The Business Case for Investing in Employee Development

The advantages of getting employee development right in the age of business change

Business owners and leaders are the first to admit that their people are vital to the success of their organisation. An organisation, no matter its size, is quite literally nothing without the people within it. 

From customer service operatives, programmers and developers, engineers, to assistants, right the way through to management. Without great employees on board, your organisational goals will seldom reach their full potential. 

Yet in an age of what can feel like never ending business change and challenge. The pressure placed on business owners to find, recruit and retain talented employees, has arguably never been greater.

By the year 2025, over 75 percent of workers will demand hybrid or remote work due to shifting demographics in the workplace

The fall out from changes within the workplace following the global pandemic and predicted recession, have seen employers and HR practitioners in fire fighting mode; battling to contend with the continued issue of the skills gap and a period of large scale resignations continuing. 

Further to increasing demands from employers for flexible and hybrid working to accommodate their lives outside of work. Coupled with the acute issues being felt across all sectors, for demands of people and talent, that continue to outstrip supply and availability. 

Yet arguably, one of the most recent developing issues revealing itself for employers, is one that could prove more challenging to address. That being the seeming reluctance of employees to remain with an organisation over extended periods of time. For some the desire to move on to pastures new may arise due to life changes, or for career progression or increased remuneration and benefits. The latter makes sense in an economic climate feeling the impact of what has been coined a cost of living crisis. 

Whilst increasing numbers or workers are choosing to move much more frequently in their careers, then previously. The impact being felt within small medium enterprises, continues to be costly. 

The cost to employers in replacing employees who leave an organisation was reported almost a decade ago as being £26,959. A figure that will most certainly have increased significantly in value since 2014. 

£26,959: the cost of replacing an SME staff member

For SMEs and owner managed businesses, this level of unforeseen cost can make a huge difference to profitability. Not to mention the impact the loss of a good employee can have on an organisation ill prepared for an impending departure. 

Given the challenges around employee retention coupled with the costs to replace exiting talent. Further to the reported reluctance of Generation Z, the generation born between 1997 and 2012, to work in traditional employment. The pressure for employers is mounting. 

Generation Z News: Latest characteristics, research, and facts | Source:
Generation Z News: Latest characteristics, research, and facts | Source:

Yet the answer to these issues could lie in a strategy that encompasses a concentrated focus on employee development. This HR practice involves building on employees’ existing competencies, skills whilst supporting them to actively develop newer ones that ultimately develop the individual but also support the goals and vision of the organisation. 

The Business Case for Employee Development

Employee Development plays a key role in the ways in which an organisation is thought about by their employees. HR Magazine, who conducted a research study into employee development and business benefits, found that 78 percent of business leaders surveyed felt that an employee development tool was crucial to their organisational success. 

Developing people is a no brainer, can you imagine keeping disengaged people in your business and the cost associated with ignorance?

Yet despite the overwhelming number of leaders understanding the value and importance of leveraging employee development, 11 per cent of those surveyed had a lack of C Suite engagement in the development of these tools and 36 percent stated they had no budget available to support the implementation of employee development practices within their organisation. 

Given the advantages on offer to organisations by progressing employee development, what is the business case for investing in these programs that can help to achieve budget allocation, time investment and executive sponsorship? 

1️⃣ The cost of living criss

Businesses are currently besieged by challenges and one such challenge impacting business owners and individuals is the cost of living crisis. It’s impossible to deny the impact that rising costs have had on businesses, from increased energy costs through to the cost of supplies and services increasing significantly. 

As the crisis around finance continues to deepen, some employers are looking to offer employee development in lieu of an annual pay rise. Whilst this may not be the overarching solution, given how many employees are seeking greater financial stability from their employers. Yet the premise of this could provide both employer and employee interim benefit solutions. 

2️⃣ The UK’s ongoing skill gap

Mckinsey’s research into the ongoing skills gap in the UK, identified that UK companies will have to respond to the ensuing threat posed by advancements in digital technologies by transitioning up to a third of their workforces into newly designed roles or advanced skill levels throughout the coming years. 

Profound structural shifts are under way in the UK workforce

Notably, it is predicted that organisations who fail to step up to this challenge, could find themselves responding to more acute, significant challenges with skill gaps than those experienced today. 

The advantages of having a plan to upwardly develop skills and experience within the organisation can lead to better business performance as digital technology advancements unfold. Moreover trust within the organisation also benefits as employees acknowledge the investment being made in their knowledge and skills set. 

This investment benefits not only the employee, but the organisation as well. Particularly when the internal skills that employers and organisations need are focused on as the core structure behind the employee development program.

3️⃣ Business Edge

Business edge or often times known as Competitive Advantage is when an organisation can articulate and provide clear benefits to its target market, notably ones that have an edge over those that market competition offers.

The future of work: Rethinking skills to tackle the UK’s looming talent shortage | Source:
The future of work: Rethinking skills to tackle the UK’s looming talent shortage | Source:

Renowned Harvard Professor, Michael E Porter, coined the term Competitive Advantage, describing it as when an organisation creates a model for sustaining superior performance. Yet under the guise of employee development, it’s arguably the case that investing in your people and their skills, will contribute greatly to that superior performance in both the immediate term and over time. 

By transforming the skills of those whose work your organisation is dependent on. Your business is meeting the demand for the ever emerging capabilities within an ever changing digital world. The edge for those organisations who recognise the advantages and benefits to be realised  by developing skills and upskilling employees, will enable greater competitiveness.

4️⃣ Reduces the risk of quiet quitting

The quiet quitting movement reached its peak at the latter part of 2022. A phenomenon in business, where employees following the Global pandemic sought to leave employment in large numbers. Many credited the insistence of organisations for employees to return to the workplace, following increased flexible and hybrid working throughout the pandemic, as being a core contributing factor. 

The more acute issue at play in the quiet quitting movement, is a lack of employee engagement. For a number of reasons, employees who feel disconnected from their organisation are at higher risk of leaving. For employers who are already facing challenges of employee engagement, or high employee attrition, employee development programs offer the potential to support engagement and retention of those who may previously have been a flight risk. 

Bringing it all together

Sage HR partners small, medium and large organisations to provide them with HR Management software that prioritises work life experiences for your employees. 

Our software has been designed with the business owner and HR professionals equally in mind. Ensuring that increased productivity is achieved in simple, straightforward steps. From onboarding your employees, to supporting them through every stage of the employee lifecycle, implementing initiatives such as employee development can sit comfortably alongside HR process automation and the creation of meaningful reporting and insights. 

For those not currently accessing the benefits of Sage HR, you can enjoy a free 30 day trial by signing up today. Click and follow the link to sign up and find out more. 



Say hello to easy personnel management! 🙂 Sage HR changes how organisations attract, retain, manage and engage their workforce. Designed for SMEs, it improves productivity and connects businesses to their people.

Written By

Jade Taryn Graham

Jade is the founder & CEO of Inspired a people & talent consultancy working with the most innovative early stage companies worldwide. Founder & CCO of Inspired Talent Media Ltd and contributing writer for Sage HR where Jade writes about people, leadership, work/life balance and change.