Why investing in L&D is a business imperative

Author: Paula Flores

With budgets increasingly stretched, learning and development (L&D) may be falling to the bottom of HR's to-do list. But, explains Paula Flores, Brightmine research shows that the best-performing organisations have a strong L&D programme and that this gives them a competitive edge. 

At a time when many organisations are cutting their budgets, investing in your workforce's L&D may not seem a priority. But there is increasing evidence to show that putting resources into internal development is good for business.

Organisations face an increasingly competitive landscape and mounting market complexity, further compounded by the challenges and opportunities created by AI. Automation and digitisation mean that the skills required to succeed are changing more frequently than ever, so the need to reskill and upskill has rapidly increased.

It is against this backdrop that L&D must be set. Organisations need to take a strategic approach, shifting from looking at employee development as a "nice to have" to foregrounding it as essential.

But making the case for implementing an L&D strategy and programme remains difficult, with more than half of learning leaders indicating that they feel executive pressure to prove its impact.

Making the business case 

Research shows that 52% of CEOs perceive a lack of skills in their organisations as a key factor inhibiting their organisation from changing the way it creates and delivers value. So the challenge is to make sure that the business case addresses the organisation's pain points and aligns with its goals and values.

1. Addressing the skills gap

As an L&D professional, one important step is to talk to different departments, assessing where the business is heading and where the greatest gaps are. What skills does an organisation require to succeed? This is a key question that organisations need to answer, particularly as building up from within is significantly cheaper than going to the marketplace to recruit. On top of that, hiring externally is no guarantee of success, as there are significant shortages in the market for many professionals.

A LinkedIn study has shown that skills-hiring - employing people based on their skills rather than their education or job title - will expand the talent pool from which employers can recruit, on average, tenfold. However, this means that work is defined based on the skills it requires rather than on a specific set of tasks and responsibilities. It also implies that data is collected about workers and analysed based on their skills, instead of their job titles.

A Brightmine study, however, showed that addressing the skills gap wasn't identified as a priority for 2024, and was mentioned by only 9% of organisations.

Add AI challenges to the mix and the case becomes even clearer. Those that invest in L&D now are more likely to be able to adapt to the kinds of work organisations will need to do in the future.

At the same time, organisations are concerned about employee performance and productivity. In fact, this was mentioned as one of the top 2024 priorities in our evolving people profession survey.

So while there is an understanding that organisations need to be more efficient in order to be more competitive, the path that leads to efficiency doesn't seem straightforward.

2. A key element of any retention strategy 

Another way to make the business case for L&D is by tying it to your organisation's employee retention strategy.

Existing organisational data provides a good starting point, but it is important to go beyond this. Assess where your organisation stands against similar organisations. Using benchmarking will allow you to assess your organisation's competitive position. Start with metrics such as labour turnover. In a (relatively) tight labour market, keeping labour turnover at low levels can prove significant, especially as recruitment is costly. In 2023, recruitment costs for a professional stood at £1,497 (median) to fill a vacancy, rising to £3,000 for a manager.

But how does retention relate to L&D?

Closely related to labour turnover and retention strategies, Brightmine research has found that organisations investing in L&D reported better business outcomes across metrics such as employee engagement, Net Promoter Scores (NPS) and business performance.

Research shows that L&D spending is one of the main areas for organisations that show a positive employee experience. It is therefore essential that organisations invest in their workforce, providing learning opportunities and new challenges, as that is a fundamental part of the employee experience.

3. Focus on development, not knowledge acquisition

The Brightmine survey shows that organisations with learning strategies tailored to the specific needs and career aspirations of each employee are more likely to report an improvement across several business outcomes. Specifically, the more the strategy met the unique needs of employees, the more likely respondents were to report that their organisation's outcomes in talent turnover, employee engagement and NPS improved compared with the previous year.

L&D thus needs to focus on more than just offering a learning platform. It is about fostering the individual's career aspirations and providing an environment that will enable them to continue to grow. Some organisations link employees' development to business metrics, using the personal development plan (PDP) process to help identify the skills already present within the organisation, and assess the skills needed to achieve its aims. Again, this addresses departments' needs within the organisation and thus contributes to overall performance.

The L&D business case must demonstrate why an organisation needs a strong programme, correctly mapped to all its departments' needs, as well as how it will benefit the business as a whole and ultimately make the connection with the fact that organisations focused on L&D are more resilient and likely to succeed.

L&D is no longer a competitive advantage - it is a business imperative.