First Midwest BankFirst Midwest Bank logoArrow DownIcon of an arrow pointing downwardsArrow LeftIcon of an arrow pointing to the leftArrow RightIcon of an arrow pointing to the rightArrow UpIcon of an arrow pointing upwardsBank IconIcon of a bank buildingCheck IconIcon of a bank checkCheckmark IconIcon of a checkmarkCredit-Card IconIcon of a credit-cardFunds IconIcon of hands holding a bag of moneyAlert IconIcon of an exclaimation markIdea IconIcon of a bright light bulbKey IconIcon of a keyLock IconIcon of a padlockMail IconIcon of an envelopeMobile Banking IconIcon of a mobile phone with a dollar sign in a speech bubbleMoney in Home IconIcon of a dollar sign inside of a housePhone IconIcon of a phone handsetPlanning IconIcon of a compassReload IconIcon of two arrows pointing head to tail in a circleSearch IconIcon of a magnifying glassFacebook IconIcon of the Facebook logoLinkedIn IconIcon of the LinkedIn LogoXX Symbol, typically used to close a menu
Skip to nav Skip to content

The ROI of Training in Your Small Business

How much do you spend training your employees? Moreover, how much should you spend? The Association for Talent Development reported in their 2023 State of the Industry that organizations spent an average of $1,220 per employee, slightly less than the year before.

Some employees still see training as a reward and evaluate it in terms of satisfaction rather than the impact it has had on their performance or work product. Some managers still send their teams to training as a supplement to, or substitute for, performance feedback and candidly, don’t evaluate the outcome really at all.

For small businesses, employee development planning can be tricky. Leadership often is caught between cash flow challenges and pressure to build rather than buy talent in a market where they struggle to compete with larger organizations. But there are some simple ways to plan and implement learning and development initiatives and achieve better outcomes for employees and for the business.

Set Targeted Learning Outcomes

As a first step, define the learning objectives, or rather targeted outcomes for the organization. One way to do this is a simple four-quadrant model to categorize and prioritize the different goals. On one axis, look at strategic vs operational impact and on the other, skills acquisition vs behavior change.

Each possible learning opportunity can be categorized into one of the four quadrants: Values and Culture, Competitive Advantage, Operational Efficiency and Technical Know-How. The investment is different for each quadrant.

Training quadrants - Behavior and Skills, Operations and Strategy

Figure 1. Learning and Development Matrix

J. L'Estrange

For technical know-how look for external programs offered by subject matter experts that are local or online, depending on the learning goal and overall business need. For example, roofing companies require OSHA training for employee safety and insurance requirements, car dealerships have manufacturer approved training programs for their technicians, and law firms require their attorneys to meet their continuing education requirements for licensure in their state.

For skills that are driving your competitive advantage, consider your approach to recruiting and how it might shift your training requirements. If employee capability differentiates you in the marketplace, adjusting your sourcing strategy to capture those skills and then internalizing the skillset through in-house training will protect your investment for the long term.

For example, if your accounting firm serves construction companies, hire the controller from a successful mid-sized construction company and utilize their expertise to train a team to specialize in serving that vertical. Alternatively, train in the core business skillset and differentiate through the unique backgrounds of your employees to add depth to the overall service offer.

If your small business sells a product, train your people on the unique aspects of the product so they can communicate the value proposition and win against the competition. Bottom line, any training program that aims to differentiate you in the marketplace is delivered inside of the house.

For the development planning that is focused on behaviors, opt for on-the-job activities that create opportunities to integrate and apply the learning immediately. For operational efficiency, this starts with process documentation that codifies ways of working.

For the law firm, this might be the documentation related to new client intake, but will also include in-the-moment education on how to best communicate with a new client and create the rapport that is so important at the start of a relationship. For the roofing company, this might be a process for estimating and pricing a job that also addresses the need to manage complexity and multiple suppliers to ensure that the estimate is thorough and complete.

Get the Most Out of Your Training Dollars

Some states offer grant money for training in specific skills or industries. Check with the department of labor and workforce development in your state to see what resources are available. If your employees are fully remote, contact the state where your business is registered or headquartered. Professional associations serving your industry may also offer training opportunities and can support through access to facilities and financial resources.

You may already have access to learning content through your existing vendor agreements. Some PEO providers offer online learning resources as part of their platform. This can range from mandatory compliance training to basic online skills training. Many 501(c)(6) trade associations offer cost effective or free access to learning resources as one of the benefits of membership. Lastly, LinkedIn Learning is free for all premium users and offers some of the best online training in Microsoft Office programs available on the market.

Whether your goal is to train your people on specific required skills to meet your business needs or to achieve the overall strategy of building rather than buying talent, consider learning and development as a broader initiative than simply sending someone to a training course and then figuring out how to pay for it.

Your small business has the advantage of being nimble. Use that flexibility and growth mindset into your daily operations for ongoing development of your people and continuous improvement of your product or service.

This article was written by Jen L’Estrange from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

Subscribe for Insights

Subscribe