Investing in employee training is a critical strategy for business success. Establishing a well-thought-out training budget ensures employees remain skilled, motivated, and productive.

There are five essential steps on how to set a training allowance, accompanied by comprehensive answers to key questions about training budgets.

Step 1. Importance of Training Allowance

A training allowance is the amount of money allocated per employee for their training and development. It serves as a significant investment, enhancing their skills, boosting morale, and reducing turnover. Companies that prioritise training see improved productivity and a competitive edge in the market.

Step 2. Optimal Training Budget per Employee

The optimal training budget per employee can vary, but a common guideline is to allocate between 1% and 5% of an employee’s annual salary for training. For example, if the average employee earns EUR 50,000 annually, the training budget should range between EUR 500 and EUR 2,500 per year. This allocation ensures that employees receive adequate development opportunities to enhance their performance.

Step 3. Calculate Company Training Budget

To determine the total training budget for the company, multiply the allocated amount per employee by the total number of employees. For example, a company with 100 employees allocating EUR 1,000 per employee annually would set a total training budget of EUR 100,000.

Industry standards suggest that the average cost of training per employee is around EUR 1,200 annually, but this should be adjusted based on each company’s specific needs and industry benchmarks.

Step 4. Determine Percentage of the Overall Budget

Companies typically allocate between 2% and 5% of their total budget to training. To estimate the cost of a training programme, break down expenses into categories such as course fees, expenses, and time away from work. Using historical data and industry standards can help in making accurate cost estimates and setting a realistic budget.

Step 5. Incorporate Learning Paths for Development

A learning path is a structured sequence of educational activities designed to develop specific skills over time. By incorporating learning paths into the learning & development strategy, employees will have a clear roadmap for their development.

This ensures that employees progress through relevant training courses, workshops, and hands-on projects in a logical order, building on their knowledge and skills systematically.

Frequently Asked Questions

What is an example of a training budget?

A small tech company might budget EUR 100,000 for 100 employees, focusing on skills development, certifications, and conferences.

What is the average cost of training per employee?

The average cost is approximately EUR 1,200 annually.

What percentage of the budget should companies allocate for training?

Typically, 2% to 5% of the total budget should be allocated to training.

How will the effectiveness of training be measured and evaluated?

Where can I find available courses?

More Information

• HR Training Excellence: Elevate Success with a Learning Path.
• FAQs: Training Courses
• Works Council Training Netherlands: Learning Pathways.
• Human in Progress Academy – Leading by Learning