Employee training is essential to the success of any organization. Too often, though, training budgets are slashed in favor of other expenses. While this might seem like a logical step when times are tight, it’s important to weigh the long-term implications of such a decision. The right training program can increase employee engagement, reduce turnover, and improve productivity. Well-trained employees make fewer errors, feel more motivated to perform, and hopefully become even more confident in their roles. With so much riding on your training program, can you really afford to downsize?
Allow us to guide you through how to allocate training budget funds in the most effective, efficient way possible. Creating a training budget is the best way to ensure your team has the skills necessary to complete tasks up to your high standards. Here are a few ways to maximize your training budget ROI:
Understand the Training Cost Categories
Start by understanding the major variables your training budget must account for. What are those variables?
About half the budget should be dedicated to paying your training staff. Whether you decide to outsource or hire internally for such positions, you’ll want someone – or multiple someones – in charge of the training process. The team should oversee the development of training materials, the delivery of content, and results reporting. While there’s no one set trainer-to-trainee ratio that works for every organization, you’ll want at least one trainer for every 50 employees on staff.
Training Tools and Technologies:
Next, consider training tools and technologies. This category should account for about 25 percent of your training costs, but the expense really depends on your delivery methods. Renting out a classroom, desks, whiteboards, and projectors can get expensive fast, while eLearning platforms may be more affordable. Learning management systems can save serious time and money, so be sure to do your homework when comparing training delivery methods.
The training content itself should account for another 20 percent or so of your training budget. Save money by developing the material in-house, or save time by outsourcing this aspect of training. Either way, the training content itself should consist of assessments, slideshow presentations, videos, lectures, or eLearning courses.
The final portion of your budget should cover miscellaneous items that can be encompassed under the training umbrella. Workshops, conferences, consulting fees, and tuition reimbursements all fit into this category.
How to Calculate Training Budgets
Now that you’ve got a good working understanding of the various training budget categories, it’s time to crunch the numbers. Check to see if your organization has budgets from previous years – they can provide a great jumping-off point for this year’s budget. Compare year-to-date expenses that you can adjust up or down for the next year.
Starting from scratch? Keep in mind that organizations should spend between one and five percent of their total salary costs on training. When your total salary costs in the millions, the difference between one and five percent can be huge. Talk with stakeholders about goals for the year to hone in on a more precise figure. It would be a mistake to underestimate the value a well-funded training budget can bring to your organization!
The High Cost of Not Training
As you tally up expenses and training costs, you might be tempted to shrug your shoulders and give up on cost-effective training and development altogether. While it’s true that quality training can often come with some sticker shock at first, the return on investment is undeniable. What’s more, not training employees can result in much higher costs in the long run. Employees value learning opportunities. Fail to provide them and you’re likely to see your organization’s turnover rates increase.
Undertraining employees also comes with the risk of losing your edge over your competitors. When times are tight, investing in your employees is one of the best moves you can make. Untrained staff isn’t well-equipped to tackle new challenges, giving your competition an opportunity to steal valuable business away from your organization. When you consider your training budget through this lens, it becomes a little easier to stomach the expense of employee learning opportunities.
Tips for Managing Training Costs
While you might be convinced of the value of investing in your team, upper management may not see it the same way. If you’re eager to make cuts to your training budget before presenting it to the C-suite, consider leveraging user-generated content to your advantage. Your colleagues are a veritable treasure trove of experience and information. Work with them to develop reusable training courses that can empower employees while also saving money on content development.
Mentorship programs are another great way to manage your training costs. Such programs take very little start-up cash to create, and they’re a fantastic way to deliver informal training. Mentors and mentees can develop valuable leadership skills through the process – and the teambuilding benefits of such relationships can’t hurt, either.
Foster a Learning Culture
Ultimately, your budget for training and development programs should reflect your organization’s goals. If you’re hoping to create a culture of learning and development, investing in your training budget is one of the best decisions you can make. Of course, outsourced partners can make all the difference in this kind of goal. World Manager can help you discover cost-effective training methods and help you harness the power of a quality Learning Management System. Book your demo now to see the difference we can make in your organization!