- Blog post
What does training cost? Benchmarks for setting your budget
How much should you be spending on training costs?
That’s not an easy question to answer, but here are two general parameters you can use for budgeting and benchmarking:
The average training expenditure per employee was $1,252 in 2015, according to the ATD 2016 State of the Industry report. That’s up from $1229 in 2014.
Another metric from the same study: training budgets as a percentage of payroll was 4.3%.
While other estimates range higher and lower, they’re generally in the same ballpark.
Keep in mind, however, that training dollars aren’t evenly distributed. Nearly everyone gets training on processes and procedures related to their particular job — for example, how to operate the equipment or fill out timesheets or troubleshoot a customer’s problem. But from an organizational point of view, the biggest investments are concentrated where they will yield the highest return on investment — typically, training for executives, managers and salespeople.
So while average per-employee training costs may be about $1,200, the amount spent on these high-impact employees may be much higher. Again, it’s hard to set a specific figure. But if you apply the 80-20 rule — if 80% of training dollars go toward 20% of the staff — it comes to about $4,800 a year per high-value employee.
Your results may vary. But when you consider the impact that these people have on the organization, that seems like a reasonable starting point for setting budgets.
What’s your training model?
Finally, there’s the question of how you’re delivering training. Are you using an instructor-led model, an e-learning model, or a blended model? Surprisingly, about half of training dollars still go to the most inefficient modality — live instructors in a classroom. You could easily spend thousands of dollars a day — or even tens of thousands of dollars a day — on live trainers. And depending on your training challenges, that expense may be justified. But if you go that route, you’ll probably need to adjust these figures higher.
And while you’re at it, budget more for individualized coaching and follow-up. Otherwise, you risk wasting those dollars spent on classroom training. And that’s not just me talking. Any live trainer worth their salt will tell you the same thing.
Full disclosure: We’re an e-learning company. And we think e-learning is an extraordinary value. But when it comes to high-value employees — those executives, managers and salespeople that we serve — we actually prefer a blended approach. We think e-learning works best as a a catalyst for coaching by managers. And that’s what our learning systems do.
So what are RLI’s training costs?
All well and good, you may ask, but how much do Rapid Learning Institute’s training programs cost? That depends on how many people you’re training and what you’re training them on. Our learning specialists will be happy to help you design a program that makes sense for your organization and your goals. I can tell you that the out-of-pocket costs will be far, far less than $4,800 per learner per year. Our average customer invests between $300 and $500 per learner per year for our learning solution.
Indeed, for the customers we work with, the cost of the learning program itself is seldom the critical factor. The biggest question — whether you use our approach or someone else’s — isn’t how much you spend. It’s whether your organization and executives are committed to creating and sustaining a culture of learning. The biggest investment you’ll need will be their time, focus and energy.