How to prioritize Learning and Development budget

Prioritizing learning and development budgets is a real business opportunity that should have a strategy tied to it. In an ideal world, resources are endless. Every employee can learn what they want and from the most ideal content provider that offers it. But the reality is it costs money to train employees. There is an opportunity cost to pulling employees away from their day to day work to focus on training. There is also a cost to pay for learning content. So in the reality of limitations, how should organizations go about prioritizing and allocating their learning and development resources? 

The wrong ways to prioritize learning and development budgets

Cut budgets:

The wrong answer is to cut learning and development programs. When budgets are constrained, it might be tempting to cut the learning and development budgets because it is not immediately tied to operations. But turning off learning and development puts pressure on a number of areas that will have downstream effects:

• Competitives
• Employee retention
• Adaptability to market changes
• Talent attraction

It is also not as simple as turning learning and development back on later and believing that those activities will resume. A culture of continuous learning is foundational to organizations that run successful learning and development programs.

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One size fits all:

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It can be tempting to create one organizational wide learning and development program with a single set of learning resources that are assigned to the same employees across the whole organization. A one size fits all approach neglects to consider that different people have different learning styles and that different skills are best developed through different learning methodologies.

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The right way to prioritize learning and development budgets

Taking a thoughtful and nuanced approach to learning and development is the way to optimize those limited resources. An approach that considers employees skills, skills gaps, and aspirations. An approach that considers the organization’s needs today and how the industry is shifting tomorrow. This is a learning and development approach that focuses resources on the most important areas of need and delivers the greatest returns.

Let’s dive into how to do that:

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Organizational skills inventory

Firstly, create an organizational skills inventory. This means, every employee in the organization should have a skills profile documented. The skills profile should include the skills they possess - and these can be skills acquired from all realms of life, not just current or past work experiences. The skills profile should also include their aspiration skills - the skills they aspire to develop. In aggregate, this is an inventory of the skills that exist in the organization. 

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Role architecture

Secondly, identifying the skills required for each role. This may be a joint exercise between Human Resources, who understands the skills on the market for roles, and the People Leader to whom the role reports, who understands the technical and soft skills required for the role. In aggregate, these are the skills the organization needs in order to compete. 

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Skills gaps

The delta between the skills an employee possesses to the skills a role requires is the skills gaps. These skill gaps are the answer to the question of: What training should people do? People should be addressing their skills gaps.

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Prioritize skills gaps

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Inevitably, every organization has skill gaps. And that’s ok. There shouldn’t be a fear of conducting this exercise to see the skills gaps. It is a healthy exercise because once those skill gaps are known, they can be managed.

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Once the skills gaps are identified, it is a matter of prioritizing them. Not all skill gaps are equal. Some are more detrimental to the organization than others. Evaluating the skill that is missing, and its importance to the organization and relevance to the team provides the answer. 

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Identify the right training program

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Going back to the earlier point, different people and different skills are best suited for different types of training. Once the skills that need to be trained against are identified, the next order is to define how it will be addressed. Some examples could include mentorships, special projects, online courses, conferences, lunch and learns, workshops, etc. 

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Track and Measure 

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Choose the key performance indicators against which this training will be measured. Track those KPIs and continue to measure them over time. Remember that learning and development is a long term play. Those metrics will not move overnight but trust the process.

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Other consequences

The premise of this approach is to maximize limited budgets. That said, there are other positive outcomes for the organization: 

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Recruitment, hiring, and the organization’s brand: An externality to this approach is building an organization that attracts top talent. Job seekers are increasingly seeking employers that value and invest in their employees' growth and development. Highlighting a robust learning and development program during recruitment can be a compelling differentiator for attracting skilled candidates and maintaining a competitive advantage in the talent market.

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More agile and versatile workforce: A dynamic and adaptive learning and development strategy also positions the organization to respond effectively to market changes and industry trends. As technological advancements and market disruptions continue to reshape industries, having a workforce that can quickly acquire new skills and knowledge is critical for staying ahead of the competition. Employees who feel supported in their learning journey are more likely to embrace change and actively contribute to the organization's innovative efforts.

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More collaborative culture: Additionally, a well-structured learning and development program can help cultivate a culture of curiosity and knowledge sharing. When employees are encouraged to explore new ideas, learn from one another, and share their expertise, it fosters a collaborative and innovative work environment. This knowledge-sharing culture can lead to increased problem-solving capabilities and spur creativity and innovation throughout the organization.

Putting it all together

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Prioritizing learning and development budgets is not just a matter of allocating resources to the lowest hanging fruit, the squeakiest wheel or the most seemingly obvious problem. A strategic approach that puts skills gaps at the centre can have the most significant impact on the effectiveness of an organization’s learning and development program.

In essence, prioritizing learning and development budgets is not just about ticking a box on the organizational checklist. It represents a commitment to invest in the growth and potential of the workforce, leading to improved employee satisfaction, enhanced performance, and a sustainable advantage in the marketplace. By fostering a learning-oriented culture and aligning training programs with organizational objectives, businesses can unlock the full potential of their human capital and pave the way for a thriving future.