The cost of training for employees, what to include? How to optimize?

Invest in training and staff development is no longer a choice but a mandatory element if the business wants to maintain competitiveness and sustainable. However, one of the most common barriers that the organization faltered privacy is the cost of training. This is considered a problem overall strategy on human resources management.

Many businesses today still vague in the planning, cost control training for employees. Many units more powerful but the effect is not clear, while there where so save that the training program is not enough to create change. Understanding the cost of training, what to include, from which the optimal cost reasonable, the right focus is the key element to switch from “cost” to “investment” effective for human resources.

This article Lac Viet SureHCS will provide general information related to details about the cost of training helps the organizations and enterprises are to find out information about this issue can be the foundation knowledge necessary to make the right decision practices.

1. The cost of training is what?

The cost of training be understood as the whole of the expenses that the business spent to organization development and maintenance of training activities to enhance the quality of work for employees. Including the training, skills, training professional updates new technology or capacity management.

A point to distinguish: the cost of training is not synonymous complete with training budget. Training budget is the number that the business plan spent in a certain time period, bring the draft. Meanwhile, the cost of training is the real account, expenditure incurred in the process of implementation. Distinguishing this helps businesses better control cash flow and investment efficiency.

More importantly, the cost of training should not be viewed as a sum of “spend money” merely. Instead, this is a form of strategic investment “business miss out the cost today to fall in value, growth, performance, labour, the loyalty of employees and ability to adapt to long-term future”.

2. The type of training costs common in business what's included?

Understand the components of the cost of training is a prerequisite to business proactive control, optimizing budgets contribute to improve the efficiency of investment in human resources. Not less organized when building plans usually just focus on the expense of clear, tangible, which ignore the factor indirect or hidden costs, which in turn leads to the difference between plan and reality. Here are four training costs important that any business would also need to consider:

2.1. Direct costs

This is a group of cost recognition is often noted first in every training plan for employees. Includes:

• Cost of hiring trainers, experts: Whether it is internal or external, this is still the expense of, particularly when the business need in-depth training or specialized skills.
• Buy copyright courses, learning materials, learning software: For example, the e-learning platform, specialized books, or training system, the number of goods need to buy according to the number of learners or the duration of use.
• Cost of class organization: includes room hire, school, presentation equipment, and printed materials, drinking water and the cost of other logistics. If deployed at factories or branches in provinces far, travel expenses, stay well need to.

Good governance costs directly help businesses avoid the cost exceeded the plan that can negotiate better with suppliers, service training, from which optimal performance in each content training.

2.2. Indirect costs

Other than direct costs, this is the account is not recognized immediately, but the impact strength to operate.

• Duration of interrupted work: When employees take the course in hours, the job is stopped or allocate to other users. If you do not plan well coordinated, the general performance will be affected.
• Operating costs management program: include time, resources of the personnel department or the training room to plan, monitor and evaluate training results.

Enterprises need to build a plan for training staff the flexibility to optimal duration vnguồn force, for example, held at the end of the week, choose study mode online flexible in shifts or in small groups.

2.3. Opportunity cost

This is a concept important but often overlooked: the opportunity cost is the enterprise value lost due to allocation of resources to training instead of commissioning.

For example, a head of sales department participate in key leadership skills in three days can make sales that week decline. Whatever is the indirect lost, but affect the target business overall.

The analysis of opportunity costs help businesses balance between short-term benefits and long-term investment from that point selection object, the duration of consistent training.

2.4. Hidden costs

This is the cost hard to quantify, but big influence on the success of the entire training program:

• Difference between expected and actual results: Businesses spend tens of millions for the course, but if no measurement is effective after training, then investments that become waste.
• Percentage off after training: If no retention policy is suitable (such as commitment to work after training, increased route advance), then the cost of training for workers can be “lost” when they left.

Policy formulation anal training clearly measure the efficiency of learning is the way business protection investments and maintain quality personnel stability after training.

In summary, the cost of training for employees not only located in the account conspicuous as money, hire trainers or buying courses which also includes all the elements that operation, interruption of work, risk long-term. Recognize the types of costs this will help business planning, training, financial control effectively maximize the value obtained from each co-investor in people.

3. Regulations on the cost of training in enterprises in Vietnam

3.1. Laws and regulations training costs are tax deductible

Follow Circular no. 78/2014/TT-BTC and Decree 218/2013/ND-CPcost of staff training is considered reasonable cost when calculating the corporate income tax (CIT) if they meet the following conditions:

• Costs have full voucher valid invoice as prescribed by the Ministry of Finance (for example training contract and proof of payment non-cash if over 20 million).
• Cost of service and production activities – business of the business, such as training, professional skills, management skills, or training for new employees.
• Do not violate the provisions of current legislation (such as the cost of training is not related to the field of business activity will not be counted).

This is the important point that many Vietnamese enterprises, especially small and medium sized businesses, typically overlooked when planning training budget. Ensuring record certificate from prescribed not only help business savings account tax significantly, but also increase transparency in financial management, internal.

3.2. Provisions on the contract of training between business and labor

According To Article 62 – The Labour code 2019when business remove the cost of training for workers (such as apprenticeships, skills training, or sent to study in and outside the country), both parties must sign the “Contract training” in writing. This contract should clearly state:

• The cost of training specific: include tuition, materials, cost of living, commuting, the account support (if any).
• Term workers commitment to work after training.
• The responsibility to repay the cost of training if the labor violations committed or leave before the deadline.

This regulation is aimed at protecting the rights of both parties: the business can be assured of investment in human capacity without worrying about lost costs, while workers understand their rights and obligations when participating in the training program.

For example: A company produced spend 100 million to send technical personnel training abroad, is committed to work at least 3 years after on the water. If employees leave after 1 year, they have to refund the cost of training corresponding 2 years remaining under the contract.

3.3. Legal risk enterprises often encounter when non-compliance

Non-compliance on the cost of training can lead to three main risks following:

• Tax risk: the Cost of training is not accepted as reasonable cost, leading to an increase of corporate INCOME tax payable. Businesses can be fined arrears and interest for late payment if the tax inspection.
• The risk of labor disputes: If there is no contract training clearly, when the employee work breaks, business can't request a refund of the cost of training. A number of cases, business is complaint reverse for deduction of salary left prescribed when workers retire early.

Financial risk management: uncontrolled actual cost, wasting budget. Teen database reviews effective training investment (ROI), which led to the decision to training and lack of direction.

4. How to calculate cost of training: formula – example illustrations

Understand how to calculate the cost of training a systematic way to help businesses easily build appropriate budgets, compare the embodiment, deploy, evaluate investment performance. Here is a simple approach, but effective for the organizations and enterprises.

4.1. The general formula calculates the cost of training

Training costs = direct Costs + indirect Costs + opportunity Costs + hidden Costs

In which:

• Direct costs: rent teaching staff, learning materials, software, organized layers.
• Indirect costs: Time, work interruption, cost management program.
• Opportunity cost: value of lost work due to staffing suspend work to study.
• Hidden costs: As the ratio of the holiday after training, or evaluation costs, measure training effectiveness.

4.2. Illustrative example: Calculate the cost of training for 10 new employees in 1 month

Suppose the business held a training course integration, basic skills for 10 new employees, prolonged duration of 1 month. The expenditures expected as follows:

The average cost for each new employee in this training program is about 4.510.000 VND/person/month.

4.3. Table checklist simple for business

For convenience in calculations, decision making, entrepreneurs can apply table checklist follows:

• Clearly identify the number of students
• Classification of costs according to the group: direct – indirect – chance – hidden
• Estimated unit price of each item
• Cost comparison between the forms of training (online, live)
• ROI assessment after training

The distance calculator helps enterprises optimize budget plan, choose the plan training new employees fit ensure transparency when allocating resources.

5. What factors affect the cost of training

The cost of training for staff is not fixed number which is governed by many factors related to the scale, form development and training goals. The catch clearly these factors help businesses proactively control optimum training costs for workers in a flexible way, effective.

5.1. Enterprise scale and number of personnel need training

Business as large number of personnel need training as much as the total cost will increase. However, in large-scale business can take advantage of scale (economies of scale) as:

• Better negotiate with suppliers, service training
• Re-use content training for multiple departments
• Utilize internal systems to training cross (cross-training)

For example, If training the same content for 5 people and 50 people, the cost per capita in groups of 50 will be lower.

5.2. Training form: Direct vs online

Forms of training have great influence on the cost structure:

• Live training: Advantages is to create a highly interactive, in accordance with practical skills, but the cost is often higher due to the need trainers, locations, logistics.
• Online training (eLearning): Help save the cost of long-term, flexible time, can train at the same time, many people on many branches. However, should the initial investment into the platform, content digitization.

Hint: businesses can combine model training, blended learning (learning in combination) to the optimal cost-effective.

5.3. The level of complexity specialization of training content

Content as intensive, requires higher training costs will be greater, due to the need to:

• Trainers have practical experience
• Materials specialized have copyright
• Simulation tool to support practice

For example, A training course, soft skills (such as communication, team work) often cheaper than training on technical programming or system administration, ERP.

5.4. For students: new Staff, middle management or senior leadership

• New employee: Usually focus on training, integration, skills platform. Moderate cost, and can be deployed in groups.
• Middle managers: Need to learn the operating skills, conflict resolution, decision-making. Requires higher quality program and personalization higher.
• Senior leadership: Training often strategic, in the form of consultants or advisors specifically, should the high cost several times more.

5.5. Tool supported platforms (for example: eLearning)

Business use platform management training such as Vietnam e-Learning can reduce the cost of the organization operating. These platforms support:

• Process automation training
• Track the learning progress of each employee
• Report effective learning in real time

Actual value: Reduce the time to manage your increased ability to evaluate the effectiveness and reuse content training for new employees.

6. How to optimize the cost of training but still ensure effective?

In the context of the training budget is increasingly being careful consideration, the question for businesses is not just “cost savings” that are also “effective training with the most reasonable cost”. Here are the practical solutions to help businesses optimize the cost of training for employees that still achieve development goals, the internal capacity.

6.1. Combine models, flexibility training

Business should not apply a model rigid training for all objects. Instead, it should be flexible choice of the form as:

• Blended learning (learning in combination): combination of live training and online help reduce the costs of holding that still ensures interactivity.
• Microlearning (brief training on demand): Divide content training according to each specific skills to help students to learn quickly, saving time does not affect the work.

For example: Instead of organizing course of 2 consecutive days, businesses can deploy content training through the video 15 minutes per day for 2 weeks, in accordance with the work schedule.

6.2. Priority deployment training platform internal

The construction of the system internal training, especially using the software eLearning help in business:

• Cut the cost of hiring trainers, venue, printing documents.
• Easy content updates training according to the actual situation.
• Manage, assign, track progress focused learning.

This is a long-term strategy to help businesses be more proactive in training, at the same time control what the cost of training for employees.

6.3. Measurement efficiency by index clear

Only when measurement is effective, new business know the cost of his training there are “worth it” or not. Indicators should track include:

• KPI learning: the rate of completion of the course, the number of new skills to be updated.
• ROI training: growth, productivity, work efficiency after training.
• Convert the following training: level apply knowledge in practical work.

For example, If after the course, training skills, sales, rate pegs menu of team increased by 15%, this is clearly evidenced for effective investment in training.

6.4. Team development internal training

The construction of teaching staff, internal not only save the cost of rent but also help businesses personalize content specific jobs. In addition, the trainer internal often understand the corporate culture and be able to convey, with real cops.

7. Software solution to help manage the optimal cost of training

Currently, the application of technology to manage the cost of training is no longer selected, which is the inevitable trend. One of the solutions pioneer effect is the software eLearning of Lac Viet is designed exclusively for business English with the goal of saving costs, increasing the effectiveness of training.

Software eLearning of Vietnam is not only transmitting knowledge, but also a comprehensive system to help businesses:

• Warehouse construction materials, internal standardization.
• Manage training plans according to groups or individuals.
• Track the progress of the learning effect in real time.

Statistics from our customers use to find businesses can save up to 50% of the cost of training for employees compared to the traditional training.

The features help control cost effective training

• Decentralized training budget for each department or project specific.
• Expense reports in an instant: to help managers track the money spent on training anytime, anywhere.
• Automatically calculate the ROI of training: help assess the value of the investment after each program.

Thanks to the system detailed report and analysis tools, powerful software to help businesses not only control is “the cost of training, including what” but also reviews the effectiveness of investment in the strategic level.

If the business is to find solutions to cost savings while improving the effectiveness of training? Let the software eLearning of Lac Viet accompany you in the journey of building a system of modern training, optimal and measurable results. Sign up to receive advice or a free trial today!

Hope the article helps you understand the cost of training, what to include, how to build plans to allocate a reasonable cost, with the application solution fit technology will help medium enterprises good control budget just ensure effective enhance human capacity in a sustainable way.