Training & Development Expense as a Percentage of Total HR Expense

Training & Development Expense as a Percentage of Total HR Expense

KPI Details

Training & Development Expense as a Percentage of Total Human Resources (HR) Expense measures the cost of developing, implementing and managing employee training programs relative to total HR spending over the same period of time. As with most cost-related metrics, a relatively low value is preferred for this metric, however any cost savings in this area must be weighed against the quality of the company's talent development programs. Poorly developed (or non-existent) training programs can impact the bottom line in other ways - high turnover rates, low customer service levels, poor employee productivity and work quality can, in certain cases, may be tied to talent development practices. Furthermore, companies that are experiencing high growth (i.e., adding many new employees, opening new positions, etc.) can expect to spend considerably more on training and development than others.

KPI Definition

The total cost of employee training and development (labor, third-party vendor expenses, technology, other overhead costs) divided by total Human Resources (HR) Department expense over the same period of time, as a percentage.

KPI Best Practices

• Utilize webinars and eLearning to minimize need for training personnel
• Synchronize training with hiring cycles to reduce number of training sessions needed
• Eliminate or combine training areas whenpossible

KPI Calculation Instructions Training & Development Expense as a Percentage of Total HR Expense?

Two values are used to calculate this KPI: (1) the total cost of training and development, and (2) total Human Resources (HR) Department expense over the same time period. The total cost of training and development is comprised mainly of labor costs (salaries/wages, benefits and commissions or bonuses) for dedicated training and development staff, third party vendor fees, and technology costs related to administering training courses (e.g., online training courses, etc.). Total HR expense should include labor, technology, occupancy and other overhead costs related to HR operations, including recruiting, hiring, training and development, employee relations, payroll and human capital management.

KPI Formula :

(Training & Development Expense / Total Human Resources Expense) * 100