While most businesses are now acknowledging the benefits of Training and Development to business performance, the attitude shift is yet to reflect in bigger budgetary allocations to Training and Development. As our contribution to this shift we present the business case for training and skills development.
Business Case for Training and Skills Development
The positive attitude shift towards Training and Development largely comes from business embracing the Triple Bottom-line Value Creation Model, which identifies the following Key Business Performance Indicators as Outputs.
- Financial Performance
- Social Performance
- Environmental Performance
As well as the 6 Capitals as inputs of business processes of;
- Financial Capital
- Manufactured Capital
- Intellectual Capital
- Human Capital
- Human and Relationships Capital
- Natural Capital
Clearly, the human factor is critical at both business inputs as well as outputs level. In light of that, Training and Development solutions are embraced as tools and strategies to increase human capital knowledge, skills and values to unlock productivity, efficiency and profitability. Return On Investment (ROI) is realized from the training impacts and benefits accruing to both the organization and individuals.
The Business Case: General Benefits
The general benefits of Training and Development are the following:
- Higher productivity
- Greater efficiency
- Increased profitability
- Less wastage
- Less accidents
- Less mistakes
- Less product rework
- Shorter turnaround time
- More production runs
- Higher motivation
- Higher retention
- More innovation
The Business Case: Context Specific Benefits
Training and Development has other context specific benefits, like in the South African context an enterprise will gain a lot more benefits over and above the general benefits. The South African policies like the National Skills Development Strategy (NSDS) and legislations like Skills Development Act, Skills Development Levy Act and the BBBEE Act provide incentives to enterprises for Training and Development expenditure. Under BBBEE Act, Skills Development Act and Skills Development Levies Act, enterprises can enjoy the following benefits among others:
- Tax rebates for training done and reported e.g. R60 000 tax break per every learner training in a learner-ship, internship or apprenticeship
- Earn points on BBBEE Scorecard for learners from learner-ships, internships and apprenticeships retained
- Claim against Training and Development expenditure e.g. Skills Programs and Soft Skills Training
- Grants specific for Training and Development Programs from Skills Development Fund
- Claim against SDF salary and salary of learners
- Earn points on BBBEE Code of Good Practices Scorecard e.g. Skills Development expenditure of 6% of payroll earns up to 40% points on the scorecard, which can be gained by training specific previously disadvantaged groups like blacks, women, disabled, the unemployed and retention of the unemployed.
- Structure Skills Development Programs so as to earn on BBBEE Code of Good Practices Scorecard
- Service Provider selection so as to gain competitive advantage on BBBEE Status and Scorecard points
- Collaborate and partner in a manner that allows taking advantage of Preferential Procurement and Supplier Development points on BBBEE Scorecard
- Claim points against Ownership Structure of business that is BBBEE compliant
- Claim points against Management Structure and Control of enterprise that is BBBEE compliant
Therefore, the policy and legislative framework provides for additional advantages and benefits from training and development. In conclusion, the business case for training and skills development is in the commercial benefits that accrue to firms and organizations, in training and development’s contribution to bottom-line value creation in respect of business financial, social and environmental performance. Return On Investment (ROI) in training and development is thus guaranteed.
Would you want to miss an opportunity to maximize your Return On Investment (ROI) from your Skills Development Budget? If not, then register for our courses on link below.