4 Reasons Why Investing in Your Employees is So Important

By Oleksiy Melnyk
August 29, 2019

Most people don’t just want to take home a paycheck: They want to be challenged and grow. If they feel stuck in a dead-end job, they’re going to be unpleasant to work with, be unproductive, and eventually leave. Employees want opportunities to take on more responsibility, get promoted, and earn raises that allow them to do more than keep up with the cost of living.

For those things to happen, their employers have to invest in them. But the first thing employers might think of when it comes to investing in employees is cost. So let’s take a look at why investing in your employees is so important and how it can pay off for your business.

1. It reduces hiring costs.

If investing in your employees makes them happy, your company will have less turnover. And if you have less turnover, you’ll save on hiring costs.

Adding a new employee to your team can cost thousands of dollars. Think about all the steps in the process and all the people involved:

  • Recruiting: writing a job description, determining a pay range, advertising
  • Narrowing candidates: reviewing resumes, shortlisting applicants, interviewing, conducting background checks
  • Hiring: extending job offers, negotiating salary and benefits
  • Orientation: explaining company policies, completing paperwork
  • Training: teaching job tasks and responsibilities
  • Onboarding: integrating the employee with the company culture and expectations

Along with the direct costs of recruiting and training, you’ll have indirect costs in lost productivity. When an employee quits, something has to give. The work they did won’t get done at all or will get done poorly by coworkers who can’t do the job as skillfully. In the best-case scenario where it does get done, the employees covering the gap are likely to become overworked; their own tasks and morale will then suffer.

Once you find a replacement, the onboarding process will continue to disrupt other team members. Managers and coworkers will need to take time away from their usual duties to show the new employee how things work. Even when you hire a standout, they’ll need time to adjust to the way your company does things.

Investing in your employees also provides a foundation to recruit from within the company for higher-level positions. When you’re giving someone greater responsibility, it’s nice to already know from experience that you can trust them.

2. It’s good for business.

Clients and customers don’t want to patronize businesses that don’t treat their workers well. But they’re excited to interact with companies that go above and beyond for their employees.

Think about the businesses with great reputations for taking care of their employees, like Starbucks, Trader Joe’s, and REI. How do you feel when you shop there?

You’ve probably given a genuine smile and treated like a human being. If you ask an employee for help, they won’t give you a dirty look and ignore you because you’re interrupting a gossip session with a coworker. If you have a problem with a product, you’re likely to get a refund or replacement, not a dismissal.

The stores feel like part of your community. You don’t dread going there or treat it as an errand; you look forward to it. These are businesses where people linger — and spend more.

What’re more, employees who are happy at work talk up their employers to their friends and relatives, in social media, and in the news. This free publicity bolsters the companies’ reputations even further. Is there any better form of advertising than positive word of mouth?

3. It’s easier than ever to poach talent.

Who doesn’t have a LinkedIn profile these days? It’s a great way for workers at all levels to keep themselves on the job market even when they already have a job they’re happy with. All it takes for employees to put themselves in the recruitment pool is to check a box in their LinkedIn profile.

According to LinkedIn’s hiring stats, 87 percent of workers are open to new employment opportunities at all times. And going back to what we said earlier about how people want to grow, LinkedIn found that the number 1 reason people say they change jobs is a career opportunity. Compensation, professional development, and work/life balance are the biggest factors in accepting a new job.

Recruiters are contacting top employees through LinkedIn all the time. It’s easy for your employees to leave if you don’t give them great reasons to stay.

4. It reduces liability.

Which type of employee do you think is more likely to sue their employer:

  • the one who’s paid well, given praise and constructive feedback, receives retirement contributions and has the flexibility to deal with the personal and health matters that can come up on workdays…
  • …or the one who’s underpaid, gets no benefits, receives only negative feedback, can’t earn a promotion, and feels pressured to come into work when their kid’s sick?

Employees who feel they’ve been discriminated against, paid unfairly, denied breaks, and otherwise mistreated will find attorneys willing to represent them. But legal defense costs, settlements, judgments, and reputational damage are all things you want your company to avoid.

Even though companies carry business liability insurance to protect against such lawsuits, actually using insurance can result in premium increases and even policy cancellation. Any company can end up with an unreasonable employee who files a frivolous lawsuit. But investing in employees by treating them well increases the odds of having satisfied, happy workers who won’t have any thought of taking legal action against you.

Investing in your employees also helps them do their jobs well. That means they’re less likely to make mistakes — product defects, accounting errors, lapses in judgment — that could lead to lawsuits from clients or customers.


Investing in your employees is important for so many reasons. While it might seem expensive, much higher costs await companies that don’t make the investment. How can a company grow more profitable if its workers aren’t growing and improving if they don’t feel valued and engaged?

How can a business attract and retain smart, productive employees if it doesn’t have a reputation for nurturing workers’ abilities and advancing their careers?

Invest in your workers through mentoring, professional development, coaching, promotions, and raises and you’ll get more productivity, less absenteeism, great free publicity, and less turnover. All of these will save your company money in the long run and make your business a better place to be for workers at every level, including yours.

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