About the Cost of Training Employees

Employees often represent the largest expense for many companies. However, this expense relates to the use of employee as assets in the business since these individuals help the company complete tasks and activities. The cost of training employees is an additional operating cost for the business.

Defined

Training costs can include a variety of different items, such as the development costs, direct implementation, indirect implementation, compensation and lost productivity costs. The first three items relate to new employees while the latter two affect current employees and business operations.

Features

According to the Society for Human Resource Management, the average training cost for an employee was $955 in 2004. Additionally, the cost of losing trained employees was 38 percent according to the same institution. The importance of the second number indicates that losing trained workers is expensive for companies.

Significance

Companies often attempt to streamline their training operations to lower the costs associated with this process. Spending too much money on training employees may result in lost capital if the employee leaves the company. This is a sunk cost because companies will be unable to recover the funds or benefit from the employee's actions.

References

• Society for Human Resource Management: Training Cost Per Employee
• Entrepreneur: What is the Average Cost for Bringing on a New Employee Including the Interview Process, Hiring and Training?