(Step 1) 3 Steps to Building a Smarter Training Budget - One that Gets Approved by Executives


Step #1: Business Alignment - Identify the Business Priorities

The majority of executives buy, invest, and budget based on their view of the value provided. The formula is really quite simple.

Value = Benefit – Investment

If the comparative benefit is greater than the investment, executives will typically fund and support a project. In order to create a smarter training budget that will be approved and supported by executives in your company, the first step is to identify the key business priorities for the next 12 – 24 months so that you can align your plans and budget with those priorities. To understand your company’s priorities, you should make sure that you can clearly answer the following four questions—only then can you begin to create a “smarter” learning strategy and training budget:


  • What are the company’s top 3-5 strategic priorities?

  • What are the company’s greatest challenges/opportunities?

  • What are the key actions that are being taken in the next 12-24 months to achieve those strategies?

  • What is the current financial situation of our company, our competitors, and our industry?
Once you have a solid understanding of the business context, it is time to build a learning strategy that is consistent with your company’s direction and creates compelling value. To get an executive’s attention and buy-in for your training budget, the compelling value of your learning strategy and training budget should always be expressed in language the executive uses and cares about:
  • Increasing revenue and margins
  • Reducing costs
  • Improving productivity and capital effectiveness
  • Delivering on commitments to shareholders of stakeholders
Note: Over the years, we have consulted with many training and human resource organizations in which their company’s overall strategy was unclear, unavailable, or not followed. Do not make the mistake of letting a lack of corporate strategy lull you into a sense of complacency when it comes to business alignment. At some point, someone should and will care. Make some key assumptions based upon the common business pressures that your company faces. Then, align your plan with these assumptions so you create your own version of strategic alignment. If you are part of a public company, most of the key information can be found in your company’s Income Statement, Balance Sheet, Cash Flow Statement, Letter from the CEO, and the Statement of Shareholder’s Equity.