Oh no. You need to reduce training costs.
Perhaps this isn’t the first time your CFO has viewed training as an expense and has decided that training needs less budget. It certainly won’t be the last time either. As organisations ride the economic cycle, the training budget tends to move with it.
If you already run a lean and mean training budget, then well done! You may find, though, that your previous good management will not always stop that CFO from asking you to reduce training costs further.
In any case, whether you have already maximised your training budget or you realise that you have a long way to go, here are ten practical steps that you can take to reduce training costs.
1 – Reduce training costs that are not adding value
This first tip will tie into our last tip (demonstrate return). If we want to reduce training costs and improve training RoI, then your training spend needs to be laser-focused.
So first things first – any training which isn’t aligned to strategic goals and can demonstrate clear value should be the first to be removed. We are not saying that such training is not worthwhile, but when the training budget is under pressure, then choices must be made.
You may need to protect compliance training and other training directly linked to strategic goals – perhaps sales to drive revenue, or service to retain customers, or processes to improve efficiency and reduce mistakes. As such, training on assertiveness skills or business ethics may just have to wait for a while.
2 – Fewer workshops, more online training
When it comes to managing the balance between training quality and training cost, online learning can be the most significant factor. Online training is a scalable method of making training activities, content and assessments available to many employees in any location.
They can access knowledge and training most relevant to them, in an engaging format, whenever they need it most and in multiple sessions which suit their availability.
Online training modules can be updated quickly and easily. Online training can be automated for delivery with minimal effort from a training administrator. This means less time and lower costs for each ‘unit of training content delivered’.
Transforming your workshops into online training is also significantly easier than ever before – the time and effort are modest, and the return on your investment is significant. Essentially moving all your workshop training which only teaches theory, facts, processes or knowledge into online learning can dramatically reduce training costs.
3 – Fewer workshops, more virtual training
Next, move workshops online with webinars. Webinars significantly lower the average training cost per employee by removing the need for a venue, travel, and catering.
Webinars can replicate small group interactions from workshops too. Modern webinar platforms even offer breakout facilities, allowing you to split groups of 20-30 employees into small teams of 3-5 employees to replicate small team tasks from a workshop.
Meanwhile, your webinar facilitator can address multiple employees at once (keeping one of the big efficiency advantages of workshops). Better yet, if an employee can’t make a webinar, it’s no big deal as learners can watch the recording when they get the time.
Finally, it is easy to take a four-hour workshop and transform it into three 60 minute webinars. From an effectiveness point of view, shorter and more frequent training is always better than longer, one-off events. So not only do you reduce training costs, but you also improve training outcomes.
4 – Replace in-house workshops with public workshops
If you must use workshops from external suppliers, consider switching to public workshops rather than private in-house workshops. This is particularly useful when you have just a small number of employees who need to be trained.
Also, consider that the employees who attend the public workshops can return and share that knowledge internally. Ask them to contextualise the training for the organisation and capture that information to share internally (see the next two points about this).
5 – Less external consultants, more internal expertise
Learning and development consultants are expensive. While they can do a great job, it comes at a cost, particularly as they are removed from your organisation. That distance adds time and complexity to their actions. They also tend to want to produce high-quality training resources, sometimes with complex animations, custom images and other time-consuming additions.
It’s alarming how many organisations turn to external consultants, which come with expensive costs while ignoring all the free consultants who know your organisation best – your employees. You can probably already identify employees with expertise, proven skills and valuable knowledge. All you need to do is empower them to share their expertise and give them the tools to do so.
Empowerment needs time and focus. It may be as simple as a KPI which requires team leaders to create two hours of online training every six months. The tools can come from a learning creation platform, which allows anyone to create online training as quickly as building PowerPoint slides. Alternatively, ratchet up your lunch-and-learns (while recording them for online distribution).
While you may still need learning experts to assist, tapping into your internal experts can substitute a lot of costs and further reduce training costs per employee.
6 – Less purchased training, more created training
Similarly, while it can be tempting to buy external training content, it is expensive. Sending employees to an external workshop is often very inefficient. In essence, you are paying for the marketing costs of that workshop, room hire, printed (and often forgotten) workbooks, travel time, food and more.
Externally created online training can be cheaper but still carries a hefty cost – especially if the content is generic and already exists in your organisation. Now, some external online training content may need to be purchased if you lack the internal skills to create it. Compliance training is a great example of this, where you need to be sure the content is approved and meets standards. Equally, highly specialised training – safety training is a good example – might also be best done by a professional.
However, any external training on universal modules like sales, management or service can usually be created internally by your experts. With the bonus that the content will be 100% relevant to your organisation.
7 – Switch to actual or active use online training plans
If your online learning platform supports active (actual) user plans, switching to those plans can also dramatically reduce training costs.
Many online learning platforms have total user plans. This means your monthly or annual subscriptions are based on the total number of users in the platform. This is fine if the majority of your users are accessing your platform every month. For many organisations, however, this just isn’t the case.
Often training is seasonal. Compliance training may occur in just a few months each year, while soft skills training is often focused outside of busy periods. If you combine this with holiday periods, the usage in your learning portal is often well less than 100% of your employees.
It may be worth running a monthly usage report for your learning platform and determining what per cent of your users log in each month on average. For many organisations, this number is 40-60%. This means your learning platform efficiency may be just 50% (you are paying for 50% of usage which you don’t need).
Some online learning platforms utilise an active (or actual) user plan. These plans are based on the number of active users per month. An active user is typically defined as a user who logs into your learning platform during a calendar month. If a user does not log in, they are not counted. If your organisation has, say, 200 employees but you realise that only 100 of them log in each month, then you can use a 100 active user per month plan to reduce costs.
Most active user plans also allow monthly overruns for spikes in usage, and you are just charged for the incremental excess users for that month. Moving to an active user plan might reduce training costs for your online learning portal by 30-60%. That’s no small number.
8 – Eliminate expenses not directly related to training
Let’s think about all the costs we incur in training activities that are not directly related to training outcomes. Then let’s see how many we can eliminate.
- Use internal rooms or move to virtual rooms (webinars).
- Simply do not supply. Ask participants to organise their own food (they do so every day on the job, so why do they need you to organise food for training?).
- Don’t print them. Provide a PDF version instead and ask learners to print and bring it to the workshop or use it electronically. Adjust your training activities to use things other than workbooks. Most training workbooks end up buried in the bottom of drawers anyway.
- Switch to online or virtual training to eliminate travel expenses (for both participants but also facilitators).
9 – Re-use internal knowledge assets for training
Recycling saves money, and it can work to reduce training costs too.
If you have an internal expert running a lunch-and-learn or any sort of internal workshop, you should record it. Then upload that video into your learning platform for re-use in the future. With just a small amount of work, it is easy to take a 60-minute video and transform it into a 60-minute online training module with 6-7 video extracts, summaries of key information and online assessments.
If you have teams that are creating process guidelines for standard operating procedures, ask them to do so in a way that can be repurposed into online training. This usually just means providing enough detail that the SOP guidelines can be understood on a stand-alone basis. It’s easy to take your SOPs and create an online learning library.
10 – Work hard to demonstrate return
While we are looking at reducing training costs, another strategy to fight training budget cuts is to better illustrate the returns. Higher returns help maintain higher investments.
Ensure that as many of your training activities as possible are tracking on-the-job outcomes and can demonstrate the value of new behaviours or skills. Let’s be honest – tracking training outcomes, particularly to a Kirkpatrick Level 4 standard, is tricky. But it’s not impossible.
Qualitative data (Kirkpatrick Level 3 standard) is often easier to obtain and just as powerful. Employees who can discuss a reduction in mistakes or improvement in efficiency, sales teams who can share stories or new clients or improved margins, or managers who can identify retained staff or reductions in absenteeism are all valuable in proving training RoI.
The problem is that most training measurement stops as participants leave the training. Instead, you need to build in on-the-job activities, reporting and tracking (something with modules in Tribal Habits can do for you with the Activities feature).
The bottom line
Efforts to reduce training costs are always a process fraught with danger for the organisation. It is all too easy to cut training and then later wonder why mistakes increase, sales reduce and morale decreases.
That doesn’t mean the training budget should be immune from scrutiny. Like all functions, it needs to work hard to maximise its outcomes. The ideas in this article should inspire you to find the gains while minimising the pain.
If you need further help, Tribal Habits can assist. We offer active user plans (starting from just 5 active users per month) and have low per-user costs. Tribal Habits can also help you to tap into internal experts, create more internal training, eliminate expensive external content and re-use internal knowledge assets. Reach out to us today for a no obligations demo and see how we can help you achieve more positive training outcomes, while we reduce training costs.