As the EU Pours Millions into Upskilling its Workforce, Here's How Founders Can Leverage and Measure the ROI of Skills Development Founders must be conscious of the effectiveness of training programs within their organizations.

The European Commission is making a massive investment in upskilling its workforce. With a goal of 540 million adult training activities by 2025 through its EU Skills Agenda, the initiative aims to equip workers with the talents needed for sustainable competitiveness, social fairness and resilience.

European entrepreneurs should take advantage of opportunities and create a culture of continued skills development throughout their organizations. For example, while investment in employees' continued education helps close the skills gap, it also boosts innovation and fosters loyalty.

According to a PwC survey, 93% of CEOs who introduced upskilling programs saw increased productivity, an improvement in talent acquisition and retention, and a more resilient workforce. With increased employee productivity, retention rates, and product development, business leaders should see upskilling not as a drain on budgets but as a profit builder.

With that said, however, founders must also be conscious of the effectiveness of training programs within their organizations. Just as with any investment in the company, leaders should establish metrics that help them accurately measure the return on investment (ROI) of upskilling. Here's how.

Measure knowledge acquisition.

While management may choose the skills or expertise workers will update, they can make this decision more accurately when they know where their employees are lacking knowledge or aptitudes.

Pre-training assessments provide a benchmark of employees' current knowledge and skill levels, help identify areas where upskilling is most needed, and allow for targeted training programs.

Once the desired program has been chosen, both pre and post-training assessments can reveal weaknesses in the upskilling program itself. For example, if a significant portion of employees continue to struggle in certain areas even after receiving upskilling, it may indicate the need to adjust the training content or delivery method.

Questions related to the value of the learning experience, course content relevance, and level of skill improvement are all key areas to focus on.

These assessments help companies answer these vital questions:

• Did employees gain the necessary skills from the program?
• Are the upskilled employees performing their jobs more effectively?
• Did the upskilling program contribute to achieving the desired business outcomes (such as increased productivity and improved customer satisfaction)?

By answering these questions, businesses can determine the actual value of their upskilling investment. They can see if the program led to a positive result or if adjustments are needed to improve the ROI.

Track sales and performance improvement.

While monitoring completion rates and time to completion are standard key performance indicators (KPIs) for learning and development initiatives, a comprehensive assessment of upskilling ROI requires a deeper dive.

Effective upskilling programs go beyond participation metrics and must demonstrate a positive impact on employee performance in core business functions. Ultimately, if the upskilling program and training initiatives aren't positively impacting employees' everyday performance, this could indicate ineffective training and require an evaluation of the program's content or delivery.

For example, a few metrics to measure for an employee in a sales role include the number of closed sales in a period of time, customer satisfaction scores, average deal size, and sale cycle length. The best way to do this is to measure metrics before and after the upskilling to gauge the difference in performance and metrics accurately.

If positive improvements are witnessed in an employee's performance, companies can increase their ROI by asking that employee to share knowledge with other team members. Simply sharing practical skills one-on-one, or giving more structured presentations to colleagues on a department-wide level, can give other team members insight into their colleague's newfound success.

Tracking sales and performance improvement clearly displays how employee upskilling directly impacts core business functions that drive revenue and profitability. This data-driven approach enables companies to make informed decisions about future investments in their workforce's development.

Monitor employee retention.

Employees who feel their company invests in their growth through upskilling programs are more likely to feel valued and engaged. A 2022 survey showed that when companies invested in employee development programs, they saw a 58% increase in employee retention.

This satisfaction can lead to a significant decrease in turnover, which is a major cost for businesses. Replacing employees requires recruiting, onboarding, and lost productivity during the transition. Lower turnover translates to direct cost savings. For example, in 2022, companies spent an average of $1,220 per employee on workplace learning. Whereas the average cost per hire is around $4,700. Therefore, if upskilling an employee helps keep them at the company, the ROI of the upskilling investment has already been fruitful.

Companies should always be continuously monitoring their employee retention rate, but this is even more crucial when considering implementing upskilling initiatives. Companies can see a tangible impact by comparing employee retention rates before and after implementing upskilling programs. If retention increases after the program's launch, it suggests that the upskilling initiative has contributed to a more satisfied and committed workforce.

Lower employee turnover can have a chain reaction of positive effects. When a company keeps experienced and valuable staff, it benefits from their knowledge and skills, leading to increased productivity, improved customer service and a stronger company culture.

Wrapping up.

With European businesses expected to experience some difficulties in the coming year, companies can protect themselves by investing in their employees, helping them upskill in essential areas and keeping them loyal.

However, upskilling needs to produce a positive ROI for it to work. Therefore, by tracking retention rates, performance, sales and knowledge acquisition, businesses can ensure they make the right investment for their future.