work for a company that will provide them with additional training and educational opportunities so that it is easier for them to advance their careers.
Conclusion
Properly investing in your employees might seem stressful, complex, or even overwhelming. Still, the truth is that it will save you money and stress while increasing revenue and profitability.
By investing in your employees, you can turn them from people who are just showing up every day, punching the clock into enthusiastic and passionate workers who share your vision and are eager to work their way up through your organization.
Since you are going to have to fill positions periodically at your company, you might as well turn your existing employees into highly promotable professionals who are constantly improving their skills and knowledge base.
When investing in your employees, a little investment can go a long way and generate significant ROI. This is because even if you can improve your employees’ skills by a small margin, this will help them do their jobs better, feel more appreciated by the company, and enjoy showing up to work more every day. For some employees, there is a good chance that feeling cared about can make the difference between staying at your company and working hard for many years or going to your competitor. It is better to keep talented hard workers at your business.
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About the Author
Ellie is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.
A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.
Ellie is the host of REady2Scale, a podcast that highlights the assets, processes, and strategies for the multiple approaches to successful real estate investing.
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can read more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.