Should You Include Training Costs in Your Hiring Budget

Hiring a new employee involves more than just offering a salary and onboarding them into your team. Behind every successful hire is a set of costs that can significantly impact your organization’s budget if not planned accurately. One critical and often overlooked component is whether to include training costs in your hiring budget.

Many businesses treat training as an afterthought, a post-hire expense that’s handled separately. However, in today’s competitive job market where skills development is ongoing and rapid onboarding is vital, overlooking training costs can lead to poor budgeting, increased turnover, and wasted resources.

So, should you include training costs in your hiring budget? Let’s dive in.

Why Training Costs Matter in Hiring

Training is essential to help new hires reach full productivity. Even the most experienced professionals need time to adapt to your systems, culture, and expectations. Here’s why training costs matter:

• Boosts employee performance: Structured training accelerates learning curves.
• Improves retention: Employees who feel supported with learning opportunities are more likely to stay.
• Reduces mistakes: A well-trained employee makes fewer costly errors.
• Increases ROI on hiring: You get more value from your new hire faster.

Ignoring training costs in your hiring budget can throw off your actual cost-per-hire and reduce the effectiveness of your workforce planning.

What Are Training Costs?

Before deciding to include training costs in your hiring budget, it’s important to understand what falls under this category. Training costs can include:

• Orientation sessions
• On-the-job training (OJT)
• eLearning modules or external courses
• Mentorship and shadowing programs
• Tools, software licenses, and learning platforms
• Trainer or instructor fees
• Printed materials and job aids
• Lost productivity during learning period

These costs vary depending on the complexity of the role and your company’s training infrastructure.

Benefits of Including Training Costs in Your Hiring Budget

When you include training costs from the outset, your hiring budget becomes more accurate, strategic, and aligned with actual business needs. Here are the top benefits:

1. Accurate Budget Forecasting

Training isn’t optional—it’s essential. Including training costs ensures your hiring budget reflects the full investment per hire. This enables better financial planning, especially for high-growth companies or those with structured onboarding programs.

2. Enhanced Hiring Strategy

When you allocate funds for training, you can afford to hire candidates who may not meet 100% of the job criteria but show strong potential. You’ll have the resources to train them effectively, leading to better long-term fits.

3. Improved Onboarding Experience

Budgeting for training allows for a consistent and comprehensive onboarding process. New hires who receive well-rounded training integrate more smoothly and quickly into your organization.

4. Clear ROI Measurement

According to a study by the Association for Talent Development (ATD), companies that invest in training see a 218% higher income per employee than those that don’t. (source)

By tracking training expenses and outcomes, you can measure ROI more accurately.

Common Mistakes to Avoid

Failing to include training costs in your hiring budget can lead to several pitfalls. Be mindful of these common mistakes:

• Underestimating the time needed for training
• Not accounting for internal trainers' time
• Skipping software or platform license costs
• Assuming knowledge transfer happens organically
• Treating training as a one-time event rather than ongoing

Including training costs avoids budget overruns and supports scalable growth.

How to Effectively Include Training Costs

Here are practical tips to help you plan and budget for training effectively:

1. Audit Existing Training Programs
   Determine what training resources you already have and what gaps exist.
2. Estimate Per-Hire Training Costs
   Include costs for tools, materials, personnel time, and any third-party providers.
3. Build a Scalable Onboarding Plan
   Standardize onboarding content to reuse across hires while personalizing where necessary.
4. Set Training KPIs
   Track learning progress, performance improvements, and time-to-productivity.
5. Collaborate With Finance and HR
   Align your budget with company-wide learning and development goals.

Real-World Example

Let’s say your company is hiring for a software engineer role. Beyond salary, you might spend:

• $500 on onboarding software licenses
• $1,200 for online coding certifications
• $800 in internal mentoring time
• $500 on documentation, orientation, and sessions

That’s $3,000 in training costs. Multiply this across multiple hires, and not budgeting for training can significantly impact your finances.

What the Experts Say

The U.S. Small Business Administration advises that new employee training should be a line item in every hiring budget. (source)

Including training costs ensures you’re not caught off guard and can better support employee development, improving retention and satisfaction.

Final Thoughts: Yes, Include Training Costs in Your Hiring Budget

To build a high-performing, motivated workforce, training isn’t optional—it’s essential. When you include training costs in your hiring budget, you gain visibility into your true cost-per-hire, create better onboarding experiences, and ensure long-term employee success.

Budgeting for training is an investment, not an expense. It directly influences productivity, retention, and overall company growth.

Call to Action

Want to optimize your hiring strategy and improve retention? Start by revisiting your hiring budget today. Make training part of the plan—not an afterthought. Your future workforce will thank you.

FAQ: Should You Include Training Costs in Your Hiring Budget?

1. Why should I include training costs in my hiring budget?
Including training costs provides a more accurate picture of your total cost-per-hire and ensures your new hires are set up for success from day one.

2. What types of training costs should I consider?
Include onboarding programs, eLearning, coaching, tools, licenses, mentorship time, and productivity losses during the ramp-up period.

3. Can training reduce employee turnover?
Yes. Employees who receive proper training and development are more engaged and loyal, reducing your turnover rate.

4. How do I calculate training costs per hire?
Estimate costs per training resource, tools used, internal trainer hours, and any third-party fees. Divide the total by the number of new hires.

5. Are training costs tax-deductible for businesses?
In many cases, yes. Consult a tax professional, as training expenses may qualify as deductible business expenses depending on your region.