employee working on training remotely

To put it simply, cost is a very large determining factor when it comes to selecting the right employee training program for your organization. With options to purchase per license, course, content offering, learning platform, or any combination of these can be confusing and costly.

The most up-to-date research we have on the average cost of training per employee comes from a  November/December 2020 Training Industry Report, which took into consideration the effects of the pandemic and showed an overall decrease in training expenditures.

In 2020, across all industries, organizations with 100-999 employees spent about $1,678 per employee, organizations with 1,000-9,999 employees spent about $581 per employee, and companies with 10,000 employees or more spent $924 per employee on training. Companies with fewer than 100 employees were not surveyed.

While the number may be a shock at first, when you look at everything that goes into training, from the time investment to the salary for training managers, that number begins to look more manageable.

The challenge facing organizations is determining if that budget is a wise investment.

To do that, you have to evaluate the real costs of not training employees and compare those costs to the return on investment from effective training.

Is the Cost of Training Employees Worth It? 

It’s common for companies to spin their wheels trying to find the right training strategy, at the cost of their employees, and the burden of combatting high employee turnover is much higher.

What then, would cause an organization to make such a seemingly risky investment?

First, Gallup reports that 87% of millennials say professional development at work is important. Since millennials make up the largest single demographic in the workplace, the risk of not having development opportunities in your organization far outweighs other concerns. 

Secondly, your organization’s employee engagement hinges on development. When employees don’t feel valued and developed, they become disengaged, and loss of engagement always equals loss of money. Gallup estimates that $300 million is lost each year due to actively disengaged employees.

Training doesn’t have to be just a line item in your budget – with the right strategy it can be an investment. Here’s how Tarrant Regional Water District budgets for employee training:

Narrowing down to an organizational level, Gallup says the cost of replacing an employee can range from one-half to two times the employee’s annual salary.

By offering training, you’re meeting the needs and wants of your employees and when implemented correctly, you can reduce your turnover.

So how does an employee training program produce these bottom-line financial results?

Employee training addresses the root issues of low employee engagement and high employee turnover in addition to providing support for sales, customer service, safety and compliance, and more.

By making room in your budget for employee training costs, you’re not only getting vital information into the hands of your employees quickly and easily, but you’ll also empower them with soft skills training, which will develop them in their role and in future roles within your organization.

Organizations shouldn’t look at training as simply another cost – it’s an investment. Investing in employee training and development will allow organizations increased revenue and reduced costs-to-operate.

Choosing an Online Training Solution to Invest In

A training program that puts employees’ needs above organizational needs already creates a competitive advantage for you, but that’s not the only reason to consider online options. Compared to instructor-led training, online solutions have proven to be more e­ffective in cost, time, administrative ease, learning transfers, and breadth of topics available.

When choosing the right program for your organization, you have to look at the cost of instructor-led training versus online capabilities, as well as what you are trying to accomplish with your program. Are you simply measuring utilization? Are you hoping for fewer safety incidents? Are you looking to measure specific variables?

Answering these questions and beginning to set goals are the first steps into choosing what’s right for you. This will also help mitigate worries and fears of making the wrong decision.

The way training may look to many employees is simply as a task to be checked off a list and forgotten about until the next year. However, when looking at online options, training can be used to further develop their skills and help them grow. By reskilling and upskilling your employees, you can boost productivity, engagement, and retention!

For more information regarding decision-making about training, check out part one of our pricing series. In this deep dive, we look at the basics of online training, the options available for learning platforms, content options and availability, and how BizLibrary fits into the market.

illustration of a house representing making a smart and confident investment in training

Maximize Your Employee Training Costs to See High ROI

Putting a training program in place without a strategy behind it is an ineffective use of training budget. Training programs can be agents of real change in your organization, but it takes a deliberate strategy to make that happen. 

Training needs to be tied to a business outcome – to do that, you need well-developed goals and metrics for training.

Start with a why – why is a specific training event occurring? 

Let’s use an example of an organization looking to increase the amount of deals they close.

Offering generic sales training won’t work. Any business challenge is a symptom of a process that has broken down. Many organizations use a sales model that involves a more junior employee qualifying potential clients, and a more senior sales representative who creates solutions for potential clients.

The best sales-closing training in the world won’t bridge the gap between desired outcomes and real results if there’s a breakdown in the process and prospects aren’t reaching your closers.

If we break down the process, this hypothetical sales situation will look something like this:

The problem

The organization is not closing enough deals to make its revenue goals. 

The broken process

Junior employees don’t have the skills to qualify the right prospects, making it harder for your senior reps to talk to the right people. 

The wrong solution

Focusing on training senior reps to improve their closing skills. 

The right solution

Offering training to your junior reps to help them better identify the right prospects and get them to your closers. 

Identifying objectives is important, but digging deeper and discovering why your processes are breaking down is a crucial part of this step. 

Offering the wrong training will waste your training budget and make it more difficult for you to champion learning in your organization. But identifying the broken process and using training to improve it will prove to your leadership team that the cost of training employees is worth it. 

Measuring your ROI is difficult, but it is possible for a dedicated professional. Check out our ROI Calculator for Employee Turnover.

You should have some idea now that strategy is the driving force behind optimizing your training budget – when you begin looking at the benefits, the cost of training per employee become significantly less daunting, and the potential for returns becomes significantly more substantial. 

If you’d like to learn more about improving your ROI and measuring the results of your training program, be sure to download our ebook on understanding the Kirkpatrick Model.

Considerations for Investing in Employee Training Solutions

With a wide variety of providers and pricing structures out there, doing research into this question of “How much will online training cost us?” can be quite the headache.

There are a few things you can look at to help narrow down your options.

  1. Base components for online learning: This is a two-fold consideration. Not only do you need to look at the support you are getting from a provider (ongoing strategic support, implementation, and tech support), but you also have to look at accepting an entire library of content versus hand selecting individual courses on specific topics.
  2. Types of solutions: There are a variety of solutions available. You can have an HR Suite that includes a learning management system (LMS). You can get an all-in-one learning platform that includes the content. You can choose to use your own LMS or select only content.

For a look at actual prices we’ve researched, check out part two of our pricing series:

executives reviewing pricing for online learning technology

We’ve done a lot of research into what’s available in the market and pulled a whole bunch of numbers together to better help you make an informed decision. These estimates and examples should help guide your expectations for what pricing can look like with different options and goals.

For more guidance on gaining leaders’ buy-in for the training budget your program needs, we’ve written an ebook that will help you make the case for online learning: