Let’s talk money — the (real) cost of training employees

The best employees are made, not found. You need to invest in their personal and professional development through continued training. But training your employees comes with a price tag. Let’s explore the cost of training employees.

Cost of training employees
Caroline
Written by Caroline Communications
Posted on
Reading time 5 minutes

What are the costs of training employees?

The average organization spent $1,299 per employee on training in 2018

According to ATD’s 2019 State of the Industry [1], the average organization spent $1,299 per employee on training in 2018. The State of the Industry is published annually by ATD Research and provides benchmarks for the talent development industry.

We see significant growth in training expenses when we compare costs in 2016 with 2018. In 2016, organizations spent an average of $1,252 per employee on training and development [2]. In 2018, those expenses grew by 3,75% to $1,299 per employee. ATD expects this growth to continue over the next few years.

Factors that determine the cost

Of course, the cost of employee training programs is not the same for every business. Here are some factors that will determine the cost of training a (new) employee [3].

  • Company size. The size of your company has a significant impact on the incurred training costs. According to a 2019 "State of the Industry" report by the Association for Talent Development, midsize companies (500 to 9,999 employees) spent less ($829) than large ($1,544) and small ($1,511) companies. A large company has 10,000+ employees, and a small company has less than 500 employees.
  • Industry. What do you think costs more, training a content writer or an asbestos remover? We assume the last one. Specialized training for dangerous jobs is more expensive. Also, they need to renew their licenses regularly, which requires ongoing education on the current regulation. For content writers, that isn’t the case. Their job (and skills) is more generic.
  • Types of learners. Some people are quick learners, while others need more guidance.
  • Type of employees. An employee’s skill level determines the training costs. Some employees only require minimal training to refine or update existing skills. In contrast, others need extensive training to learn completely new skills to grow in their position.
  • Training methodFirst, a company must decide whether the training takes place online, in-person, or in-house. E-learning is less expensive than traditional classroom instruction. But some things, like practical-based instruction, are not well-suited for e-learning. At a minimum, an organization needs to factor in: travel expenses, training facilities, hiring a trainer, and printing materials.
  • Equipment. Is e-learning state of the art at your organization? Then you need to create or buy e-learning courses and distribute them. An LMS is a helpful solution because you keep all the materials in one place. You need to provide printed materials (or books), notebooks, pens, and other materials for in-house training. The latter could be costly if you provide first aid training, for example.
  • Productivity loss. Let’s say a senior team member trains new hires or junior employees. In this case, he can’t spend this time on growing your business. The cost of lost productivity depends on how long your training program takes and who is doing the training. Is it Rachel, who generates a turnover of $20,000 every month, or Ben, whose turnover is $13,500? In the end, it will balance out because the productivity of trained employees will be higher.

Is the cost of training employees worth it?

Training makes your employees happier

We think the cost of training employees is worth it. No pain, no gain! Training makes your employees happier. With excellent training, your employees will feel valued and also add real value to your organization. They’ll make fewer mistakes and be more productive and efficient. Companies that prioritize employee development had 281% higher revenue per employee and 24% higher profit margins [4].

Conversely, lack of training leads to employees feeling unappreciated in their job and having a general sense their work doesn’t matter. At this point, employees either leave (or get fired). Replacing an employee comes at a high price. Hiring someone can cost up to 30% of the position’s salary. An employee making $40,000 a year would cost around $12,000 to replace. [5]

Read more about the benefits of employee training

Affordable employee training with Easy LMS

Easy LMS helps to put your employee training online. With our LMS, you can create engaging Courses and challenging Exams that allow you to verify and test your employees’ knowledge. Use our Academy to provide all training materials in one centralized location. Our LMS has all the features to support your team’s continuing education! And it is all at an affordable price. We offer three subscription types that start as low as $50 a month. We are known for our fair pricing!

Useful resources

  1. Association for Talent Development - report 2019
  2. Association for Talent Development - report 2016
  3. Patriot
  4. Cegos Group 
  5. Insight consulting 

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