Training Cost - A Key Performance Indicator in Human Resources

Training cost is a critical key performance indicator (KPI) within the realm of Human Resources (HR). It represents significant spending and effort towards improving the skills and knowledge base of an organization's employees. This KPI is used to calculate the total cost incurred by an organization to train its employees over a specific period.

Understanding Training Cost

Training cost is a reflection of an organization's investment in its people. It covers various expenses, including training materials, fees for training programs, and the salaries of training staff. Ensuring your employees are well-trained is an essential part of maintaining a competitive edge and driving innovation.

On the other hand, excessively high training costs or inefficient training methods can drain resources, making this KPI a critical balancing act. Regular monitoring of training costs helps companies control expenses and ensures that training initiatives are cost-effective.

Calculation of Training Cost

The total Training Cost of an organization can be calculated by summing up the following components:

• The cost of the training program or course fees (if outsourced)
• The cost of training materials (such as manuals, software, etc.)
• The cost of training facilities (if rental or maintenance is involved)
• The cost of trainers (both internal and external)
• The cost of employee time (salary of employees for the hours they spend in training)

The formula to calculate Training Cost would be:

Training Cost = Training Program Fees + Cost of Materials + Cost of Facilities + Trainer’s Cost + Cost of Employee Time

It's important to note that the 'Cost of Employee Time' is accounted for as employees are spending work hours on training instead of regular work tasks.

By analyzing this KPI, HR departments can gain insights into the efficiency and cost-effectiveness of their training programs. They can also make necessary adjustments to ensure that they are providing high-quality training to employees without overspending.