The Dollars and Sense Behind Investing in Talent Development

Fostering high performing teams is a surefire way to drive tangible business outcomes. And the key to more productive teams often lies in supporting the managers who lead those teams. 

But today’s managers are stretched increasingly thin: a recent survey from Gartner reports that 54% of managers are struggling with work-induced stress and fatigue. Where’s this stress coming from? Since the pandemic, the expected responsibilities of managers have doubled, with many managers spending more time managing projects instead of people. 

And when managers are under pressure, the employees who report to them feel it directly, further contributing to burnout, reduced productivity, and a lack of confidence in leadership. 

In sharp contrast, teams with effective managers flourish. Research from Gallup shows that about 70% of a team’s level of engagement can be attributed to managers. Furthermore, employees with effective managers:

• Are 15.4x more likely to be high performers
• Are 13.4% more likely to be engaged 
• Are 3.2x more likely to stay 
• Have 12.5% higher physical and mental well-being

The boost in employee engagement caused by high-performing managers has a tangible effect on a company’s bottom line. According to data from McKinsey, when compared with teams with average managers, those teams with highly effective middle managers delivered:

• 20-30% higher profits
• 21% higher employee engagement
• 17% higher productivity 

We created Develop™ by Criteria to help support managers, equipping them with the tools they need to easily connect with their team members, motivate their team, and drive results. 

Let’s do some back-of-the-napkin math and look at 6 ways investing in talent development pays off: 

1. Turnover Reduction 

Did you know that the average cost of replacing a single employee (including recruitment, training, and lost productivity) is roughly $40,000?

Develop™ enables managers to better understand their team members and help them become more engaged with their work. Gallup reports that engaged teams have 59% lower turnover rates compared to disengaged teams.

Let’s look at this in action:

• Company of 200 employees with 15% turnover, so 30 employees per year leave. 
• If Develop™ helps reduce turnover by just 10%, 3 fewer employees will quit.

2. Higher Training Efficiency 

Develop™ offers managers targeted, data-driven training that maximizes the return on investment for development programs.

By focusing on areas with the highest impact, Develop™ ensures that training budgets are utilized effectively, leading to measurable improvements in performance and significantly faster rates. 

• Traditional training programs require approximately 40 hours of instruction per employee 100 employees, typically costing $1000 per person = $100,000
• If Develop™ reduces training time by 25%, training time reduced to 3,000 hours

3.  Improved Engagement

The average cost of just one disengaged employee is $5,000 per year. This cost comes from lost productivity and absenteeism. This estimate is actually quite conservative, as research from Gallup suggests that a disengaged worker can cost a business 18% of their salary! 

Even modest improvements in employee engagement can create a significant return on investment:

• Let’s say a company of 500 employees improves engagement by 5% using Develop™ 
• 500 x 5% = 25 fewer disengaged employees

4. Better Manager Performance 

Project delivery is a critical responsibility of middle managers. The average overrun cost for delayed projects is $10,000 per week, so delays can add up fast: 

• Develop™ helps managers improve project delivery times by increasing team productivity, reducing delays by 20% across 50 projects annually. 

5. Reduction in Conflict-Related Downtime 

No company is immune to workplace politics and conflicts. When people struggle to work together (or avoid each other as much as possible), team productivity suffers. The average cost of conflict-related downtime per employee adds up to $1,500 annually. 

Most team conflicts can be resolved with improved communication and understanding. Develop™ gives managers tailored guidance to unite and elevate their teams. By identifying the strengths and weaknesses of the team, Develop™ enables managers to foster a collaborative environment with fewer conflicts.

• If Develop™ reduces conflict in a 300-person company by fostering better communication and collaboration, conflict-related downtime could be cut by 15%

6. Increased Onboarding Efficiency 

Getting new employees up to speed is a necessary part of bringing them into the fold. The average onboarding time is 200 hours per employee. 

Develop™ can help reduce onboarding time by streamlining the onboarding and talent development process, helping managers to understand how to better integrate new hires into their team as soon as they join. 

Let’s say a company hires an average of 100 new employees each year:

• If Develop™ reduces onboarding time by 20% through better role clarity and team integration, and more tailored management strategies
• 200 hours x 20% reduction x 100 new hires = 4,000 hours saved

These Savings Add Up

Develop™ was designed to tackle and deliver on every one of these six common issues by empowering managers to cultivate collaborative, committed teams.  

Let’s run the numbers one final time and see the total cost savings Develop™ could drive for a 1000-person company: 

Average turnover is 13.5%, so a 1000-person company will lose 135 people per year. If Develop™ improves retention by 10%, they will retain 13 additional people. 

They still need to hire and train 122 people to replace those who have left. Those 122 new would need 4,880 hours of training and that onboarding education costs an average of $1000 per person. Develop™ helps to cut training time by 25%, leading to lower training costs. 

If Develop™ helps improve the number of engaged employees by 5% at this 1000-person company, 50 employees will become more productive, saving an average of $5000 per person over the course of the year. 

Typically, 1 in 8 people at a company is a first-level manager or supervisor, so our average 1000-person company has 125 middle managers. Because Develop™ helps managers meet their deadlines and improves team productivity, it can reduce project delays by 20% over the course of a year, reducing project overrun, saving $10,000 per week over avoided delays. 

Even if Develop™ only improves project delivery by a single week on a single project per manager over the course of the year, those cost savings still add up quickly. 

Conflict between team members can stall productivity and costs on average $1500 a year per employee. Let’s say Develop™ improves team cohesion by 15% across this 1000-person company.

It’s standard for onboarding to take about 200 hours per new hire. This company hired 122 new employees just to maintain their 1000-person headcount. Employees must be paid for their training time in the US and the average per hour pay is $28.16 per hour (as of October 2024). 

This means that this company will spend 24,400 hours training its new hires each year. 

Develop™ makes it easier for managers to clearly define roles and creates tailored management plans that result in more efficient onboarding. If Develop™ improves onboarding time by 20%, it will cut the amount of required training by 4,880 hours. 

Even modest improvements in manager efficiency and team performance compound over the course of a year – especially when applied at scale.

A small upfront investment in talent development can save your company thousands of dollars, and makes a whole lot of “sense” for your business. Empowering your managers with a tool like Develop™ pays off – literally.