What Is the Real Cost of Training Employees?

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Jon Hill
4 mins
woman raising hand in training session representing concept of cost of training employees

For some organizations, employee training is seen as an unnecessary expense. Once an employee has a basic understanding of the role, why invest more time and resources into that employee’s development?

However, untrained or under-trained employees pose significant risks to any company, including productivity loss, a negative customer experience, and high employee turnover—and hiring new workers costs significantly more than training your existing workforce.

Let’s break down the average cost of training employees, as well as the benefits of providing proper training to your staff. 

Benefits of Providing Training to Employees

Providing adequate training equips your employees to do their jobs well—which ultimately benefits the company as a whole. Here are just a few of the benefits you can realize from effective employee training:

A trained employee is a happy employee.

Trained employees understand how to efficiently and effectively perform their roles. That makes them feel competent and accomplished, which can boost employee satisfaction. Plus, when employees do their jobs well, they tend to receive more opportunities for promotions, professional development, and special projects.

An untrained employee, on the other hand, may struggle to do his or her job and will likely make more mistakes. This may open them up to employee discipline or poor performance reviews, which can erode morale—and lead to employee turnover.

Training employees costs less than hiring new workers.

Hiring new employees can be costly—more than $4,000 per new hire, according to the Society of Human Resource Management. Training an employee, on the other hand, costs U.S. companies an average of $1,111 per year, according to the 2020 Industry Training Report.

Trained employees work smarter.

Because trained employees understand how to perform their roles, they are often able to complete their responsibilities more efficiently than under-trained workers. Ultimately, that allows them to get more done in a shorter amount of time—which benefits both customers and the company as a whole.

Effective training increases productivity.

In nearly every industry, technology and trends evolve quickly, so employees’ skills must be constantly updated to keep up with the fast pace of innovation. With regular and adequate training programs, you can equip employees to maintain high levels of productivity.  

Risks of Not Properly Training Your Employees

Failing to train your employees comes at a high cost. Some of the risks include:  

  • High employee turnover: Without training, employees will miss opportunities to grow professionally and may not be able to meet performance goals. That can lead to low morale, which tends to result in higher employee turnover. And while turnover is an expensive problem in and of itself, also consider the cost of losing employees and their knowledge. When employees leave, their knowledge goes with them — making it even harder to properly train new employees.
  • Loss of customers: Poorly trained employees may lack the knowledge and skills to provide a good customer experience. In response, customers may take their business elsewhere. 
  • Damage to brand reputation: One poor customer experience may seem like a small problem—but as untrained employees continue to impact more and more customers, your brand as a whole may suffer.
  • Financial turnover: High staff turnover is expensive. Finding a new employee can cost 30% of that role’s total salary. As you lose more employees to turnover, those costs can quickly add up.
  • Never reaching optimal productivity: Staffed with fully trained employees, your company could be capable of acquiring and serving more customers—but if you don’t provide that training, you’ll never realize that optimal productivity. Workers who aren’t fully trained will generally take longer to perform tasks—and may perform them to a lower standard—which will hinder your overall productivity.

What Are the Expenses of Training Employees?

While training employees typically costs less than hiring new workers, there are still expenses involved:

Time

Adequate training requires a time investment. Training takes employees away from their primary responsibilities and job function. A customer service representative, for example, would have to take time away from the phone to successfully complete that training—and you may even have to pay an additional worker to cover those responsibilities. You also have to account for the time that trainers (either in-house or outsourced) spend delivering the educational materials.  

Materials, equipment, and supplies

Depending on how you deliver your employee training, you may require certain materials and equipment. For example, technology training may require computers and software.

Travel

Also make sure to account for transportation expenses. Employees may have to travel for certain courses or conferences, so you could be responsible for covering reimbursements for mileage, lodging, and meals.

Is the Cost of Training Employees Worth It?

When you compare the cost of training employees to the cost of hiring new employees, it’s clear that providing adequate training is worth the money. However, there’s even more to the story: you must also consider opportunity cost—how much productivity, revenue growth, and customer loyalty can you generate with capable, fully trained employees? 

When employees are empowered with a deep understanding of their roles, they are able to proficiently—and happily—perform their roles. As a result, your company is more likely to experience high staff morale and provide exceptional customer experiences.While there’s no one-size-fits-all training program, it can be beneficial to use a knowledge management solution to house your company information, including your onboarding and training materials. With this kind of system in place, you can ensure that everyone has access to the same, trusted, up-to-date information—and that you never lose experienced employees’ knowledge, even if they eventually leave the company. And ultimately, it can simplify your training processes, whether you’re training a new employee or offering advanced training opportunities to your experienced staff.

June 24, 2021

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