Learning and development (L&D) is vital for any organization. The journey to establish a training budget can often start with ambiguity around cost structures from L&D vendors. The questions linger: How much will it cost? What exactly am I paying for? Are they a good facilitator? These uncertainties can leave decision-makers feeling adrift when seeking guidance and partnership.

You don’t have to go into building your budget blindly, however. This article will share some areas to consider as you build out your initiatives and best practices for how to establish your training budget.

How Much Do Companies Spend on L&D?

Training Industry research indicates that the global investment in L&D will reach $395.2 billion this year.

If spending this type of money on training seems like a lot, consider that this is an investment that pays off when people work better and smarter because of what they learned.

Imagine a team leader is struggling with interpersonal communication and building rapport with their team. They address it effectively using the tools acquired in their L&D program. Now you’ve regained the training investment.

The alternative is broken relationships, disengaged employees, wasted time, misunderstandings and confusion among the team members, or even dragging human resources (HR) into spending a whole bunch of time and effort to sort things out. In essence, it’s more costly not to lean into the development of your people.

How to Create a Plan for Your L&D Budget

Creating a plan is like drawing a map that shows everyone on your team where you’re heading for the next year. Imagine your budget as a way to tell a story. It’s not just numbers, it’s a way to show them what you can achieve together.

When following the tips below, think in grandiose ways. It’s better to get a big plan plotted out, and then work with your leaders to fine-tune and identify what’s most important.

Assess Organizational Goals

Start by understanding the company goals so you can develop and deliver training programs that assist in the achievement of those goals. What specific skills and knowledge does your team currently have, and what will they need to have in the future?

Asking your team for ideas is a good place to start. Conducting employee surveys can help you determine the knowledge, skills and abilities (KSA) gaps across the workforce so that, where possible, you can close those gaps through training programs.

Additionally, qualitative data collected on a survey, or via focus groups or interviews, is a great way to uncover information. And by involving your employees in the decision-making process, you communicate that you value them, and potentially gain their buy-in for your programs.

You might ask in focus groups, for example:

• • What work processes could we improve?
  • What’s the most challenging part of your job?
  • What skills would you like to develop to better function in your role?
  • Do you get the information you need to do your job effectively and efficiently?
  • Does your manager coach you when you’re feeling overly challenged or lacking the knowledge to accomplish a task?

Keep in mind that training on its own doesn’t usually solve problems. At this point, you’re simply making a “shopping list” to uncover all possibilities for training topics that could help achieve organizational goals. Once you decide what’s most important and how you’ll teach that information, you can begin planning your budget.

Break down all the costs (e.g., materials, trainers, overtime pay for attendees) and now your budget allows for a clear understanding of the financial commitment required to drive toward the organization’s goals through training. You can also regularly revisit and adjust the budget to ensure it stays in line with evolving organizational needs and priorities.

Choose a Delivery Method

Choosing the right delivery method is key to maximizing your training budget. Here are some options to consider:

In-person training can be great for team-building as it is very interactive, but it can also result in some pretty steep expenses. You have to factor in travel and accommodations, the training venue, catering costs and training materials.

Virtual instructor-led training, on the other hand, is a more cost-effective option that can bring together your entire team. Live online training can often be as interactive and effective as in-person training with the right amount of activities and discussion, and a trainer who creates a safe online space.

Asynchronous online training is likely the most cost-effective option and is most often used for topics that require some learning activity but not a lot of discussion. Topics related to compliance (e.g., new policies, government regulations, etc.) are often taught in this format.

Blended learning is a great way to go as this method can reach people in ways and timeframes in which your workforce might need information. Your budget will depend entirely on how many educational avenues you pursue and what they entail. Blended learning could include, for example, one asynchronous course, an ongoing email chain of short videos or articles, some activities to complete on one’s own and some learning delivered by other team members.

Choose a Training Provider

There are a few options for providers: you can do it yourself (in-house), bring in an external training provider, build an online course in-house, or locate a vendor with pre-built courses (e.g., LinkedIn Learning, BizLibrary, Udemy, etc.).

The decision depends on the topic and the expertise required to deliver it. Obviously, a new internal organizational process is best trained by the creator or monitor of that process. A training topic that requires expertise in topics outside of the organization’s knowledge, however, may be better delivered by an external provider.

If you’re thinking about leaning on a pre-built online course, first consider if it’s the best way to deliver information and inspire your team to make the change you seek. Sometimes, online courses might not be as effective in connecting with your team, facilitating the changes you need for your business or sending the right message about the importance of a topic.

Monitor and Adjust

Once you’ve set up your training program, keep an eye on how things are going and be ready to change course if needed. Is the training working? Are people understanding what they’ve learned? Are they struggling to implement anything? Checking in with your team and taking in the feedback helps you understand if the program is hitting the mark or if adjustments are needed.

You can monitor progress by asking your workforce through quick surveys, having candid one-on-one conversations, using anonymous polls during training sessions, and reviewing whether the business goals that drove the training program in the first place are being met.

Why is L&D Important?

L&D helps employees grow and improve in their roles. A positive and inclusive workplace culture not only enhances employee satisfaction but also plays a pivotal role in driving overall organizational success.

In the long run, the benefits of investing in training to cultivate a positive workplace culture extend beyond individual job satisfaction, positively impacting the organization’s bottom line and competitiveness in the market.

It’s important to note that good training may not be free or cheap, but improved productivity and better business outcomes are just a few of the many rewards. When employees are happier and work better — and the company does well — it’s totally worth it.