Page 35 - IEC Insights Mar-April2020

THE COST OF TURNOVER employees’ salaries is added to the processes. Many software vendors
budget. This percentage can vary, but also offer additional training to cover
Let’s say a 50-person electrical company between 1% and 3% is common. Using this advanced skills or provide a refresher
follows the average rates listed above. method, the contractor from the earlier course on best practices — all of which
In that case, 21% — or 10 employees — example would budget between $500 can help to make their daily tasks easier
leave by the end of the year. If those and $1,500 for each employee with a while improving office efficiency.
employees have a salary of $50,000 salary of $50,000 — much less than the
and it costs 33% of their salaries to $16,500 needed to replace any that quit. Even if there’s not much to dedicate to a
replace them, the company is looking at professional development budget, there
a loss of almost $165,000. By retaining In budgeting a lump sum amount, a are still cost-efficient solutions that a
half of those employees — if 52% of contractor would allocate a set dollar contractor can successfully implement.
voluntary turnover is preventable — the amount in the budget for professional Using limited funds to create processes
company would save around $85,500, development. They can determine what and materials for internal training and
exponentially more than it would’ve amount is appropriate in a few different mentoring can increase employee
likely cost for professional development ways. For example, if there’s a specific satisfaction while improving the skills of
for all of those employees for the year. conference they think would be beneficial the whole team. Likewise, setting up a
for their employees, the amount set aside curriculum for in-house development can
can be enough to cover the cost for those help to build internal experts on a wide
INVESTING IN THE FUTURE employees to attend. It might even be range of subjects, producing opportunities
picking a specific topic or skill to highlight for cross-training at minimal cost.
Beyond the potential to save money for the year — such as leadership, hiring
by reducing turnover, there are other practices or project management — and
benefits to investing in professional researching local courses or seminars CONCLUSION
development. Having leadership covering these topics and using the
vested in their growth builds trust funds to pay for enrollment costs. For many contractors, budgeting for
between employees and managers, professional development might seem
increasing overall job satisfaction and No matter the strategy, it’s important like an unnecessary expenditure. With
output. Happy employees are more to be reasonable when allocating profit margins as narrow as they are
productive — around 13%-20% more professional development funds. for most contractors, it makes sense to
productive — than unhappy employees. The budget should adequately cover keep a tight hold on any allocation of
costs while still being a realistic funds, but professional development
An extra benefit of developing employees amount to spend in a single year. shouldn’t be considered unnecessary or
internally is that contractors can cultivate included as an afterthought in a yearly
the future leaders they need. Even if budget. Even if the advantages aren’t
management positions aren’t immediately SPENDING THE BUDGET completely monetary, contractors can
available, getting the proper training quickly see returns in their investment. By
and development in place for employees Depending on their state of residence, nurturing and developing their employees,
who seem like a natural fit for these it’s likely that some electrical contractors contractors make an investment not
roles can help to both increase their job already budget for continuing education only in those employees but also in
satisfaction and prepare them for an courses if they’re required for a license the overall success of their business.
easier transition when those positions renewal, but professional development
do become available. And for owners, exists outside of mandatory education. Steve Antill is VP of business
they can save time and money when Conferences allow contractors and development at Foundation Software and
it comes to onboarding leadership. employees opportunities to expand
their knowledgebase in their field Payroll4Construction.com, where he leads
and network with other professionals. the charge for continual revenue growth,
BUILDING A BUDGET Joining a professional organization or including new entry points into market to
completing relevant certifications can also serve contractors. He invests much of his
While there’s no definitive answer for be professional development. Some of time building partnerships and relationships
how much to budget for professional these costs may even be tax deductible across the construction industry with
development and continuing education, for both the company and the employee. contractors, CPA firms, associations and
there are a few methods that can help technology vendors. Over 20 years, he’s
contractors narrow it down. Two common Don’t forget that office workers can led more than 1,000 software selections
strategies are the percentage-of-salary benefit from professional development and implementations for contractors
method and lump sum amount. too. Conferences dedicated to their of numerous sizes and trades. santill@
foundationsoft.com | (800) 246-0800
roles within the company can help
In the percentage-of-salary method, reinforce habits and improve internal
an amount equal to a percentage of

www.ieci.org | March/April 2020 | Insights Magazine 33