RoI: Why developing your young employees pays dividends



Having taken the big step and employed an inexperienced young person it may prove difficult to justify further investment in their development so early on. Being able to show that a modest investment in developing their business skills will deliver a significant return on that investment (RoI), will help make the business case for doing so.


What if we train them and they leave?

What if we don’t train them and they stay…

In my recent article entitled Enough talking. It’s time for action. I talked about the importance of developing essential business skills in your young employees at the start of their career journey with your organisation.  I referenced the GradStart® programme which comprises 10 days of training over a period of approximately one year.

Measuring the RoI for employee learning and development (L&D) programmes is challenging to calculate at the best-of-times.

When it comes to young employees the MD is looking for their rapid integration into the business environment; the FD will measure improved employee performance and productivity boost, and the contribution they make to the bottom-line; while the HR manager will evaluate evidence of greater competence and confidence from knowledge and business skills acquisition.

What do you emphasise?  The quantitative or qualitative element?

The quantitative elements such as cost of recruitment, salary, increases in productivity, decreases in defects and errors, and shortened time to task completion, are relatively straightforward to calculate.

The qualitative elements such as improved business relationships, improved customer satisfaction, better communications and understanding, greater confidence and competence from knowledge and skills acquisition, are much harder to put specific values on.  However, their business benefits are not to be underestimated, for example, the ability to:

1.       Attract better calibre young people with a comprehensive graduate-style development programme

2.       Rapidly integrate your new employees into their team and department

3.       Accelerate performance from new recruits, and make them more productive

4.       Retain employees for longer, thereby avoiding massive costs in terms of both time and money (more about this later).

There are also significant employee benefits too:

1.       Their self-confidence grows and they take more initiative in the workplace

2.       They develop the ability to ask better, more critical questions of the people they engage with

3.       They develop essential business skills that will form a solid foundation on which to build their career

4.       They gain an understanding of leadership and how to lead

5.       Increased promotion and career prospects, leading to greater responsibility and higher income.

There have been many studies and much research into the contribution for L&D RoI, however little on the impact for first-time young employees.  Thanks to research by Oxford Economics[1] and FirstYearIn[2]we have been able to produce quantitative RoI figures for first-time young employees.

According to Oxford Economics there is a productivity – and therefore financial – impact while a new employee is ramping up to optimal productivity.  The financial impact consists of two elements:

1.       The cost of lost productivity

2.       The cost of new young employee recruitment

In addition, the time to reach optimal productivity has to be factored in for a young employee.

FirstYearIn’s research shows that the ramp-up period to reach optimal productivity can be achieved 30% faster (i.e. a reduction in the time taken to reach optimal productivity) if the young employee is put through a skills development programme combined with mentoring, such as GradStart®.

Here is what we’ve identified about quantitative RoI:

1 employee > net RoI = 131%

4 employees > net RoI = 224%

Using this information, we have calculated that for one employee, a net return of 131% can be achieved after factoring in the cost of the development programme.  This increases to a net return of 224% when developing 4 employees.

When you factor in qualitative components then the RoI could be 12-34% greater.


To understand why the RoI increases substantially for 4 employees then you have to consider that 1 in 4 graduates is likely to leave their first employer within 12 months (CEB[3]).

Four of the top reasons that employees leave their job are the lack of:

  1. genuine interest in their development
  2. skills development and opportunities to utilise their skills, expertise and abilities
  3. recognition for the contribution they make
  4. promotion and career progression.


By immediately addressing points 1 and 2 and placing your young employees on an essential business skills development programme then you will be decrease the likelihood of an employee leaving; thereby saving on further recruitment and ramp-up costs.


If you would like to read a more detailed calculation analysis and description of the RoI for young employee development, then please download our complimentary Akonia GradStart RoI paper by completing the box at the side of this article.


[3] CEB/SHL Talent Measurement: Hire and Inspire – A new approach to Graduate recruitment 2014