How to Reduce Training Costs in Business

By: | Updated: August 31, 2023

You found our guide on how to reduce training costs.

Training costs include all funds and resources dedicated to educating workers directly and indirectly, including course fees, textbooks, and other instructional resources. Some ways to reduce training costs include cutting unproductive training expenses, using in-house knowledge, and having more virtual learning sessions. These ideas aim to empower teams and facilitate workers’ access to the high-quality information required for effective performance.

These tips can help you cut costs of customer service training programs, HR training programs, and sales training programs. These concepts often appear in career-planning books and books on employee training and development.

This article contains:

  • how to manage training costs
  • sample training cost breakdown
  • ways to reduce training costs
  • cost-saving ideas for training
  • training budget tips

Here we go!

The cost of employee training

In today’s rapidly evolving business landscape, employee training is a critical investment for organizations aiming to maintain a competitive edge. However, the financial investment needed for comprehensive training programs has become a significant consideration for companies of all sizes. The cost of employee training includes various factors that extend beyond direct monetary expenses, like opportunity costs and adapting to technology.

1. Monetary Expenditure

The direct financial impact of employee training is perhaps the most apparent aspect of its cost. Training programs need budget allocations for curriculum development, training materials, instructor fees, and technology infrastructure. Small- and medium-sized enterprises often find it particularly challenging to set aside enough funds for training initiatives. Firms need to balance limited budgets with the necessity of upskilling their workforce. Even larger corporations, while having more resources at their disposal, must carefully weigh the returns on investment against the costs.

2. Opportunity Costs

Beyond the immediate budget, there are opportunity costs associated with employee training. The time and effort invested in training programs could alternatively be directed toward revenue-generating activities. This situation becomes especially relevant in industries where time-to-market and adaptability are crucial. Moreover, pulling employees away from their regular tasks to participate in training can lead to short-term productivity losses, potentially affecting overall efficiency. Striking a balance between employee development and ongoing business operations is a delicate challenge that requires strategic planning.

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3. Adapting to Technological Advances

As technology reshapes industries, employee skills must align with these shifts. Consequently, organizations often grapple with the need to train their workforce to keep up with technological advances. Failing to do so can result in a skills gap that limits innovation and growth. However, embracing these changes also means facing the associated costs of retraining or upskilling employees. Staying competitive while facing the financial realities of training expenditures remains an important consideration for modern businesses.

Sample training cost breakdown

In the world of employee growth, it is important to know what goes into training costs. Below is a breakdown that shows the different parts of a training budget. From making training materials to attending workshops to using tools to track progress, this breakdown helps you see where the money goes. By understanding these pieces, companies can make smart choices to improve training while also being mindful of their budget.

1. Training Materials and Content Development

  • Course design and development: $12,000
  • eLearning platform subscription: $2,500 annually
  • Printed training manuals: $800
  • Total: $15,300

2. External Training Providers and Workshops

  • Leadership workshop: $2,000
  • Sales training seminar: $1,500
  • IT certification course: $2,800
  • Total: $6,300

3. Internal Training Resources

  • In-house trainers’ salaries: $30,000
  • Internal training room maintenance: $1,200 annually
  • Total: $31,200

4. Technological Infrastructure

  • LMS software license: $3,600 annually
  • Multimedia content creation tools: $800
  • Total: $4,400

5. Travel and Accommodation

  • Employee travel to off-site workshops: $1,500
  • Accommodation expenses: $800
  • Total: $2,300

6. Measuring and Tracking Performance

  • Data analytics tools for tracking training effectiveness: $1,200 annually
  • Evaluation and assessment materials: $500
  • Total: $1,700

7. Miscellaneous Costs

  • Refreshments during training sessions: $400
  • Certification exam fees: $1,000
  • Total: $1,400

8. Grand Total Training Costs

  • Miscellaneous Costs
  • Measuring and Tracking Performance
  • Travel and Accommodation
  • Technological Infrastructure
  • Internal Training Resources
  • External Training Providers and Workshops
  • Training Materials and Content Development
  • Total: $62,600

This sample breakdown provides an overview of various cost categories involved in an employee training program. Actual costs can vary widely depending on the size of the organization, the scope of the training, the training methods used, and the resources available. It is important for companies to tailor their cost breakdowns to reflect their unique training initiatives and requirements accurately.

Ways to reduce training costs

The following are concrete ways to cut training costs, whether you are just starting out or trying to reduce the budget.

1. Swap In-Person Training Sessions for Virtual Workshops

Online education might be the most influential aspect when it comes to balancing the two competing priorities of training quality and training cost. Virtual workshops make training activities, content, and evaluations accessible to many workers quickly and from any place.

Workers can get the information and instruction they need, when needed, in as many sessions as they choose and in a style that keeps their attention. It is simple and fast to update online course materials. A training administrator can automate online training delivery with little effort, reducing the cost and time involved in delivering the training.

The time and energy required to convert your seminars into online training are minimal, and the payoff is substantial. You can significantly reduce training budgets by switching to online education for any classroom instruction focusing only on transferring information on theories and procedures.

It is also possible to simulate this kind of intimate discussion during workshops by holding a webinar. You may even simulate a workshop’s small group work by dividing a group of 20 to 30 workers into smaller groups of three to five using the breakout features of today’s webinar platforms. Virtual workshops also allow you to save extra costs on feeding participants or printing out handouts.

2. Repurpose Existing Content

Repurposing existing content involves breathing new life into previously created training materials. This approach maximizes the value of resources already invested in content development. By updating and adapting older materials, organizations can ensure that knowledge remains current and relevant without starting from scratch. This strategy saves time and effort and reduces costs associated with creating entirely new content. Through restructuring and modernization, organizations can deliver effective training while minimizing the financial burden of content creation.

3. Utilize Open-Source Tools

Open-source tools are cost-effective alternatives for developing and delivering training content. These tools, often developed and maintained by a community of volunteers, offer functions comparable to mainstream software. Organizations can use open-source learning management systems, authoring tools, and multimedia resources to create engaging training materials without hefty licensing fees. Additionally, users can customize open-source solutions to suit specific training needs, ensuring a tailored learning experience. By embracing open-source tools, organizations can use technological advancements while keeping training costs in check.

4. Use Online Training Packages

You can reduce your training expenses significantly by switching to a cheaper plan for the number of active users on your online learning platform. Total user plans are common on online learning platforms. Therefore, the price you pay monthly or yearly depends on how many workers are on the platform. If most of your employees visit the site regularly, then such an approach would be good. However, this is not the case for many businesses.

Typically, training programs only run at certain times of the year. For example, some companies only provide compliance training for a few months out of the year, while others schedule soft skills sessions for slower times of the year. When you factor in time off for the holidays, you may find that less than 100 percent of your staff is using your company’s training site. You can find out roughly what percentage of your users check in monthly by running a usage report every month. The evaluation will help you avoid paying for inactive users. Switching to an active user plan for your online learning portal may save training expenditures significantly.

5. Cut Unproductive Training Expenses

Spending on training that is not explicitly directed toward achieving your goals is a waste of money. Your training should be goal-oriented if you want to generate ROI on your investment. The first step is to eliminate any learning that is not directly related to achieving strategic objectives with a clear return on investment. Such training may have value, but you should make tough decisions when resources are limited.

It is essential to safeguard any courses directly tied to the company’s long-term objectives, such as sales to increase revenue, customer service to keep existing customers, or process management to increase efficiency and minimize errors. For example, it could be necessary to postpone the training on assertiveness skills or corporate ethics for a time.

6. Opt for Public Seminars Over Private Workshops

If you cannot host your own seminars but still want to employ outside vendors, then look into public workshops instead. This option is great when there is just a limited number of workers to train. The employees attending the open seminars may bring back the lessons they learned and teach their coworkers. In addition, you can invite the workers to incorporate the training into the company’s culture and record their thoughts to share with others.

7. Implement Peer-to-Peer Learning

Peer-to-peer learning is a dynamic approach to employee training. This strategy involves fostering an environment where employees share their expertise and teach one another. This approach taps into the wealth of knowledge already present within the organization. By enabling employees to become both learners and educators, organizations can create a culture of collaboration and continuous learning. Peer-to-peer learning encourages active engagement and discussion, enhancing skill development. This approach reduces the need for external trainers and cultivates a sense of community and mutual support among employees.

8. Focus on Achieving Optimal Training Results

If your employees do not acquire the knowledge and abilities they need to conduct their tasks more efficiently, then even the cheapest training is useless. To confirm that the training has been successful, it is important to test the trainees at multiple points. Beyond the assessment, you should also set clear training goals and gather the feedback necessary to evaluate the program’s effectiveness.

You can use results from staff training to fine-tune future sessions and ensure they have the greatest potential impact. In this approach, workers have access to the material and acquire the necessary skills, meaning less time on overall employee education and a lower total cost. If you want to learn how to manage training costs, you should know how to reduce unnecessary expenses.

9. Use Free Educational Materials

Free training is one of the cost-saving ideas for training since it guarantees outcomes at no expense. The following are examples of sources for free or low-cost training or study materials:

  • Learning platforms like Udemy, Coursera and EdX
  • Software vendors
  • Professional associations
  • Podcasts and YouTube videos,
  • Government agencies

In some cases, there is hardly any difference between paid and free training courses. A premium course may provide supplementary resources or priority services that the free version does not, such as printed guides or email access to instructors.

The free training course material may not be as well-developed as a paid one, but that does not imply it is not enough for learning. In fact, if you find free training tools, you should check them out to see whether they help teach new skills or knowledge without using your company’s training budget.

Here is a list of online learning platforms.

10. Launch a Mentorship Initiative

You can leverage the expertise already present in your company to strengthen your employees. You can launch a mentorship program by selecting the most knowledgeable and accomplished individuals in your organization. Your mentors guide new employees and may benefit the company and its workforce in the long run. Having these leaders instruct their peers is a wonderful way to save money on staff training since they have previously received training on the topic and shown knowledge in the field.

Check out this list of mentor program ideas.

11. Adopt Microlearning

Training initiatives do not have to be lengthy or significant resources. If you are worried about the cost of traditional training, then you may want to try microlearning. With this method, you can provide training in bite-sized pieces that are both more manageable for the trainee and more cost-effective for the organization.

Microlearning courses are an effective method of providing training without disrupting an employee’s regular duties. The system allows employees to do their job, take a little break to finish training, and then return to work. Therefore, workers can continue doing their regular jobs while simultaneously completing a portion of their training. As a result, the training time and costs reduce remarkably.

Training budget tips

The following are tips on how to get the most out of your training budget to advance your company.

1. Determine your Staff’s Training Requirements

You have a team of unique individuals, and a cookie-cutter approach to training will not generate desired results. A training needs analysis aims to identify the activities and personnel required to achieve your organization’s goals and objectives. The analysis offers a baseline of your workers’ starting points so you can equip them with the resources they need to help you reach your business objectives. Therefore, you can better tailor training workshops to your team’s requirements and avoid needless expenses.

2. Prioritize Essential Skills

Prioritizing essential skills involves identifying and focusing on the core abilities critical for individual success and organizational growth. By pinpointing the skills that directly contribute to achieving strategic objectives, companies can make informed decisions when allocating their training budget. Instead of spreading resources across a mix of skills, this approach ensures that the training materials have a tangible impact on performance, productivity, and innovation. Prioritizing essential skills lets organizations maximize the value of their training budget while fostering a well-equipped workforce.

3. Benchmark Costs

Benchmarking costs involves conducting thorough research and gauging the average training expenses within your industry and region. By comparing your organization’s training budget to these industry benchmarks, you can determine whether your budget is aligned with the standards. This information provides valuable context for evaluating your training budget. If your costs exceed benchmarks, then it suggests you may need to do a closer examination of your training strategies. Conversely, if your costs are significantly lower, then it might indicate that you could increase investments for improved employee development. Benchmarking costs helps you measure your training budget’s competitiveness and cost-effectiveness, aiding in well-informed decision-making.

4. Foster a Learning Culture

A workplace with a learning culture can build a team of employees with a growth mindset. When workers commit to education, they can use their knowledge to advance their companies. Emails between coworkers often include brief recommendations for how each might improve their performance on the job. Without overwhelming each other with information, workers can see where they are in terms of quality. Employees can also get feedback.

Building a culture of learning is a cost-effective way to supplement traditional training methods. This approach ensures that the next training is not a one-and-done deal. Workers, on the other hand, put their instructions into effect immediately.

You can facilitate lifelong education by amassing a collection of useful materials like books, audio, videos. You can set up a Learning Management System to provide digital versions of such content to remote workers.

Incentives can encourage your staff to learn. You should acknowledge and recognize significant progress or completion of objectives. You can offer employees monetary incentives like pay, bonuses, and salary structures and non-monetary incentives like praise, public acknowledgment, and promotion.

Here are tips for shaping company culture.

5. Assess Progress

Before beginning training, develop a training matrix to track each employee’s present credentials and current state. You can share your matrix model to ensure that the company’s staff is on the same page. After training, you can use mock tests to determine what your workers learned from the training.

It would be best if you also established budget regulations that spell out the consequences of not using allotted training budgets. If an employee has to go on leave, for whatever reason, they are responsible for training the worker who will be covering them.

Conclusion

Reducing the budget for employee training is a risky endeavor for any company. Cutting training budgets demands careful evaluation of the company’s education needs and reaching a compromise. However, although these cuts have repercussions, the funds set aside for training are not necessarily off-limits for adjustment. Training costs should work to get the best results possible. This article’s suggestions should motivate you to maximize training results while minimizing costs.

Next, check out this list of employee engagement strategies, this guide to virtual lunch and learns, and these professional development ideas for work.

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FAQ: How to reduce training costs

Here are frequently asked questions about how to reduce training costs.

How do you reduce training costs?

It is advisable to assess the company’s training requirements before allocating funds. This step means determining which skill gap is impeding output and performance. As a result, you will ensure that your training dollars are well spent and that your program addresses the most pressing problems and demands of your company and its workforce.

How can you do inexpensive training?

You can do training inexpensively by choosing virtual workshops over in-person sessions. Another option is to cut training that is not generating the required value. Using internal expertise may also help you reduce training costs.

What are some good tips for keeping training costs low?

You can keep training costs low by leveraging free learning resources and tracking success with feedback and assessments. You should also ensure that you only pay for active users on your online learning platform.

Author avatar

Author:

People & Culture Director at teambuilding.com.
Grace is the Director of People & Culture at teambuilding.com. She studied Industrial and Labor Relations at Cornell University, Information Science at East China Normal University and earned an MBA at Washington State University.

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