A report from Cranfield School of Management and Learn Direct Business shows 44% of businesses reported money savings from nurturing their talent, 33% improved staff motivation and 52% increased employee retention.
But only a third (34%) of employers have a formal training strategy in place although almost eight out of 10 (78%) see internal skills development as more beneficial than recruiting staff externally.
Emma Parry, senior research fellow at Cranfield School of Management, said: "With training budgets arguably among the first to go in a recession, this research demonstrates that growing your own is an effective way for organisations to obtain the skills they need while saving money.
"For employers, the nurturing talent concept means managing and developing employees to achieve business goals. This could include training, employee coaching, staff mentoring and job enrichment to stretch employees with new tasks."