3 Ways to Calculate Your Training & Development Budget

1) Total yearly salary budget X 1-3% = Total Training

Budget

This calculation takes the total salary budget for the entire year
and multiplies it by 1% to 3%. The 1% to 3% is what you can
use to represent the size, industry, or other organization
specifics.

This method ensures that the organization is strategically

committed to the learning & development of employees
and leadership.

This could also be based on what the company historically has

spent on training. For example, last year we spent 2.5% of our
salary costs on training. If training needs appear to be the
same, then that same % can be applied to the next year

2) Industry specific per employee average X FTEs =

Total Training Budget

Calculating a training budget based on a reputable industry

report is a great way to benchmark against similar companies
in size and industry. Use these reports to not only ensure that
training and professional development investments and
strategies are aligned with trends but also ensure
competiveness within the talent market.

3) Predetermine training needs, estimate costs, and

calculate

This calculation takes a little more work ahead of the year. It’s
less of a formula and more of an estimate based on the needs
of the organization. Calculate a training budget using known
training needs and estimated costs for items such as materials,
instructor fees, travel, technology, consulting, facilities rental,
etc.

This way of calculating a training budget is great for when your

needs for the entire year are easily determined ahead of time
and backed by the strategic approach to the development of
the workforce.

Start by identifying your key training initiatives. For example in

the next year, we are planning for these training initiatives:

 Leadership development
 Plant operator training
 Safety training
 Supervisory training
 New hire on-boarding

 Next, estimate the costs for each initiative that would take into
consideration:

 Numbers of participants
 Instructor costs
 Travel and Living
 Materials
 Facility costs
 Food
 As with most things, there’s pros and cons to each method
of calculating a training budget. For instance, using yearly
salary budget multiplied by a percentage may not be ideal
if you are anticipating a stage of hyper-growth or an
acquisition. Using reported averages and FTEs may not
accurately represent the needs of your organization.
Predetermining the training needs of your organization is
not always ideal due to unforeseen circumstances like a
change in leadership or a triggered training for all
 employees such as harassment training or workplace
safety training.
 Whichever method of calculation you may choose, it’s
always important to remain flexible and try to anticipate
shifts and changes to your training budget.