If your employee training budget is based on little more than historic spending and wishful thinking, try tying it to company goals. Business goals and strategy provide an objective, measurable target. And, hitting those targets might demand new skills, innovative thinking, better customer service, etc. Attaching your training budget to something tangible also guarantees that as your company grows so does its talent.
The average organization spends a little over $1,200 annually per employee on training and development, according to a report by the Association of Talent Development. Another resource puts that number at $700.
A Forbes article reports steady growth in U.S. training spending — 10% in 2011, 12% in 2012, and 15% in 2013. Industries where there are talent gaps spend more. Industries with a lower wage and higher turnover spend less.
Where do you fit into this picture? Do you spend enough time and money on training employees? How do you decide where to spend training dollars?
One website, called the Propitious Manager, offers this suggestion: “You spend as much on employee training as you need to achieve your company’s performance goals.”
As part of your budgeting process, you set sales and revenue goals. To reach these numbers, you need to retain a certain number of customers. You need to find a certain number of new customers. You need to improve your product or service offerings. Will your existing team be able to hit that mark with their existing skills?
Spend some time looking at specific things that could keep you from reaching the goals. If you’ve been having trouble with customer retention, everyone who touches that customer might need some customer service training. Maybe you also need some new systems and processes to make you better able to serve customers — people will need to be trained on any upgraded system. If your salespeople aren’t hitting their targets, sales training might be needed. If your competitors are becoming more technologically advanced, is it time to upgrade part of your team by growing the skills needed to move in this direction?
Here are a few other reasons to give your training budget ample consideration:
Attracts higher quality employees: Quality employees want to continually improve their skills.
Reduces employee turnover: It’s very expensive to lose an employee and recruit, replace, and retrain a new one.
Leads to a more innovative team: When employees have an opportunity to get new information and ideas, it triggers innovative solutions, cost reductions, and streamlined procedures.
Improves customer satisfaction: Training employees to handle customers and clients with finesse makes your customers happier.
The continuous improvement of your employees leads to the continuous improvement of your organization. It also helps fill talent gaps. Find smart people, and train them. Use your company’s goals to help build your training strategy.