SKILLS INVESTMENT PROVIDES BEST RETURN
Investing in your employees, through apprenticeships, is a cost effective way to make major improvements to your business, boost morale and create a highly-motivated workforce who understand their role in the company and are less likely to leave.
Investing apprentice levy funding in continuous improvement teams has the potential to yield significantly better results than all other investments.
* Assumes your business pays into the levy, which the Government tops up by 10%, then to fund 8 off L4 Improvement Practitioner apprenticeships is costing you £43,200.
How we made the comparison:
Capex – typical project viability criteria would be a payback in 2 years – that is the exact investment value returned after 2 years.
FTSE 100 – data based on the average (6.137%) of the 2 year returns between 1985 & 2016 although there were large and volatile variations between +28% and -19%.
Marketing Campaigns – again based on typical expected increases of £5 sales revenue for every £1 invested. I have taken a gross margin of 20%, which most manufacturers would be pleased with, which makes the return payback in 1 year.
Continuous Improvement – studies done of teams at GE during the 1990s showed an average ROI of 2.62 in mature teams (2nd year).
Table compares the return after 2 years on an investment of £43,200. It illustrates the Continuous Improvement can provide a much greater return than Capex – although Capex should not be dismissed as in some cases it is the most appropriate decision.
Investing in your staff to improve your results is a business decision just like a capital project or a marketing campaign.