How much should companies spend on employee training?

Let me give you some figures for comparison:

If company ABC earns 7 million/year and spends $50K for training, this company is sending the message that the value of their employees is not even 1% of revenues.

If company XYZ profited $500K last year and spent $3K for employee training, this company is investing less than 1% of their profits back into the staff that made it happen.

Question:  should the amount spent on employee development matter if the company is private, franchised or corporate?

I will never prescribe that budget lines for training and development should be a certain percentage of revenue. The uniqueness of each company and the employees they house should be a larger proponent of training dollars than profits.

It is a simple process to assess if performance, productivity and HR benchmarks are hitting the mark – your dollars and cents will tell you this. It is also easy to diagnose what isn’t working – you just need to ask your employees.  They will give you the truth, unless trust is an issue in which case an outside consultant/trainer will be needed to get an accurate assessment and recommendations.

Once you have identified the problems, issues and gaps, you are in a better position to implement training and development for solutions. For continuity and rapport building with your staff, keep the same consultant to implement the solutions and change.

The amount of training and development required for each company, with their respective set of staff and issues will differ, so training frequency and cost is not one set formula.  What can be regulated is the degree of change after the training – evident and tangible results should be evident and measured by HR metrics as well as production and sales.

If changes aren’t long-lasting or do not occur at all, then the problem may not be accurately defined or the training may be missing the mark.

Whatever you do, please don’t keep doing what does not work. Implement change and solutions by giving your staff the knowledge, skills and abilities to perform well and excel in your company.

If you read this and don’t have confidence in your training and development program or budgets, then you are a prime candidate.  Contact us at or 604-349-8660 to arrange a Change Strategy Session to diagnose the problems that exist with your company and staff so we can develop a program for change and budget. Is it the leadership that needs some work? Check out our Building Better Bosses Program.

This entry was posted by Pam Paquet and is filed under Employee Training. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.