If you want top-notch employees, then you need to invest in their knowledge and skill sets. Even people who already have training can benefit from continuous learning. Making education a part of your corporate culture will make your workforce stronger and more adaptable.
A solid employee training program offers many benefits beyond the initial knowledge gained. It closes skill gaps in your team. It also improves employee motivation and morale.
Training empowers workers. It makes them feel more professional and confident in their roles. It also sends a message that the company cares about career development and is willing to invest in them. Businesses that offer well-rounded training tend to have higher job satisfaction and lower turnover rates.
Research indicates that approximately 40% of employees who do not receive adequate job training leave their positions within the first 12 months.
A national survey consisting of more than 400 respondents across three generations found that 70% of workers said that training and development opportunities influenced their decision to remain with their current employer. This was especially true among Millennial respondents, with 87% pointing to professional development and career growth as being very important when deciding to stay with or leave a company.
Employees who are trained are proven to be more productive. The National Center on the Educational Quality of the Workforce (EQW) conducted a study that revealed increasing training investments had a bigger impact on productivity than increasing equipment value. Raising both by 10% resulted in an 8.6% productivity increase for education compared to just 3.4% for equipment upgrades.
It’s easy to see why a solid employee training program is essential to success. And that starts with ensuring that the resources are available to get your team on track.
The Average Cost of Employee Training
Some organizations look to their training program when it’s time to cut costs. They don’t keep courses up to date or don’t implement newer technology. While you may not need to make changes every year, it’s important to know what’s out there and how you can benefit from it.
Skipping an upgrade or expansion to your training program could put your team behind your competition.
The average per-employee training cost in 2020 was $1,111. That was a decrease compared to the $1,286 per employee in 2019. A Training Mag report also found that mid-sized companies reported the lowest training costs at just $581 per employee. Meanwhile, enterprises reported around $924, and small businesses came in at $1,678.
While cost is a factor, it isn’t the only consideration. The amount of time spent in training and the quality of the content is also essential. Cost per employee dropped while hours spent in training increased from 42.1 hours per employee annually to 55.4 hours.
There is no way around paying when it comes to business training. If you want your team to be the best, you have to be willing to invest in their knowledge. In the end, maximizing training and development will have a profound effect on your ability to produce and earn.
Things to Consider When Calculating a Training Budget
No two training budgets are going to be the same. Your organization may have different needs or may be starting at a different point in the process. You may require more resources and time compared to other businesses in your industry.
When you begin the training budget building process, you should consider:
- If there are skill gaps in your team
- What topic is given the most training time currently
- How often do employees attend training and when
- If there are more efficient ways to train your team
The answers to these questions will help you find a starting point for your budget. The amount you allocate should be enough to address the items listed above. Do you need to expand your course offerings to close skill gaps? Is training time assigned in an effective manner or is more or less time needed?
You should also consider alternative training platforms and techniques. Researching your options will help you know if you are using the most effective method available.
Quick List of Potential Training Expenses
As tempting as it may be, you may not need every training tool or resource out there. You should only pay for what you truly need. That’s why it’s important to have a plan with a budget. Taking these early steps will force you to consider options and weigh the pros and cons before you spend any money.
With both in-person and online training available, your expenses may vary. This list will help you get started when determining what you need and what you may want to skip.
- Trainer salaries and fees
- Apprentice sponsorship costs
- Self-guided courses
- Video content production
- Mentoring and job shadowing
- Seminars and webinars
- Training delivery method
- Training materials
- Staff time in training
If you plan to have workers attend in-person training, you may also need to consider the cost of lodging, meals, and travel. This is especially true when sending employees to off-site courses or seminars.
After COVID, more companies are offering online training. Most of the time, attending an in-person class isn’t necessary. You could save a lot of money by sticking to online training as much as possible.
How Much Should My Training Budget Be?
The big question most business owners ask is: how much should my training budget be?
There is no one-size-fits-all answer. Different industries and organizations have different training demands. A general rule of thumb is that your training budget should be approximately 1% to 5% of total employee salary per year.
This isn’t a hard and fast rule. Smaller organizations may not be able to pay out this much and will have to find ways to fit in quality training for less. Others may want to pay more to cover specialized training based on their business needs.
The most important thing to remember is that your training budget must be realistic. Make sure you are investing enough to give your workers the best experience possible while keeping it affordable for your organization.
Affordable eLearning Makes a Difference
eLearning offers an affordable option that can get businesses more value for their investment. Start by finding a good learning management system. Visit LMS.org to read LMS reviews and blog posts to learn more about the benefits of online training.