Tips To Get Leadership Buy-In
Last year, expenses for training were $70.65 billion—including internal design and delivery costs, salaries, and external services. Though this is comparable to the budgets from preceding years, there was quite a shift in investments by the company. 37% of companies invested in growth, while 13% saw a decrease in their employee development budgets [1]. Organizations are realizing the need for quality employee onboarding, but many L&D teams still struggle to secure the corporate training budgets needed to meet their organization's training needs.
A research report by ATD found that most Northern American L&D teams cite a lack of time and resources as their greatest challenge [2], but this ultimately comes down to a lack of funding. So, how do you secure a larger budget for your next employee onboarding initiative? Well, we have a few ideas.
Budget Benchmarks
One of the most important budget factors to consider is what other organizations are spending. The 2019 Brandon Hall benchmark report offers data that you can use to compare and contextualize your proposed corporate training budget. So, to offer a better idea of average spending, we've gathered a few notable figures:
1. Annual Spend Per Employee
40.6% of L&D teams spend $1,000 or more annually per employee on training for senior leadership, followed by 29% of L&D teams that spend $500-$1,000 on high-potential employees [3]. This focus on leadership is also reflected in the most common subject areas for training development. Is your leadership training creating lasting behavior change and driving performance on an organizational level?
2. Augmenting L&D Teams
Over 53% of L&D teams plan to add roles to their learning team [4], including data analysts, web designers, UX designers, game designers, social media experts, and performance consultants. This aligns with the increasing expectations of quality for corporate training. It will take more than an expert in instructional design to build effective motion graphics or choose the right navigation for eLearning modules.
3. Total Budget
24.5% of organizations have a training budget of $1M—$2.49M (the mode value of a sample size of 106) [5]. However, a large percentage of organizations spent less than $10,000. If your organization needs customization, $10K simply isn't feasible, but off-the-shelf training can work for subjects like sexual harassment and regional compliance.
When making the case for a large corporate training budget to leadership, having information about other companies' expenditure is great. However, having information on competitors would be even better. Thoroughly research the L&D landscape, then ask your leaders if they want to do more or less than their competition.
Training ROI
Showing tangible success or training ROI is ideal for convincing leadership to devote more money to training. Unfortunately, tangible performance results are difficult to come by. This is most often due to a lack of time or resources to conduct post-training evaluations or build performance-tracking infrastructure. So, if your organization doesn't have an effective strategy to evaluate the impact of training, then leverage that into your budget conversations. Your leaders want tangible performance improvement data to decide where to invest, so tell them how they can get it.
How To Present To The Leadership
There are a number of widely publicized examples of what happens when employees are poorly trained. For instance, Starbucks suffered a PR crisis after an incident involving racial discrimination in one of their stores, which prompted a company-wide training initiative on racial bias.
If there are historical setbacks within your organization (e.g., a compliance violation or PR crisis), then address those specific situations. Discuss the potential impact those issues would have on a larger scale. Emphasize how training can prevent similar situations with better employee onboarding and continuous learning. You will want to compare tangible numbers like share prices and NPS, as well as the cost to train after a crisis (i.e., rapid course development and learner downtime). Then, tell them what you can do with specific dollar amounts. Framing your budget discussion this way will also help to draw attention to the need for audience analysis and proactive training development.
Conclusion
When you discuss your budget, it’s vital that you clearly show the impact training has on the organization. Benchmark and performance data will make the conversation much easier, but it's also important to communicate the potential benefits of a well-funded employee development program. If you can get your leadership to cosign a more proactive approach to training development, then the result will ultimately drive success within your organization.
Download our eBook, Developing an Effective Employee Onboarding Process in the Modern Workplace, for more insight on budget factors in employee onboarding.
References:
[1] Future Focus
[2] Challenges for talent development
[3] Learning & Development Benchmarking 2019-Budget By Employee Level
[4] Learning & Development Benchmarking 2019-Adding Learning Function Roles
[5] Learning & Development Benchmarking 2019-Annual Learning Budget
