Training: Cost or Investment

Mar 17, 2014

I'm curious about whether training is considered as a cost or an investment for those in companies who manage training and development finance.

Any thoughts from the greater community?

9 Replies
Ashley Chiasson

I've worked for both ends of the spectrum - companies who understand that the value they put into their employees will likely yield a return on investment, and those who can't get past the cost. I've even gone so far as to leave organizations who have languished when it comes to investing in professional development (I do always give them a chance!).

To be honest, employers need to change their attitudes with regard to training and development because today's society depends on continual learning, and it's a lot less expensive to develop an employee (and a greater value to the organization) than it is to hire and train new employees every other year.

Kate Salvan

To my mind, it all depends on the company’s approach towards training software usage. For companies, that prefer to stay conservative, using customary means of employees’ education, training will be just cost. For those, analyzing and experimenting, - investment.  To buy training software and to hire a specialist not enough to receive return on investment. Companies need to monitor the process, find gaps and take into account feedback. Modern eLearning software has reporting system allowing seeing course completion statistics and individual learner’s progress. This kind of information shows employees’ attitude towards the training (if an employee ignores the training course their negative image is created in the manager’s eyes) and learner’s performance, thereby indicating whether an employee is worth keeping and investing money in. Thus,correctly organized training software usage will not only maximize ROI, but will increase staff performance, results quality and will make the business process more effective, especially if the business is connected with customer service and management.

Steve Flowers

It's gotta be both, in my opinion. Can't have an investment over the long term without some cost in the short run. Defining training as a simple cost without outcome expectations associated with investment will likely end up as a cost with no payout.

Doesn't need to be either / or. Training should (almost) never be considered as a standalone cost or investment. When considered as part of a system of improvement that is tied directly to business results - the costs are always investments or they aren't worth pursuing.

Bob S

Hi Nicholas,

Some good thoughts above, but my answer is a bit more pragmatic...

In terms of budgeting/finance, I've worked for companies that do it both ways; and both can work just fine. The key is this IMHO...

1) If you "charge" other business units and/or vendors for your L&D services, then the financials are best  run with an investment slant like any other revenue producing entity. (ie run with a P/L)

2) If however you do not bill back for your services, you are a "cost center", and the financials are best run as such. (ie pure budget-based costing)

In my experience, neither of these approaches were neccessarily indicative of a company's committment to providing great development options for their people.

Hope this helps,


Steve Flowers

I see what you're saying Cary. In some ways it's semantics. In others, the word "cost" can provide ammunition for avoidance of some assistance that could be critical to performance. Sometimes costs are unnecessary -- others, like the telephone and employee development, the cost of doing business. 

As for referring to these as investment, I recommend folks consider the economics of any transaction. Lots of ways to frame this. What's the cost of the problem (opportunity costs, real costs)? What's the cost of the solution? Does the solution cost more than the problem? Bad investment. Unfortunately, lots of things that training and work support contribute to are not that easy to isolate for effect.  Still, considering the ratio of problem : solution costs can help folks avoid bad investments in favor of better investments  

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