We recently stumbled upon this article by ABC News which was published last week. It’s about the benefits of workplace training, so obviously it turned up on our radar.
We didn’t just read the article, however, we also decided to delve into to hard facts and stats on the actual relationship between investment in staff training, and the overall benefits to the business. Read on below…
The current retail context
Times, as ever, are tough. Profit margins thin, consumers hard to please. The first thing we think when we fall upon hard times is to cut: cut your costs, save your money, have your business survive to turn a profit another day. And all businesses have one huge cost looming over them: staff.
It’s an obvious cost to cut.
Cut staff, cut costs?
Wage costs are humongous. The average retail worker is on $19.92 an hour. That may not be a whole lot to live on, but it’s a lot for a business to run on. $19.92 and hour x 8 hours a day = $159.36 a day. And it’s unlikely you can run a whole store just with one person on the floor, so you times that by 3 or 4, and suddenly you’re spending around $600 a day just keeping the lights on and the door open. And that’s just for a single, relatively small, retail store.
So it seems clear, you’re already spending a bunch of money on your staff, you don’t need to be spending any more money on them by investing in them; hiring more, training them, paying them above minimum wage. It’s too much. I mean, staff aren’t what makes you money, it’s selling that makes the money. If you could run the business purely by automation, you would.
Is it the right cost to cut?
The problem with cutting staff is the customer: if a person has walked into a physical store, then they are expecting human interaction. This is the information age, if you don’t want to speak or interact with anyone, you don’t have to. Everything ever known to man fits in that blue screen staring back at you. You buy, quite literally, anything online. If someone has come to your store, they’re not just shopping, they’re looking for a person to assist them with that shopping.
In the day of digital, it’s not about online or physical stores winning out, it’s about utilising the particular affordances of each. Online shopping has convenience and vastness of choice, physical stores have people.
Just because the information is out there, doesn’t mean you know how to find it; what combination of words or phrases to plug into google. You may not even know exactly what you’re looking for, or how to tell if you’ve found what you’re looking for. This is where physical stores win out: it takes away this pain point for customers. Instead of trolling through pages of reviews and specifications, someone can just walk in and ask for help. Help finding not only the best product, but the best product for them.
But if your staff can’t help the customer, their purpose is severely limited. In short: it’s not enough just to have retail assistants, they need to have the skills to assist the customer.
This is why we shouldn’t be cutting staff, we should be investing in them.
The benefits of investing in your staff
You’ve got to spend money to make money. It’s not just how a gambler justifies his debts, investment is how a business grows.
Now let’s speak in the language of business: cold hard stats. If you look at the figures, you’ll see that staff training isn’t an enterprise designed to increase costs, if done right, it can actually reduce costs overall:
- - The American Society for Training Development conducted a study which showed that investing an extra $680 in training and development per employee generates an average of a six percent increase in the businesses total shareholder return, per year. So this means that investing in staff training increases the value of the entire business.
- According to a study done by Oxford economics, the average cost of hiring a new staff member is upwards of $30, 000. What’s worse, 40% of staff who don’t receive adequate training leave their job within the first year. In this way, the numbers suggest that cutting costs in the short-term, increases your costs in the long-run.
- A study conducted by IBM reported a 16% increase in customer satisfaction where companies implemented learning technology. They also reported that increasing the skill level of employees resulted in an average of $70,000 in annual business savings, and a 10% increase in overall productivity.
If you look at all of this in context it’s simple: staff training isn’t a cost, it’s an investment. Staff aren’t a cost to be cut, but a resource to be utilised. If retail stores are going to survive in the digital age, it’s not going to be because they’ve whittled their costs down to none; it’s impossible. The only way to survive is to utilise the affordances of physical stores. And what do physical stores have that can’t be replicated online? Staff. Human staff, here to serve the customer.