Are the benefits of employee training worth the costs?

Posted September 26, 2017

By Kyra Kudick, associate editor, J. J. Keller & Associates

A human resources manager doesn’t need to look far to find opinions and statistical data touting the benefits of employee training.

For example, according to a May 2017 CareerBuilder survey, employers using a structured onboarding program, including ongoing employee training, report positive effects on the workforce, including: greater efficiencies (44 percent), higher productivity (42 percent), higher morale (38 percent), and lower turnover (31 percent).

It might seem, according to this survey anyway, that there is a good argument for using a structured onboarding and training process. After all, who doesn’t want a more efficient, productive, happy workforce of long-term employees? The benefits speak for themselves ... or do they?

What about the costs?

HR managers understand that employee training comes with benefits, but they also know that training can be costly.

A 2016 report from the Association for Talent Development showed that the average training cost per employee was $1,252 for direct learning expenditures in 2015.

For some employers, training costs might be a line item in a budget, but for others, training expenditures seem like a luxury they can’t afford.

Considering training

So you read this CareerBuilder survey, and it’s got you thinking, because you don’t currently have a structured onboarding process.

You have noticed an increase in turnover recently, and departing employees have cited a lack of training as a reason for their exit.

In fact, several employees have been recruited by a competitor who is advertising a comprehensive onboarding program with a focus on employee development.

In the past, you have not had trouble recruiting, but recently you have noticed a tightening in the labor market. You are concerned that your lack of training opportunities might make you a less desirable employer in the future.

You have traditionally had a limited training budget, but you are wondering if now is the time to propose a larger expenditure.

How can you spend your training dollars to reap the greatest benefit?

Start with a simple cost-benefit analysis to better understand both the costs of specific training as well as the potential benefits.

Cost-benefit analysis

Understanding costs. First, brainstorm to consider all potential costs of a program, from design to implementation. Can you buy an out-of-the-box solution? Do you have in-house trainers? Do you need a consultant?

Also, think about as many related costs as you can. For example, will there be an initial decrease in productivity while people learn new systems (or perhaps while managers or coworkers mentor new hires), and what cost might be associated with that decline?

Assign a monetary value to all costs (this might require some market research).

Understanding benefits. This is less straightforward than understanding costs.

Some benefits of training are easier to quantify. For example, an increase in productivity can sometimes be measured by output. Often, however, the benefits of training are more intangible and not as easily measured. For example, how much is good employee morale worth on a balance sheet?

It might be helpful to consider benefits in relation to potential costs of inaction. For example, if your current lack of training is linked to turnover rates and challenging recruitment efforts, what are those costs? How are those costs minimized by a training program? Again, assign monetary values to all potential benefits.

Compare costs and benefits. To determine whether your benefits outweigh your costs, calculate your total costs and your total benefits, and compare the two amounts.

It is also important to look at costs and benefits over a set period to understand where the break-even point occurs.

Some training programs might reap long-term benefits that make up for large initial investments. In other cases, you might decide that a smaller investment (such as a test program) can help justify expenses for a larger-scale undertaking.

About the author:

Kyra Kudick is an associate editor at J. J. Keller & Associates, Inc., a nationally recognized compliance resource company that offers products and services to address the range of responsibilities held by human resources and corporate professionals. Kudick specializes in employment law/HR issues such as employee relations, hiring and recruiting, and training and development. She is the author of J. J. Keller’s Employee Relations Essentials manual and SUPER adVISOR newsletter. For more information, visit www.jjkeller.com/hr and www.jjkellerlibrary.com.