How Much Do Most Companies Spend on Training and Development?
The 2021 Training Industry Report published by Training Magazine indicated the average company spent $1,071 per employee on training in 2021. When looking at the average based on size:
- Small companies (100-999 employees) spent the most per employee at $1,433, even though they decreased their spending by over $200 per employee from the previous year.
- Mid-sized companies (1,000-9,999 employees) nearly doubled their spending per employee in 2021, up to $902.
- Large companies (over 10,000 employees) decreased the training amount spent per employee by 20%; from $924 in 2020, to $722 in 2021.
If that feels expensive to you, shift your thinking a little bit and consider that you’re giving your team the tools they need to succeed in their roles. It may come at a cost, but there’s a return on investment (ROI) as people work harder and smarter with the tools they learn in training and development programs.
For example, if a manager addresses poor behavior (e.g., gossip) correctly and using the tools they gained in training on addressing poor behavior, you’ve already recovered what you spent in training. Left unchecked, that behavior would’ve turned into a lot of wasted time by everyone in the team complaining or being distracted by it. And, it would’ve ended up being a lot of time spent by HR if the complaint had escalated.
Tips to Establish a Budget for Training and Development
Your budget is one way your organization communicates goals to employees for the upcoming year. Here are some tips to help you establish it.
1. Training Needs Analysis
Before allocating a budget for employee training, it’s essential to identify the areas where your workforce needs the most development. Conducting employee surveys or climate assessments can help you determine the knowledge and skills gaps within your team, so you can address them through training programs.
In addition to data, it’s also important to gather feedback from your employees directly. Asking questions like:
- What work processes could we improve?
- What’s the most challenging part of your job?
- What skills would you like to develop in your role?
These questions can provide valuable insights into the specific training needs of your team.
And, by involving your employees in the decision-making process you show them you value their input. You also gain their buy-in and support for the training initiatives you ultimately choose to implement.
2. Training Goals and Objectives
When it comes to training goals and objectives, it’s important to ensure your training program aligns with your company’s overall business objectives. So, it’s essential to have a clear understanding of what those objectives are. Sit down with your senior leaders to discuss the goals, and challenges facing your organization, and how your department can contribute to company success.
Our training inquiries are often focused around solving a company culture problem. Perhaps there’s high turnover, people are engaged in toxic behavior, or a recent survey shows people are unhappy. Even in these cases, it’s important to understand the goals, and what exactly will help you achieve them. For example, is it educating people on harassment, or teaching them about inclusivity, that will turn things around? Or, is it something else entirely, like changing up a system for accountability, that’s needed?
In addition to considering what you want employees to learn, you have to think about how you’ll know it was learned and even better, it’s in practice.
If the goal is to increase market share by 10%, for example, it’s important to discuss how your team plays a role in that goal with organizational leaders. Through a needs analysis, you can then understand the skill gaps, and now you can propose training programs that are attached directly to the company goal. You’ll know the training was successful when the company achieves its 10% market share increase.
By the way, according to the Association for Talent Development (ATD), companies that invest in training enjoy a 24% higher profit margin compared to those that don’t. By investing in your employees, you’re telling them you believe in their potential and want to help them succeed. Of course, this inspires engagement and retention.
3. Delivery Method
Choosing the right delivery method is key to maximizing your training budget. In-person training can be great for team-building as it is very interactive, but it can also result in some pretty steep expenses. You have to factor in:
- Travel and accommodation
- Training venue
- Catering costs
- Training materials
Online training, on the other hand, is a more cost-effective option that can reach a larger audience. You can bring together your entire team, regardless of where they are in the world, and provide them with the training they need to succeed. Plus, you can save on printing costs, as everything can be delivered digitally and the training recorded for future use.
When it comes to the duration of your training, it’s important to strike a balance between providing enough time to cover all the necessary material and keeping the cost under control.
4. Training Provider
The options are to do it yourself (in-house), bring in an external training provider, locate some online courses, or a mixture of these options. Weigh them carefully before making a decision.
Obviously, doing a training in-house is cheaper than an external provider, but will the training be as effective as an external expert who’s been delivering training on that topic for years? Probably not.
And, a more experienced trainer may charge more than a less-experienced one, but they are probably better at achieving the desired results. (Check out our amazing trainers here, by the way)
Pricing of online courses can vary, but before considering that as an option determine if it’s the best venue for relaying the information and inspiring behavior change attached to business results.
5. Number of Training Programs
While a one-off standalone training can be helpful, it’s crucial to provide ongoing training for your employees. It requires more significant investments, but it offers more opportunities for sustained growth and development.
It’s essential to keep in mind that our brains are not retention superheroes. We can only remember so much information at a time, and as time goes on, our memory fades faster than a summer tan. Research shows that we can only recall about 80% of material immediately after training, and that number drops significantly over time to 10%. That’s why it’s crucial to have ongoing training to ensure information sticks, and behavior changes are sustained.
What Happens Next?
It’s important to note that good training may not be free or cheap, but increased employee satisfaction, improved productivity, and better business outcomes are just a few of the many rewards.
Recently, one of our clients indicated in a follow up survey that 40% of employees had used a tool they gained from our training on being an upstander (stepping in when you witness poor behavior) over the last year. Consider how we reduced complaints to HR and the possibility of behavior escalating into something worse. Return on investment, baby!
Our training programs are designed to maximize employee learning in key areas such as civility, communication, and allyship, and many more. We understand that simply providing training is not enough, which is why we work closely with you to create, develop, and execute programs that are tailored to your company’s unique needs and challenges.
By partnering with us, you can be sure that your employees will receive training that is both effective and engaging, and that will have a real impact on their ability to make a positive difference in your work environment! Remember, your employees are your greatest asset, and their growth is vital to the success of your organization!
“We are committed to helping your organization meet its goals by partnering with you to develop and deliver systemic solutions to negative workplace behaviors. We will partner with you to build a positive and healthy work environment so your employees can thrive.
We don’t focus on the corrective actions involving eradication of problems and negativity, we focus on finding solutions that create a safe and civil workplace – and there’s a difference. Focusing on solutions creates preventative and sustainable change.
Negative and aggressive workplace behaviors are systemic. In order to effectively remove them, holistic and system-wide solutions that are tailored to your organization and focused on prevention, not correction, are required.”
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