The Hidden Costs of Poor Training for Business

Most organisations understand that training is necessary. It is a routine line item in budgets, an expected part of onboarding, and often seen as a compliance requirement. Businesses deliver training because it feels like the right thing to do, a sign of investing in people and supporting development.

But there is a critical distinction that is often missed. Training is only valuable if it works.

The effectiveness of training is not measured by whether the content was delivered, nor by how many people attended a session. It is measured by what happens afterwards, whether people remember, apply, and act on what they have learned in their day to day work. Unfortunately, the reality in most organisations is that this does not happen. And when training fails to transfer into practice, it imposes significant hidden costs on the business. Costs that compound quietly over time and undermine both performance and profitability.

Training That Fails is Expensive

Businesses in Australia spend, on average, $2,500 per employee each year on training. Across larger organisations, this can represent millions of dollars in annual investment. But this figure alone tells us very little. Money spent on training is only an investment if it leads to improved capability, better performance, and real business outcomes. Otherwise, it is simply cost without return.

It is not that people are unwilling to learn, nor that employees lack the ability to retain information. The problem is that most training is poorly designed from a learning science perspective. Studies consistently show that people forget up to 70% of new content within 24 hours of a training session. Within a week, that figure can reach 90%.

This happens because corporate training all too often relies heavily on passive learning. Long presentations, dense information delivery, and one-off workshops overwhelm working memory and fail to engage learners in the right way. The result is predictable. Training content is forgotten and skills are not transferred. Staff behaviour does not change and the business is left wondering why performance has not improved despite significant investment.

Productivity Loss 

One of the first and most visible costs of poor training is lost productivity. Employees who have not retained critical knowledge or skills are slower to complete tasks. They require more support from colleagues or managers. They are more likely to make errors, operate inefficiently, or apply processes incorrectly. This impacts not only individual performance but also team dynamics. Skilled employees spend additional time answering questions or correcting mistakes made by others. Projects take longer. Bottlenecks appear. Customers experience delays or lower quality service.

Over time, the productivity loss created by ineffective training can be substantial. It shows up not as a dramatic failure, but as a steady drain on efficiency and output. An invisible tax on day-to-day operations.

In contrast, businesses that invest in training designed for retention and application see far stronger performance outcomes. Employees operate with greater speed, accuracy, and confidence. Decision-making improves. Customer experience improves. And the organisation becomes more resilient and capable over time.

Staff Turnover

In addition to productivity loss, another significant cost of poor training emerges in staff turnover. Employees want to succeed and they want to feel competent and supported in their roles. When training fails to provide them with the tools they need, frustration often builds, and sometimes very quickly. This frustration often turns into disengagement. Employees begin to look elsewhere for opportunities where their development will be better supported. Research highlights this risk clearly. For example, one study found that 94% of employees would stay longer at a company that invests in their learning and development. Yet when that learning is ineffective, the message received is the opposite. That their growth is not a priority.

Replacing employees is expensive. Estimates suggest that replacing a staff member can cost between 30 and 200% of their annual salary once recruitment, onboarding, and lost productivity are considered. For high-turnover roles or industries, these costs escalate quickly and create significant financial strain. Training that does not stick therefore creates a double cost. The initial wasted spend on the training itself, followed by the far larger cost of recruiting and training a replacement when employees leave.

The Impacts on Organisational Culture 

Perhaps the most overlooked cost of poor training is its impact on organisational culture. When training fails, it sends a message. Even if unintended. It suggests that development is not taken seriously. Employees begin to see training as a box-ticking exercise rather than a genuine investment in their growth. This erodes trust and engagement over time. It weakens collaboration and reduces the willingness of employees to go beyond minimum expectations. 

In environments where capability is low and turnover is high, culture becomes transactional. Staff do what they must, but little more. Recovering from this type of cultural decline is far harder than simply improving a training program. It requires rebuilding trust, investing consistently in capability, and demonstrating that development is valued and expected at every level of the organisation.

The Real Returns from Good Training

The good news is that the solution is not complicated. But it does require a shift in approach. Effective training is built on principles grounded in the science of how people learn. Strategies such as active learning, retrieval practice, spaced repetition, and cognitive load management are all well-evidenced and proven to improve retention and application. When these strategies are applied to training design, the outcomes change significantly.

Employees retain knowledge for longer. Skills are transferred more effectively into practice. Performance improves. Mistakes decline. Staff feel supported and engaged. And retention rates increase. The financial return is well-documented. Research shows that for every $1 invested in high-quality training, businesses can generate up to $4.70 in additional revenue per employee. More importantly, effective training builds organisational capability. Creating a workforce that is more skilled, more adaptable, and better equipped to meet future challenges.

Final Thoughts

Training is not simply a support function. It is a strategic asset when done well, and a costly liability when done poorly. Businesses that view training as a compliance exercise, or a content delivery task, will continue to face the same problems. Poor retention. Low performance. High turnover. Those that invest in training designed for how people actually learn will gain a clear competitive advantage. Not just in performance today, but in capability and resilience for the future. The cost of forgetting is real. But so is the opportunity of getting it right.