5 Inexpensive Ways to Pay for Training Employees

pay for training

How I Cut the Cost of Training My Employees in Half

 

Many managers are familiar with the old 70, 20, 10 Rule for employee development.  The last 10% of the 70, 20, 10 Rule, of course, is training.  However, since formal training only makes up a small part of employee development plans, many managers push it off entirely.  After all, training employees takes them away from their work and timing of classes is always inconvenient.  And even when formal course instruction is essential, the cost of paying for the class can be prohibitive.  But there are ways around it to reduce the cost of training.  Here’s what I did.

Identifying the Need for Training My Team

A few years ago, I took a new position in my company.  It was November that year when I was promoted to the manager of a team of about 40 professionals.  By the time I walked in for my first day and met my team, though, the budget for the following year had been set.  Like any new manager, I made it a point to spend time with my new employees so I could get to know them and settle into my new position as soon as possible.  Through my discussions, though, I quickly learned that a major source of frustration as well as roadblock in terms of productivity resulted from a lack of training.  Specifically, only 5 of my employees had ever received formal training in a certain software package that everyone was required to use as part of their jobs.  Eager to address the situation, I looked into the costs.  To train my entire staff in all the necessary components of the software, it could cost me somewhere between $50,000 and $100,000.  The problem: I had no budget to accommodate an expense of that magnitude in the next year.

RELATED: How To Justify The Need for Training Your Employees

How to Pay for Training When Your Budget Doesn’t Allow It

Waiting another year to try to get training was not an option for me.  First, it meant another year in which my employees would struggle to do their jobs.  Second, given the financial challenges my company was dealing with at that time, a budget proposal that had a line item for $100,000 in training would quickly be rejected for the next year.  But I was determined to figure something out.  Here are the 5 things I did to reduce the cost of the training my team, and it’s impact on my department budget.

1.  Spread Out the Training Costs

There was no conceivable way I could pay for training my team that year at a cost of $50,000+.  But the fact that training needs had been neglected for years really bothered me.  So, my first action was to prioritize.  Our corporation had a partnership with an outside company for preset training packages for beginner through advanced users.  So, using the training class syllabi for the beginner, intermediate and advanced user classes, I had employees rate their comfort and skill level with the topics covered in each course.  I also had them identify if they were ‘daily users’ or ‘casual users’ of the software.  Using the scores, I identified 6 groups for training:

 Course Daily Users Casual Users
 Beginner Level Group 1Group 2
 Intermediate Level Group 3Group 4
 Advanced Level Group 5Group 6

Since I wanted to make sure each employee received the full training, those who took the beginner level course would also be enrolled in the intermediate level and advanced user trainings when scheduled.  (Thus, the class size for Group’s 5 and 6 was naturally larger than Groups 1 and 2).  Given the size of my team, and having no way to pay for all the training classes at once, I knew I would have to forego some of the classes that year.  I decided that Groups 4, 5 and 6 would have to be scheduled the following year in order to split the costs of training and the impact on the budget.

2.  Bring Training To You

The second action I took was to examine the cost of training at the software company’s training center, and compare to the cost of paying to bring a trainer on-site to my office.  I did a simple cost analysis as shown below.

 Cost of Sending Employees Training
 Course Cost per Employee$1,500
 Travel Cost per Employee (5 days)$2,000
 Total Cost per Employee$3,500
Cost of Bringing Trainer On-Site To Office 
Course Cost (8 to 18 people)$10,500
Travel Reimbursement for Instructor$2,000
Cost of In-Office Meals (5 days)$1,500
Total Cost of On-Site Training for Each Group$14,000

From my cost analysis, if any Group had more than 4 employees, paying for training would be easier by bringing an instructor to our office.  As it turned out, the smallest Group was 5 people, making it less expensive to have an on-site instructor for all six Groups, for an initial grand total of $84,000.

RELATED: Budget Planning Tips for Managers

3.  Share Expenses With Others

One challenge I ran into was the fact that on-site training had a minimum class attendance of 8 people (and a maximum of 18).  In my case, two of the six groups would have fallen below the minimum of 8 students.  So, to ensure I had enough employees to warrant on-site training, I reached out to other managers I knew around the business (whose teams also used the same software) to see if they had any employees who needed training.  Fortunately, another manager identified several of his employees who could benefit from the courses.  To pay for the training, we agreed to split the cost of two courses his people needed and share the burden between our two respective budgets.  Doing so saved me $14,000 ($7,000 per class).

RELATED: What Keeps You Here?

4.  Find Internal Instructors

As I continued on my quest to get my people the knowledge and skills they needed for their jobs while battling significant financial challenges, I came to know that an employee elsewhere in the company had previously worked as a certified instructor for one of the courses.  Upon reaching out to his manager, I worked out an arrangement to pay for the employee’s travel to come to my office to train my employees in his respective course.  Though a rather fortunate and unique situation, I was able to take advantage of it.  By using my network, I saved the $21,000 I would have paid the outside company in course fees.

5.  Find Ways to Offset the Cost

Finally, through discussions with the financial controller for my department, I learned that I could partially offset expenses to my budget through credits from outside funding.  In my case, we managed to pick up a few small projects over the course of the first year, netting about $10,000 in services.  My controller was able justify this payment to be credited back to the budget, which partially offset the cost of the training.  (Make sure you work with your Finance department to confirm the credits and adjustments made to your budget are in compliance with accounting rules; in my case, it was).  The costs and the added revenue both hit the bottom line, but the unanticipated revenue netted a reduced impact on my specific budget.

In Short…

Ultimately, what would have cost me $84,000 for all six courses, only ended up hitting my budget (over a two year period) at a cost of around $39,000, or less than half of what I would have shelled out if it were not for some creative efforts.  This was roughly $1,000 per employee.  For me, getting the training class for my employees was very important.  Having been overlooked for several years, it was a big win for my employees who felt valued.  And though the situation was not ideal, it was a small win for me.  It helped me quickly gain the respect and trust of my team, enabled me to improve productivity across my team, and an action that made me personally feel like I was doing the right thing, amid significant corporate cost controls and financial challenges.

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