Investing in your employees is a lot like investing in your employer-sponsored 401(k) plan.
What you do now can pay huge dividends in the future.
Let’s talk about compound interest for a minute. (Compound interest makes for a great analogy to compounding the talent and skills of your workforce over time to dramatically increase the value of your business. Bear with us to read the analogy, or just scroll down to see the five tips.)
If a genie showed up at your door (or wherever genies usually show up), and offered you the choice between one penny today that doubled every day for one month or a payout of $1M, which would you take?
The seven-figure payout, right? $1,000,000 is much more impressive than $0.01.
But if you happened to answer, “Give me the penny today,” and kept on doubling your initial investment for 30 days straight, you’d have a $5M nest egg to your name at the end of the month.
That’s the power of compound interest. The same idea that drives compound interest with a 401(k) plan applies to your business.
For your business to stay ahead of the curve, you need to invest in engaging and retaining excellent talent now so you’re not scrambling to cover skill or leadership gaps in your business down the line.
Here are 5 ways to set your business’s future up for success by investing in your employees now:
- Just like a 401(k) plan, investing early and consistently in your team is key. Making constant contributions to your team’s learning and development now will save you time, resources, and money down the road. Investing in your people early and consistently means your business will see a better ROI in the long term: a thriving and resilient team, workers in the right seats, and a growing business. Not to mention saving an average of $16,500 per employee you need to replace.
- Consider soft skills as a way to generate compound interest. A LinkedIn Learning report found that the #1 priority for talent development teams is training for soft skills in our workforce. Sure, having knowledge and education related to your field is great (and often needed), but having an employee who can combine know-how with soft skills like leadership, interpersonal communication, collaboration, negotiation, and problem-solving skills can help your business stay ahead of the curve. Sparking interest in soft skills training is a great way to develop well-rounded employees.
- Leaders aren’t built overnight. We know that compound interest works best when we have a long runway to work with. Adopting a long-term perspective that it takes years or even decades to build a successful team will help you build a road map of skills your top performers need to prioritize. With the retirement of Baby Boomers on the horizon, investing in your team now will help cover the leadership and skill gaps that Baby Boomers will take with them once they exit your company or industry.
- Diversify your team’s investment to reduce risk and ensure more stable growth. “Don’t put all your eggs in one basket” rings true with investing and diversifying your team “portfolio.” Think about your current employee roster. Is it filled with diverse perspectives ranging in age, gender, ethnic background, and lifestyles? If not, consider where you can bring in diverse voices who can share their lived experiences to solve problems you may not even be aware of.
- Match contributions. Gallup research shows that 87% of millennials rate “professional or career growth and development opportunities as important to them in a job.” This means employees are actively looking for learning and developmental opportunities from their employers. You can “match” your employers’ enthusiasm to up-skill through training, mentoring, and opportunities for skill development. The great news is that your state offers Incumbent Training Grant Programs, which provide your company with grant dollars for employee training. We call that a win-win situation. (Looking to stop leaving grant money on the table? Shoot us an email at: connect@buildingppl.com and we’ll connect you with best-fit grant opportunities.)
Interest exists no matter what; You’re either paying it or it’s paying you.
By investing in your team early and often, you can make interest work to your advantage.
