North American businesses spent $167 billion on learning and development last year. More and more leaders are understanding the value of investing in talent, and the industry has seen remarkable growth over the last decade.
But the market is still evolving. The 2020 LinkedIn Learning Report identified a shift in the way companies are budgeting for L&D. For the first time, traditional training budgets are expected to decrease, while online learning budgets continue to increase.
That’s because traditional training methods aren’t working, and the data backs that up over and over again:
- 80 percent of CEOs cite lack of key skills as a serious threat to their growth. (Degreed+Harvard Business Publishing)
- Only one in five workers, managers, and leaders are “promoters” of their learning and development efforts. (Degreed+Harvard Business Publishing)
- The hidden costs of critical skills gaps—and the burden they place on HR and recruitment—add up to an average of nearly a million dollars per year. (CareerBuilder)
- 54 percent of companies have no programs in place to build the skills of the future. (Deloitte 2019 Human Capital Trends)
It’s clear that the status quo isn’t enough. So what can organizations do to get ahead in learning and development?
Forward-thinking organizations and leaders are approaching this like a business problem.
- What problem am I trying to solve? They’re considering the particular skills gap they want to close.
- What solutions exist? They’re looking outside the traditional offerings that have proven ineffective and searching for innovative platforms that drive clear skills growth and behavior change.
- Assuming I can solve the problem, “What’s the ROI?” They want evidence the results will be greater than the investment.
Savvy leaders keep these questions in mind with every business decision. When it comes to learning and development, however, that return on investment (ROI) has traditionally been all but impossible to measure, because training sessions tend to be highly theoretical and the contents highly subjective. The typical ROI measurement is little more than a participant satisfaction survey after the event. Naturally, when it’s hard to see the return, it’s difficult to justify the spend.
But there’s one area of learning and development that today’s businesses can’t afford not to invest in: communication. And there are two reasons for that.
First, Communication Is the Core Activity Of Work
Communication takes up more of our working hours than any other activity, and it’s the number-one skill recruiters are looking for in new hires. And yet, it’s also the most difficult skill to find. Research notes a significant gap between the communication skills required for businesses to be successful and the skills current and potential employees possess.
Fortunately, training for this critical skill at every level of the organization is both more affordable and more effective than ever before, thanks to the availability of communication skills platforms built to provide world-class, personalized training in today’s digital-first world.
Second, Communication Effectiveness Can Be Directly Tied to Organizational Performance
Peter Drucker famously said, “If you can't measure it, you can't improve it.” Fortunately, communication is a skill we can measure, and therefore tie to organizational performance.
The ROI of Great Communication
We can start on a macro level. Research from Towers Watson has found two key reasons for businesses to invest heavily in communication:
- Businesses with highly effective communicators have a 47 percent higher total return to shareholders compared to companies with the least effective communicators
- Businesses with strong communication practices are 3.5 times more likely to significantly outperform industry peers than businesses with less effective practices.
But these global benefits aren’t all there is to it. Exceptional communication drives organizational performance returns in every facet of business operations and at every level on the org chart, including productivity, people, and revenue.
Consider the time we waste communicating inefficiently, as individuals and as collectives. If you’ve ever sat in a meeting or a conference call and listened to two or three team members talking in circles for what seems like ages, you’ve got anecdotal evidence. But there’s research to back you up: Studies have shown that organizations spend 15 percent of their collective time in meetings, with the senior manager typically spending a whopping 50 percent of her workday—you guessed it—in meetings.
And when those meetings aren’t going well—or when communication in general is lacking—it’s not just a source of frustration but a significant waste of resources. Research shows that businesses as small as 100 employees spend, on average, 17 hours a week clarifying previous communication, which translates to an annual cost of at least $525,000, or $5,250 per employee per year.
If businesses can learn to communicate more clearly and efficiently—from the c-suite to the intern desk—they can not only gain back valuable time to put toward activities that grow the business, but they can also save significant resources simply by preventing misunderstandings.
Stronger Talent Management
From a talent perspective, there are two areas in which we see significant ROI from an investment in communication skills.
The first is recruitment. Or, rather, lack of recruitment. We know hiring a new employee comes at a high cost—often as much as nine months of that employee’s annual salary. When businesses invest in helping their employees develop the skills they need to grow professionally, they position themselves more effectively to promote from within, saving significant costs on recruitment and training.
The second area is employee engagement. This investment in professional development demonstrates to employees that their employer values them and is dedicated to their growth, encouraging loyalty to the organization and reducing turnover.
Additionally, at a higher level, when business leaders know how to communicate effectively, they can build trust and confidence with employees and encourage their teams to become personally invested in the company mission. This, again, minimizes turnover and leads to higher quality work from fulfilled employees.
Let’s face it: it doesn’t matter how innovative a product is or how revolutionary a service. If the sales team can’t communicate its value, then the product or service won’t sell. Sales—and, more importantly, long-term customer relationships—are built on a foundation of trust that is developed through effective communication.
When a sales representative can clearly and effectively show potential customers how the business’s products or services are going to solve their unique problems, that rep can close more deals, more quickly than a rep who struggles to communicate the value in a way that resonates with the prospect. So, when businesses invest in training their sales representatives to communicate effectively with prospects, that investment will be repaid significantly in increased sales.
Harnessing the ROI of Communication Skills Development
With enhanced communication driving growth in nearly every facet of a business, investing in employees’ softer skills seems like a no-brainer. But how can companies track the ROI on a “soft skill” like communication? At Quantified, we’ve applied hard science to this skill that’s traditionally been considered more of an art or a natural talent, empowering our platform’s users to measure their skills and track their growth over time—with hard data rather than mere subjective feedback.
Once you start mapping that measurable communication growth to your key business outcomes, we’d be willing to bet you’ll see the kind of ROI your business and its investors are looking for.
Quantified Communications is bringing the ROI to L&D and helping businesses grow their bottom line by improving employees’ and leaders’ communication skills. To learn how we can help your organization develop world-class communicators, request a demo, and one of our experts will walk you through our platform and process.