(Intro) 3 Steps to Building a Smarter Training Budget - One that Gets Approved by Executives
Organizations continue to spend billions of dollars each year on training and development for their employees - programs that typically fail to produce tangible business results. No wonder the majority of executives are looking at ways to aggressively cut training costs.
Under the auspices of helping organizations to effectively benchmark, align, and manage their training functions, much has been written over the years about training cost metrics.
With increased financial pressures, figures such as those outlined below have received a lot of scrutiny and attention lately:
- Training expense as a % of revenue
- Training investment per employee
- % administration training costs
- % delivery training costs
- % in-house vs. outsourced learning
While training cost information is certainly part of the equation, looking at costs alone (or even first) misses the point.
Building a smarter training budget is about ensuring that training investments get meaningful results. Those results must be relevant to the business and are rarely achieved by doing training “as cheaply as possible.”
It is true that, once you have aligned your training investment priorities and approaches with the business, benchmarking training costs can be a useful exercise to ensure that your expenditures are in line. But most savvy executives agree that training effectiveness comes before training efficiency. It is smarter to simply cut programs that have low value vis-à-vis the results—the generic, open-enrollment-based, underutilized programs—than to spend time and effort trying to make them more efficient.
Unfortunately, we still find that many training budgets and training initiatives start and end with costs and efficiency and that they miss the most important step altogether—the one that executives find most persuasive, business alignment.
