Learning and development can play a significant role in the success of an organization by helping prepare high-potential employees for future leadership roles. It also smooths out the succession management process, minimizing disruptions and maximizing long-term performance. In fact, studies show that companies with top-tier leadership teams outperform others by roughly 19%.
So, budgeting for learning and development is an incredibly important task. Yet, many companies struggle to establish a reliable and consistent budget that allows their employee and leadership development programs to flourish.
Here are a few tips to help budget for learning and development:
1: Leverage Technology to Increase Program Scope While Minimizing Costs
Traditional learning programs can be extremely expensive to get out to your whole organization—especially when you have offices in different regions around the country and the world. Modern learning and development solutions often blend traditional, in-person sessions with online content and resources to make the solution easier to scale across a large organization.
For example, when scheduling a face-to-face training session for a group of people, each y person needs to set aside significant time from their schedule to attend. The more employees who need to attend the session, the more complicated and difficult it is to create a shared time slot that works for everyone. Additionally, there are travel considerations that need to be made for any remote workers in attendance.
By using online learning solutions that allow people to access learning content remotely and on their own schedule, companies can make it far easier for their employees to attend sessions. This also helps eliminate travel costs for experts to attend in-person sessions at each of your company’s branch offices.
2: Establish Your Critical Learning Program Goals
What do you want to accomplish—what business strategy or objectives are the programs aligned with? How many people and which levels of the organization will participate? What skills and knowledge will they possess when they’re finished?
Knowing your goals is a key part of being able to sell the initiative to senior management and to be able to anticipate the overall costs of the program—especially when you can track past spending compared to the results for learning and development.
3: Establish the Business Case for the Program
How will the business benefit if the learning and development program meets its goals? Will the benefits of the program outweigh its costs? Getting budget approval from top leadership requires being able to answer these questions.
There are a few ways to establish the business case for a learning and development program.
For example, the statistic mentioned earlier at the start of this article about how companies with top-tier leaders outperform others by 19% could be a good argument for increasing the leadership development program budget. Or, if the company is facing a shortage of people with a specific set of skills needed for the business’ operations (such as a manufacturer not having enough people with the skills to run its manufacturing equipment), that would be a good rationale to fund a program to develop those skills.
Another consideration is the cost of hiring external candidates for a given role versus hiring from within to fill that role. While hiring an external candidate can be a fast way to fill a role, it is often less costly to promote from within than to launch a headhunting campaign.
Additionally, promoting from within demonstrates to employees that there is room for advancement within your organization. This can help to improve employee engagement and retention—which translates into reduced costs from employee turnover.
4. Focus on Your High-Potential Leaders
Many organizations struggle to identify the right people to develop; in fact, 55% of candidates will drop out of a leadership development program within five years because they were incorrectly selected for development. Another 46% of leaders will fail to meet objectives in their new roles.
Failing to identify the right people to develop can waste a lot of time and money. However, many organizations focus on the wrong criteria for choosing high potentials—focusing on areas like productivity or tenure with the company rather than qualities related to leadership. Case in point, research shows that only about 1 in 7 high-performing employees have the right combination of characteristics to be “high-potential” leaders.
By focusing on identifying the employees who are high-potential leaders, you can prevent wasting time and money on developing people who would be a poor fit for leadership roles. Reducing wasteful spending this way can ensure you’re getting more out of every dollars budgeted for training and development .
5. Measure Results for Each Learning and Development Program
Even after you’ve gotten approval for your budget, you still have to consider the budget for next year. To that end, you can track the results of your development programs to see how each one performed as well as establish what the baseline for next year’s budget and program goals should be.
Training is never a “one and done” solution—it’s a continuous effort. As time goes on, your company will have to onboard new people to replace those who leave. New technologies and business tools will require people to learn new things to keep up with the competition. As the business grows, it may need to create new job functions to manage its resources or serve new markets. And, employees may need refresher courses to help them retain what they’ve learned previously.