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Soft skills training brings substantial returns on investment

Both companies and workers benefit.

By Dylan Walsh  |  December 11, 2017

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Training employees in soft skills, such as communication, can increase employee productivity and retention.

Why It Matters

The benefits of soft skills training can be hard to measure, but new research reveals that it can bring substantial return on investment to employers while also benefiting employees.

Employers typically request a handful of qualifications from employees: good listener; strong communicator; team player; able to manage time and priorities. These so-called “soft skills” have long been associated with career success.

But two questions linger: Can soft skills be taught to adults who lack them? And if they can be taught, do they actually matter in the workplace?

Namrata Kala, an assistant professor of economics at MIT Sloan, with colleagues at the University of Michigan and Boston College, set out to answer those questions. Partnering with Indian garment manufacturer Shahi Exports, Private Limited, they ran a randomized controlled trial across five factories in Bangalore. They found that a 12-month soft skills training program that focused on communication, problem solving and decision-making, time and stress management, financial literacy, legal literacy and social entitlements, and execution excellence delivered substantial returns.

Given the repetitive labor required in garment assembly lines, “it wasn’t immediately obvious that soft skills were going to matter in this setting,” said Kala. After all, how relevant is clear communication when sewing the same hemline over and over? “But we found they did matter. When you’re on a production line for eight hours you need to communicate with other team members, you need to meet the deadline, and you need to listen closely to your boss who is walking up and down giving instructions.”

When comparing the final program costs against increased revenue, Kala and her colleagues found that in-factory soft skills training returned roughly 250 percent on investment within eight months of its conclusion. Boosts in worker productivity accounted for much of this gain, but a number of other factors contributed, like the ability to perform complex tasks more quickly, short-term gains in improved attendance, and increased retention during the training.

The study also found some “spillover” productivity effects that were about 70 percent as large as these direct impacts, albeit not statistically significant. Employees who did not participate in the training program but were on the same assembly line as those who did showed improvements in workplace productivity. (The authors did not include these gains from spillover in their financial calculations, so the 250 percent return is a conservative estimate.)

Employers, clearly, benefit from soft skills training, but so did the employees themselves. “It was great that they were able to be more productive and do better,” said Kala. “But we also wanted to get a sense of what among the workers may have led to this effect.”

She and her coauthors surveyed women who had taken part in the training and women who had not. Not only did those who’d been trained have marginally larger incomes — a half a percent — but they had better opinions of themselves as workers, took more advantage of government programs, were more likely to request training for hard skills, and saved more for their children’s educations. In the end, the soft skills program seemed to empower women both in and out of the workplace. “We found evidence of benefits on both sides, employer and employee,” Kala said.

The fact that these results emerged in India holds particular significance: Young, unskilled, and semi-skilled laborers are moving from self-employment in the country to wage labor in cities — and women often constitute the bulk of this group. Those migratory shifts are representative of what’s occurring in emergent economies worldwide.

That soft skills training had such an effect in Bangalore carries implications for urban employment centers everywhere: Instituting soft skills training programs could help not only local companies, but also local workers, find greater prosperity.