It’s Tax Time! – Why Your EOFY Budget Should Prioritise Employee Development

As the end of the financial year approaches, it’s the perfect time for business leaders to
assess their budgets and consider how to allocate resources for maximum return on
investment. While it’s easy to focus on short-term gains, it’s important not to neglect the long-term
success of your business. One area that should not be overlooked is employee development.

Investing sufficiently in your workforce can yield significant benefits for your company, both
in the short and long-term.

The Major Risks of Neglecting Employee Development

Many businesses view employee development as a luxury, not a necessity. They may believe
that their employees should be able to perform their job functions without additional
training or development. However, failing to invest in employee development can have
serious consequences.

Here are the top risk areas of neglecting to invest in employee development:

Turnover and Engagement

Firstly, employee morale can suffer. When employees feel undervalued, underappreciated, or stagnating in their career growth, they are more likely to disengage from their work or seek opportunities elsewhere. This can lead to high employee turnover rates, which can be costly in terms of recruiting, hiring, and training new employees. Employees may view the failure to utilise the training budget as a lack of commitment to their development, which can result in decreased engagement and motivation. Lack of development opportunities can lead to employees seeking out other opportunities with organisations that prioritise employee development.

Performance, Productivity and Compliance Risks

There could be a skill gap where employees may lack the necessary skills and knowledge to perform their roles effectively, resulting in lower productivity, reduced quality, and increased errors. If employees are not properly trained, the organisation may need to spend additional time and resources on correcting mistakes, rework, or hiring additional staff to fill skill gaps. Failure to utilise the allocated budget may result in missed opportunities for employees to develop new skills and knowledge that are essential for their roles. This can lead to a decline in employee productivity and overall organisational performance. If employees are not adequately trained and developed, the organisation’s overall performance may suffer, impacting its financial results, customer satisfaction, and reputation. Businesses that do not invest in employee development may face legal and regulatory issues. Certain industries require that employees undergo training and development to comply with safety, quality, or ethical standards. Failure to meet these requirements can result in legal and financial penalties for violations of health and safety regulations, data protection laws, or industry standards.

Uninspired and uncreative results

Businesses that neglect employee development may find themselves falling behind their competitors. As technology advances and industries evolve, employees must have the skills and knowledge necessary to keep up with the changes. Without investing in employee development, businesses risk falling behind their competitors, losing market share, and experiencing a decline in revenue. Failure to provide training and development to employees can result in an organisation losing its competitive advantage in the market. Without proper training and development, employees may not be equipped to innovate and develop new ideas, which can limit the organisation’s ability to adapt to changing market conditions and stay competitive.

…And of course, if the allocated budget is not utilised, it may be reduced in the following year due to the perception that it is not a priority or necessary.

The Benefits of Investing in Employee Development

On the other hand, investing in employee development can yield significant benefits for
businesses. Here are a few ways in which prioritising employee development can benefit
your business:

1. Increased Productivity: Employees who receive regular training and development
   are more likely to be productive in their work. By enhancing their skills and
   knowledge, employees can become more efficient and effective in their job
   functions.
2. Improved Morale: Investing in employee development can help employees feel
   valued and appreciated. This can lead to improved morale, higher job satisfaction,
   and lower turnover rates.
3. Enhanced Innovation: As employees gain new skills and knowledge, they may
   become better equipped to identify and solve problems, generate new ideas, and
   contribute to the growth and innovation of the company.
4. Regulatory Compliance: Investing in employee development can help businesses
   comply with legal and regulatory requirements, reducing the risk of penalties or legal
   issues.
5. Competitive Advantage: Companies that prioritise employee development are more
   likely to attract and retain top talent. This can give them a competitive advantage
   over their competitors, as well as improve their reputation in the industry.

How to Prioritise Employee Development in Your EOFY
Budget

• If you want to prioritise employee development in your end of financial year budget, here
  are a few steps you can take:
  Assess Your Current Training and Development Programs: Evaluate your current
  programs to determine their effectiveness and identify areas for improvement.
  Always use a trained professional to do this or it could waste valuable time and not
  achieve the outcome you need.
• Set Clear Goals and Objectives: Determine what you want your employees to
  achieve through training and development and set clear goals and objectives to help
  them get there. Conduct a proper needs analysis to get a realistic and accurate
  gauge on current state and desired state and to establish what support will get you
  there.
  Allocate Sufficient Resources: Ensure that you are allocating sufficient time and
  budget to employee development and consider outsourcing or partnering with
  experts if necessary. It might be more economical to engage specialist consultants
  for specific learning and development projects.
• Track Progress and Measure Results: Regularly assess the effectiveness of your
  training and development programs, and track progress toward your goals and
  objectives. This requires a mark in the sand of where you are today and regular and
  recorded check-ins on progress. This allows you to tweak and change course as
  needed.
  

Investing in employee development may require a long-term perspective, but it can yield
significant benefits for your business. By prioritising employee development in your end of financial year budget, you can create a more productive, innovative, and engaged workforce that is better equipped to help your business succeed and ensure your training budget is not cut next financial year.

Louise Kelly

Leadership & Team Dynamics Expert

Louise is a skilled coach, mentor, facilitator, trainer, and speaker, working primarily on building clear communication skills. people need to get clear, confident, and connected. She has over 20 years’ experience working with hundreds of organisations in change behaviour and performance improvement. She specialises in helping people achieve clarity, confidence and connectedness through integrating and customising the most current learning techniques and tools.