Most companies offer employees opportunities for training and development. This not only helps a company by upskilling its workforce, but also helps workers grow and become more competent.
According to Employee Training and Development: Reasons and Benefits, companies that train employees experience:¹
- Less turnover
- Enhanced company image
- Increased job satisfaction and employee motivation
- Better user adoption of new technologies
- Lower bottom line from more efficient processes
Is Your Training Method Cost-Effective?
The benefits of employee training are critical to the success of your company, but they come at a price. Employee training programs can take up a major chunk of your corporate budget.
There are several methods companies use to deliver corporate training. They include but are not limited to traditional instructor-led training (in-person), online training, and a blend of these two types of training (blended learning).
Each of these training methods has advantages and drawbacks, and each incurs expenses related to travel, training facilities, equipment, learning tools and technologies, and instructor salaries, to different extents. Understanding more about each of these areas will help you measure what corporate training is costing your business.
“In 2015, corporate training costs rose to nearly $70 billion dollars.” -- HR Dive²
3 Corporate Training Expenses That Are Costing Your Organization
Employee training isn’t cheap. Companies in the U.S. alone spend about $4.5 billion each year on training and development.3 Here are a few common expenses related to corporate training:
- Travel, training facilities, and training equipment – Traveling to and from training is expensive. In fact, if you are using an in-person training method, about 85 percent of your training investment is going toward simply gathering your trainees for training and paying instructors.4
Interestingly, expenses related to travel, training facilities, and training equipment doubled for U.S. companies in 2015, according to Training Magazine.5
- Learning tools and technologies – Most organizations spend about 5 percent of their budget on implementing new learning technologies such as learning management systems6. These technologies enable companies to deliver training virtually, make it accessible on-demand, and personalize it to meet the needs of individual learners.
Online learning reduces the need for physical training facilities, training equipment (paper products, etc.), and in-person instructors. Over the long haul, learning technologies usually save companies money, although the initial investment may be significant.
- Instructor salaries – Face-to-face training has advantages, but it’s not cheap. Paying instructors to train employees in-person contributes to the 85 cents on each training dollar that companies using a traditional training method spend to get employees in a classroom and lectured.
A contributor to Business Blogs stated, “The following things need to be considered with regard to (training) facilitators. Do they need a salary or they are billed by another firm? Should the company pay any license fees for using the materials or the outside firm will do?”7 Salaries and license fees add up and can increase your company’s bottom line.
Related Reading: 3 Practical Ways to Lower the Cost of Employee Training.
How Much Are You Spending on Employee Training?
After measuring each of these expenses, what is employee training costing your business? If paying for corporate training is straining your budget, you have options to lower costs.
“Organizations spend an average of $1,208 per employee on training and development.” -- GMS8
How to Lower Employee Training Costs
An expensive employee training strategy can do more harm than good if it burdens a business financially. To cut employee training costs, consider a more economical training method, such as online training delivered with an LMS. If an online learning platform might be a good fit for your training program, we've created an LMS comparison tool for you.
Management Help. Employee training and development: reasons and benefits. https://managementhelp.org/training/basics/reasons-for-training.htm.
HR Dive. 5 technologies that are transforming corporate learning. https://www.hrdive.com/news/5-technologies-that-are-transforming-corporate-learning/506384/.
Monster.com. 10 companies with awesome training and development programs. https://www.monster.com/career-advice/article/companies-with-awesome-training-development-programs.
Panopto. Is in-class training killing your corporate L&D budget? https://www.panopto.com/blog/is-in-class-training-killing-your-learning-development-budget/.
5, 6. Training Magazine. 2015 training report industry report. https://trainingmag.com/trgmag-article/2o15-training-industry-report/.
Business Blogs. Employee training costs to a company. https://www.businessblogshub.com/2016/02/employee-training-costs-to-a-company/.
GMS. The true cost of employee training programs. https://www.groupmgmt.com/blog/post/2015/06/02/The-True-Cost-of-Employee-Training-Programs.aspx.