The Economics of Training 101: Reducing Cost, Increasing Quality

Companies gain competitive advantage when employees have the proper skills and training to excel in their roles. Efficiently trained employees require less oversight, make less costly mistakes, and are better at problem solving than employees who have not been properly trained. When budgets are tight, particularly in a troubled economy, employee training is often the first to get cut. On top of that, training is also heavily scrutinized as employers need to substantiate the cost that comes with employee training. But did you know that businesses are increasingly looking to community colleges for their staff training needs because we provide quality, customized corporate training at an affordable cost? Fortunately for Virginia businesses, there are proven programs in place that are designed to meet the needs of regional businesses at a fraction of the cost, without sacrificing quality.

How much should I spend on employee training?

Each company should budget realistically for their specific development needs. According to Training Magazine’s 2020 Training Industry Report, the average U.S. company spent $1,111 per employee on training costs; this factors in small companies (up to 999 employees) spending $1,678 per employee, mid-size companies (1,000 – 9,999 employees) spending $829 per employee, and large companies (10,000+ employees) spending $1,544 per employee. This data is provided as a resource and may not reflect actual budgets for your organization. The costs associated with employee training are unique to each employer (and employee) needs and is crucial when formulating an annual training budget. Formal budgeting to include crucial development programs helps employers prioritize training needs and assists in the analysis, design, development, implementation, evaluation, maintenance, and justification of employee training programs.

This the economics of training.

What is the point of paying for employee training?

Ongoing professional development transforms employee mindsets, creates new and better habits, enhances job performance, and ultimately creates the growth needed for your business and staff to thrive. A recent survey of over 500 global professionals by Udemy for Businesses revealed that upskilling employees is a top priority with an overwhelming 62% of businesses reporting the immediate need to close skills gaps. Funding employee training should be deliberate and strategic to an organization and part of their overall competitive arsenal. Aligning training with relevancy to specific job roles leads to positive momentum and reinforcement of employee engagement in the workplace. Employee training is most effective with both employer and employee commitment.

What’s more, according to LinkedIn’s 2020 Workplace Learning Report, employees are craving job-related learning experiences and are selecting companies that provide significant development opportunities over those that do not offer these programs. By understanding and staying on top of learning outcomes, employers and employees remain accountable for a return on their investment and ultimately, employee satisfaction and retention. The survey revealed two obstacles to employee training: lack of time and budget constraints. While managers are ultimately responsible for employee development, it can be difficult to carve out time for comprehensive training and skill development while maintaining a balanced budget for productive time and dollars allocated for training. Customized training programs can relieve these obstacles for managers by providing tailored solutions that work with your time and budget constraints.

What programs are in place to help pay for employee training and how will they work for me?

Laurel Ridge Workforce Solutions has partnerships with several local municipalities and state agencies that can help employers save on their training spending.

Locality Funding: Laurel Ridge Community College, the Laurel Ridge Community College Foundation, and Laurel Ridge Community College Workforce Solutions partners with various organizations and offices to offer numerous scholarships based on a variety of individual factors such as residency, career training path, and economic need. The requirements for eligibility as well as the amounts of funding vary per funding stream and specific program. Employers can use this funding on behalf of qualified employees, to provide employee training at reduced prices. The application process is quick and eligibility requirements are simple and straightforward. Explore these funding options here.

FastForward: Did you know that employers can save at least 66% of the cost of tuition on many employee credential training programs? Virginia is unique because the state recognized a need for skilled, qualified employees in many high-demand industries throughout the state so the Virginia General Assembly and Governor created and funded the Workforce Credential Grant (WCG) program, which is now called FastForward. This program is grant-funded and is only available through Virginia’s Community Colleges. Eligible industries include healthcare, trades and manufacturing, computers and information technology, and transportation. Through FastForward, tuition is one-third the cost of the full tuition rate and the only qualifying factor is students must be a U.S. citizen and have lived in Virginia for at least one year. FastForward allows employers to save time and money on their on-the-job training. All courses are taught by industry experts and the completion rate exceeds 90%, so students are skilled and ready for employment or promotion upon completion. Some FastForward eligible students may also qualify for an additional funding stream called FANTIC. This additional aid covers the final portion that the student has to pay, bringing the student financial responsibility to $0. FANTIC also has additional eligibility requirements; you can read more about it here.

Real-World Examples

In Winchester, Laurel Ridge Workforce Solutions partnered with Powell’s Plumbing, which wished to provide in-house training for new and existing employees. Through the FastForward funding stream, they were able to save over $14k in training costs for employees to achieve their level-one plumbing apprenticeship-related training. In this case, nine of the 11 employees qualified for FastForward because they were Virginia residents.

Here’s how they saved:

In Fauquier County, a group of businesses within the community recognized a need for skilled tradesmen. By banding together their resources, they partnered with Laurel Ridge Workforce Solutions to create a customized training cohort. By using FastForward as well as the Fauquier County locality funds, they saved over 92% of tuition costs.

Here’s how they saved:

If I want to explore these programs, who should I contact?

Laurel Ridge Workforce Solutions is at the forefront of education innovation. Our Corporate Training Department offers customized training programs and cohorts, apprenticeship and certification programs, as well as consulting and assessment services utilizing leading-edge technology, curriculum, philosophies, and methodology to help area businesses thrive – all at a cost that is much more affordable than you may think. Your workforce is made up of people. Our people work with yours to encourage and inspire accomplishment and success, one employee, at a time. We also bring our knowledge of the adult learner and work closely with you to custom-tailor solutions around your employees’ needs.

We are more than happy to help and we would love to discuss your training needs. Feel free to reach out:

Contact the Workforce Solutions Team | Call 540-868-7021 or email [email protected]