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HRDQ will be closed on Friday (5/24) and Monday (5/27) for Memorial Day
What’s the Average Cost of Employee Training Programs? - HRDQ

What’s the Average Cost of Employee Training Programs?

U.S. businesses lose one trillion dollars due to voluntary employee turnover every year. As you likely know, the cost of hiring a new employee is significantly higher than retaining an existing worker. According to conservative estimates, it costs one-half to two times an employee's annual salary to replace them.

There are many different ways that you can work to improve employee retention at your organization, including prioritizing employee happiness, offering opportunities for development and growth, and keeping compensation and benefits competitive.

Another essential piece of the puzzle when you want to create a team of long-term employees is ensuring that they have received the proper training for their position. Employee training programs don't just teach new hires the basics, but they also benefit existing employees and the entire organization.

We'll dig deeper into the benefits of investing in employee training later in the article. First, however, let's answer the question that is likely on the forefront of your mind: how much do employee training programs cost?

How Much Does It Cost to Train Employees on Average?

As you might imagine, the cost of training employees can vary significantly based on many different factors. We'll look at some common factors that can impact the cost of employee training, but first, let's take a look at the average cost of training employees.

In the early 2000s, the average cost of training a new employee was around $1,200 per worker. While this cost was rising in the decades that followed, there was a decrease in the average cost in 2020 by about $175. The reasoning behind this likely has to do with companies either getting rid of their training programs to cut costs in the face of the coronavirus pandemic or finding less costly alternatives.

Training an Employee

Of course, training new hires isn't the only type of training that you will likely offer your workers. However, when it comes to additional training related to your workers' professional development, the average cost is around $1,000 per worker.

According to the 2019 Industry Report from Training Mag, small businesses and enterprises spent the most on employee training, while medium-sized businesses spent the least.

What Factors Determine the Cost of Employee Training Programs?

To better understand how much it will cost your business to operate employee training programs, you'll want to examine some of the factors that can influence how much you will need to invest.

Company Training Program

Of course, the cost of your training programs isn't the only thing that matters. In fact, focusing too much on cost can be a distraction from the most important consideration: how much return are you enjoying from your investment? To learn more about the different methods you can use to measure the ROI of employee training programs, take a look at this guide.

The Size of Your Business

One of the most important factors about how much employee training programs will cost your business is the size of your company. Larger companies can have lower employee training costs, as they are more likely to take on more than one employee at one time. That means that they can reduce their time and money input by training several workers at one time.

Small Sized Business

On the other hand, smaller businesses tend to spend more money per employee than larger companies. At the same time, smaller businesses typically spend less time training their employees than larger businesses.

Your Industry

Team of Employees

The industry your business is in will also play a role in how much employee training programs will cost. Some types of work require that you give new and existing employees extensive training, while other roles don't demand nearly as involved training programs.

The Equipment Required

Equipment Required For Training

Training typically requires equipment and supplies, which is a cost that can vary between businesses and industries. When you are launching a new computer-based employee learning program, you'll want to explore various options when it comes to video courses and computer programs.

The Training Method

Depending on which training method your business requires, the costs can range significantly. Your training program might involve classroom-style training, on-the-job training, simulations, computer-based learning, or some combination of these.

Online Training Method

Are you wondering whether virtual classroom training is worth the investment? Check out this article for some of the top benefits of this training method.

Your Employees' Skills

Highly Skilled Employee

Another significant factor in determining the cost of employee training programs is the skills that your employees have. You'll likely find that some workers learn faster than others and might require less training before they begin the job or implement new strategies in their current position. Conversely, other employees might require that you invest more resources and time to catch them up to speed.

The Opportunity Cost

Training New Employee

Another factor you can't ignore when training employees is the opportunity cost. When your workers are training, they aren't performing their job duties. While this is a worthwhile trade-off, it's worth considering how long your training program should be in relation to the productivity loss it will incur.

How Can You Calculate the Cost of Training Per Employee?

Understanding how much it will cost you to train your employees is essential if you have a training budget you want to stick to. You will want to keep accurate records of your expenses to help you understand the real cost of training, and you'll want to keep track of the time spent training, too.

Calculating Cost of Training

Some important costs to consider include:

  • Training materials and equipment
  • Hiring outside help
  • Productivity loss

To calculate how much your training programs cost per employee, you'll want to add up all of the expenses related to the training programs. For example, if you calculate the cost of new hire training, you'll want to divide this number by how many new employees you have. If you're calculating the cost of training programs for existing employees, you'll want to divide the total expenses by the number of employees participating in the program.

Why Employee Training Programs Are Worth the Investment

Training Organization Employees

Training programs are an excellent opportunity to invest in your workers and organization. Let's look at some of the numerous benefits of employing well-designed training programs at your workplace.

Boost Productivity

There are many different ways that employee training programs can boost productivity among your workers. When you're training new or existing employees to use tools or software that are an essential part of your business machine, you can rest assured that you will receive the money you invested back several times over in increased productivity.

Productivity can also be increased thanks to another benefit of employee training programs that we'll discuss in a bit: increased confidence among your team. When your workers know exactly what they should be doing and how they should be doing it, they can tap into a much more productive workflow. It also means that they aren't slowed down by asking questions or feeling uncertain about how to proceed.

Productive Employees

If you're training your employees in soft skills, this can also be incredibly beneficial in the realm of productivity and efficiency. For example, a study authored by professors from the University of Michigan, Boston College, and Harvard found that workers who received soft skills training were 12% more productive than those who didn't.

Reduce Turnover

Employee training programs can also give you one of the most valuable results a business can receive: reduced turnover. We all know that hiring a new employee is a lot more expensive than keeping an existing employee. According to LinkedIn's 2020 Global Talent Trends Report, there was a 53% lower attrition rate at organizations that ranked highly for employee training.

Employees that are properly trained are more knowledgable, successful, and engaged. That means that they also tend to be happier at their jobs and less likely to start searching for new opportunities elsewhere.

Team of Satisfied Employees

On the flip side, if your workers feel like they don't know what they're doing, there's a good chance they'll start thinking about looking for a new job soon. People are much more likely to be engaged when they feel like they grasp the task at hand, and employee training is an essential part of creating that outcome.

Soft skills training programs can also help to reduce employee turnover. According to the same study referenced above from UMichigan, BC, and Harvard, workers that receive soft skills training are more likely to stick with their job than look elsewhere.

Increase Team Confidence

There is a misconception that confidence is something that people either have or don't have. The idea is that you're blessed with confidence, or you suffer from insecurity. In reality, though, confidence is a soft skill that can be nurtured and improved over time.

Increased Team Confidence

One survey from Indeed found that 98% of workers report performing better when they feel confident. 94% of respondents also said that being confident at work makes them happier.

Employee training doesn't just build confidence at the individual level, but it can help to build team confidence. This is truly a game-changer, as all of your workers feel confident in their abilities and their teammates' abilities to perform the task at hand. Employers can benefit significantly from promoting a culture of confidence in the workplace, and investing in training programs is one crucial step towards that outcome.

Improve Flow in the Workplace

Improved Organization Workflow

Employee training programs can also help improve the workflow in your office or organization. Ultimately, when employees don't have the training that they need, they interrupt more experienced staff with questions. When you invest in training programs that prepare your team adequately for their role, this will happen less often, and your organization can maintain a healthy workflow.

Prepare Your Employees For Future Leadership Positions

Many companies prefer to promote from within, and there are many good reasons to prioritize that tactic when you need to fill a management position. When your workers are well trained, they will be able to excel in their position more quickly and therefore be more prepared for a future leadership position.

Training For Leadership Positions

Soft skills training can be essential if you hope to promote your workers from within the organization. According to one report that surveyed hundreds of recruiting and HR professionals, 58% of respondents believe that soft skills are more valuable in leadership positions than positions at the entry level. The same survey found that 94% of these professionals believe that employees with strong soft skills are much more likely to be promoted within a company than workers with weaker soft skills, even when they have more experience.

Is It Time For You to Implement Soft Skills Training Programs at Your Workplace?

How much employee training programs cost can vary depending on the size of your business, your industry, the type of training you're employing, and more. Of course, an important question to answer before choosing employee training programs is how much you should expect to receive when it comes to a return on your investment.

As discussed above, soft skills training can improve your organization in numerous ways. From improved job satisfaction and productivity to increased self-confidence and retention rates, soft skills training can be an essential tool in transforming your workplace into the most effective, efficient, and pleasant organization in town.

Soft Skills Training Session

At HRDQ, we specialize in delivering research-based soft skills training materials and solutions for companies of all sizes.

With more than forty years of experience offering training products and services, we know just how important it is for you to keep your expenses low in your business. That's why we offer nearly 200 do-it-yourself training tools that include hands-on games, assessments, activities, and simulations.

If you know that your workers would benefit from soft skill training but aren't exactly sure where to begin, you might choose to start with our online assessments. In our HRDQ Assessment Center, you can assess the skills, behaviors, and styles of your workforce in order to implement the most effective training programs for your team.

Do you or your organization have any questions or concerns about employee training programs or their costs? Was there anything we brought up in this article that you would like a little more clarification on? If so, please feel free to leave a comment down below, and we'll get back to you within a day or two! We make it a point to reply to every comment or question we receive, and we'd be more than happy to assist you however we possibly can!

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About our author

Bradford R. Glaser

Brad is President and CEO of HRDQ, a publisher of soft-skills learning solutions, and HRDQ-U, an online community for learning professionals hosting webinars, workshops, and podcasts. His 35+ years of experience in adult learning and development have fostered his passion for improving the performance of organizations, teams, and individuals.