Whenever you take time off from your job to learn new knowledge or skills, there is a cost incurred for that learning. The cost includes such things as your prorated compensation and benefits, training materials, facilities, trainer costs, travel, etc. But for many of us, the largest single cost is known as "lost production" or "opportunity" cost. That is the cost associated with your work that isn't being done in your normal timely fashion, as well as the slowdown or reduced effectiveness of your internal customers who depend on your output to perform their functions normally - the "ripple effect" of not doing your work as usual because you are away at training. 

Taken together these costs can be substantial. Research has shown that, depending on the nature of  your job, the costs of training can range anywhere from about 1.5% to 4.5% of your base annual gross pay per day of training. It's very difficult to figure out what percentage should be used for any particular individual, but to get a reasonable, ballpark estimate, many people can use about 2.2%. That seems to be a typical or average per diem cost in many organizations.

So for example, if your base annual gross salary is say, $68,000, a two day, off the job training program would cost your company an estimated $3,000 (using 2.2% per day as a typical cost). If you take a total of two weeks of training during the year, the total annual cost to train you would be around $15,000. Generally speaking, the closer you are to your company's customers, or the more other people (your internal customers) depend on your output to do their work effectively, the higher the percentage you should use.

To carry this notion a step further, if the salary, number of days of training, and daily cost (2.2%) used in the example above are a good average for your company's employees, you can multiply that number by the total number of employees to estimate the cost to the company of training all its employees. It can be a staggering number! For example, a company with 500 employees would be spending around $7.5 million, while an employer with 50,000 people would be incurring total training costs in the neighborhood of $7.5 billion.

"Now hold on just a minute!" you say. $7.5 BILLION??? Yes, when you consider all the direct and indirect costs associated with employees being off the job and not producing their normal work in the customary fashion. Of course, they make some, maybe even all of it up by working overtime, giving it to someone else to do, or whatever, but that costs as well. And much of this total cost, especially the opportunity cost,  cannot be accurately measured or traced to any specific budget center. It is hidden, but very real, nonetheless.

The main point here is not precisely what is being spent, directly or indirectly, but that it is a substantial amount, whether or not every dollar can be accurately identified, accounted for, or allocated to somebody's budget.

That's the cost - or better yet, the investment side of the issue. For a brief discussion of the ROI side, click the Continue button below.