Compliance Communications Blog

The True Cost of Compliance Training


So get this.  The other day I was talking with a friend who sells compliance training solutions into large companies.  We got to talking about a deal he is working on and he told me this:  the Compliance Department of this company he is selling to, which provides regular training to the various functions around the organization, gets billed by those departments for the labor costs associated with that training.

“Labor costs?” you say.  “Do you mean the costs for preparing and delivering the training?”  No, I mean the costs of the people sitting in the seats receiving the training.  I mean the actual hourly rate for every employee that gets trained on their Code of Conduct and other compliance issues.  Those labor costs.

Now, I think this practice is probably wildly misguided; clearly compliance training is a kind of service to the receiving department and in the best interests of the company overall.  On the other hand, it might be brilliant, for reasons I’ll get to.  But either way, the story represents a real jackpot for you and me because it shines a light on something really important – the question of how much compliance training really costs.

Here’s a quick analysis of what compliance training is likely to cost an average company.  The results will probably surprise you. 

Imagine a company – I’ll call them ACME (not after the grocery chain, but after Wile E. Coyote’s go-to supplier of weapons and traps).  ACME has 7,500 employees, and they provide five hours of compliance training activities per employee per year – i.e. one hour of annual Code of Conduct e-learning, four additional risk modules, a monthly briefing in a staff meeting or town hall event, and periodic disclosure and policy review activities.

You might think that e-learning alone would cost ACME, say $20/head.  If that were the case, then annually they would be paying around $150,000 for that level of activity.  But add to that – as the anecdote above suggests – the labor costs associated with that work.  The average employee in the United States costs the company about $45/hour.  At five hours each for 7,500 employees, the cost of compliance training jumps to over $1.6 Million!

As much as I think the charge-back for training is a strange thing for a company to do, it may have an extraordinary benefit for employees.  By forcing the company to really contemplate just how much it is spending for training, I can only imagine that they are looking at every interaction and asking the following kinds of questions:

  1. Is all of this training necessary? Are we targeting the right employees with the right messages, or are we just giving all employees the same messages regardless of risks associated with their jobs?
  2. Are we wasting a lot of time piling on training full of legalese and detailed regulatory topics that is meaningless to most of our employees, or are we zeroing in on the key issues and takeaways that employees need to know?
  3. When it comes time for retraining, are we giving employees the same 45-minute e-learning module year after year, or are we delivering quick-hit refreshers in subsequent years at a fraction of the cost?
  4. Are there areas where other sorts of employee engagement might be much more cost effective (and perhaps much more effective from a learning perspective too)? For example, would a 5-minute video-based learning module be a good alternative to a longer interaction that requires an employee to read loads of on-screen text (often, the same text they read last year)?  Might the cumulative effect of structured, periodic exposure to brief messages—a blog post or newsletter article, a 15-minute Tone-At-The-Middle session with a Manager, posters and handouts that reinforce the message—take the place of certain formal training activities?  Would the user-experience and context of a well-designed intranet page drive the same result we look for in long-form training: an employee who knows how to spot a compliance dilemma, avoid the wrong decision, and escalate it appropriately?

In other words, when companies start to contemplate the true cost of the compliance training they are pushing out to all of their employees, interesting alternatives start to emerge.  Maybe that’s what my friend’s prospective client had in mind.  Maybe they’re asking the compliance department to come up with something better, by requiring them to pay for its true cost themselves…


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The True Cost of Compliance Training

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