Employee training can be a hard sell sometimes. Even though having a well-trained workforce is widely known to be a key driver to a company’s success, too often the training program is viewed as an expense rather than an investment.
What if you could cut that training investment in half? What if the training department could actually generate revenue? It is possible—if you know what training incentives your state has to offer and how to get through the application and approval process to maximize your award.
From Fortune 500 corporations to self-operated, Mom-and-Pop startups, every year more than a half billion dollars is awarded to companies throughout the United States to offset the cost of training new and existing employees. In 2005, there were more than 150 incentive programs available at the state level, solely for training employees.
Each state has its own economic development goals and most provide financial incentives to companies whose training programs support these goals. Some states will offer multi-million-dollar awards to lure or keep major corporations within their borders. Depending on the state’s economic conditions and fiscal priorities, some have been known to go through phases of massive funding in support of corporate training programs.
There are dozens of variables to consider, and predicting the benefit of state training incentives to an individual company takes a bit of time and analysis, but the likely payoff is well worth the investment. If your company plans to roll out a training program this year, now’s the time to look into the funding available from your state.
How Much Could a State Grant Be Worth to My Company?
Every state training incentive varies in the funds it offers, its qualification guidelines and program objectives. But typically, qualified training costs include instructor salaries, employee wages during training, development of training programs (internal and external costs), materials and supplies, instructional media, equipment used for training and reasonable travel costs.
A state may award funding on a case-by-case basis. Therefore the award might be determined upon the size of the operation and its value to the state.
The size of the award also depends on the degree to which the application has been properly prepared and processed. But even figuring in the time required to research what’s available and submit the application, companies usually find that training grants, credits, and incentives provide a substantial boost to the return on investment (ROI) before training even begins.
What Types of Training Are Included?
A common misconception is that many of these types of training incentives are designed for and only apply to the manufacturing industry. In fact, almost any industry can win a training grant. Criteria focuses more on supporting the types of training the state wants to promote for its workforce than on the type of industry.
Different industry types require different kinds of training, but there are commonalities among states as to what qualifies for incentives. Typical qualified training may include: new technology, new equipment, software implementations and upgrades, total quality management (including Lean Manufacturing, Six Sigma, ISO etc.), teambuilding and leadership. In some states, training incentives are linked to job creation, so states are looking to stimulate training in the area of basic job skills.
Some programs require training to take place at a state technical college. In some cases, the state will use the college’s staff to design, develop and deliver the training specifically for your company needs. In most cases however, your training can be developed and delivered by any qualified source, including your company’s own in-house trainers, outside training vendors, local university staff or via e-learning.
Is Federal Funding Also Available?
On the federal side, money is dispersed to each state under the Workforce Investment Act for that state to use in its programs as it sees fit. For years, federal legislators have talked about funding high-tech skills training, but as yet nothing significant has been made available to the general public or business community.
In most states (with the exception of Georgia), a company must have a training plan in place to submit for state approval before the state will consider its application for funding. The plan must outline number and nature of training programs and projected cost. If the application is successful, the grant or tax credit is awarded at that time but usually not paid until the training has been completed. So to ensure receipt of the award, applicants need to pay careful attention that, for the most part, the actual training follows the plan, and that documentation is in place to show adherence.
Why Don’t More Companies Take Advantage of These Incentives?
Most companies are simply not aware that these incentives are available. This is especially the case in a multi-state training rollout where the company does not know of incentives offered in each rollout state and where it has no relationship with those state officials.
And those companies who are actually aware of the programs are often daunted by the paperwork and labor-intensive procedures they expect are required to receive government awards.
It is true that every state’s program is different, and each has its own unique requirements, so the investment of time and energy to take advantage of the grants can be significant, especially with multi-state rollouts. Training managers will spend time on paperwork and deal with officials in each state and local employees to coordinate a successful campaign for state funding.
Also, because training has to take place as originally planned, companies have to be reasonably sure on the front end that the training program they propose won’t significantly change course.
How Can I Minimize the Effort and Maximize the Return?
Many states allow multiple-year contracts. This allows a company to go through the application and approval process once to receive a grant to cover up to two years of training.
Also, if a company has multiple locations in the same state, it can usually group its activities together and receive one large award.
Alternatively, many corporations work with a company that specializes in training cost recovery. These companies already have relationships in place with state officials and expertise in leveraging each program to minimize hassle and maximize return.
Where Do I Start?
A good starting point is your state’s Web site. This will provide you with information on the various programs available. Talk with the local state officials responsible for administering and approving your local program for important details, nuances and particulars that could help with your application approval.
You also might consider contacting a company that specializes in this one area of training cost recovery to find out how it may be able to save your company time and money in the application process.
Peter Green is the vice president of business development at WALLACE. He can be reached at firstname.lastname@example.org.
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