Designing a Learning Budget You Can Defend

Use this budget season to ensure your learning organization achieves its true business potential.

Learning organizations are under constant pressure to prove their value to the enterprise. And learning leaders must design budgets that deliver performance gains while being defensible and justifiable from a business standpoint.

This requires careful planning, a considered approach and a transparent process that illustrates exactly where and how they intend to spend company funds.

Before learning leaders can secure the funding needed to deliver on business objectives, they first need to make budget requests that are justifiable and defensible. The learning function must deliver performance gains and measurable ROI — both of which require careful planning and a transparent process illustrating exactly where and how funds will be spent.

Don’t just cross your fingers and hope the dollars come through — take a more strategic approach to budgeting.

First and foremost, understand who ultimately controls the purse strings, what kinds of information they need and want to know and the optimal timeline for submitting budget requests. If the request involves an outside vendor firm, get ahead of the master services agreements approval process to avoid getting tripped up by red tape.

Additionally, lay a little political groundwork. Identify and court supportive business stakeholders who can champion your efforts. Where possible, tie your pitch to their own pet interests and priorities. You’re much likelier to get a sales training initiative funded if the vice president of sales is an active proponent of the project, for instance.

When discussing project proposals with business unit stakeholders, share cost information with them. Karen Freedman, vice president and manager of enterprise learning for FM Global, a large commercial and industrial property insurance company, recalled the time a stakeholder discussed a learning budget request with another business leader.

Freedman had previously made the case for training including insight into the cost so, lo and behold, the business leader defended the budget request and it eventually went through.

“It’s all about communication and relationships and making sure they understand what we do,” she said. “Don’t wait until budget season to do that.”

Do Your Research

It’s tough to ask for money if you can’t clearly articulate how it fits into the overarching learning strategy. Before building your budget, account for the various projects, deliverables and initiatives that are in progress and on the horizon along with their anticipated ROI.

Know what’s happening elsewhere in the industry by reading research reports, benchmarking surveys and trade publications. This valuable intelligence can be used to provide context and support to frame your own budget requests.

Determine how much comparable organizations are spending on similar projects, what your project headcounts should be and what technological advancements are needed to remain competitive. Likewise, use industry data to compare your learning organization to high-achieving counterparts that you aspire to match and to determine alignment to accepted best practices and standards. If you do your research right, even assumptions and forward-looking guesswork will be rooted in reality.

Of course, it doesn’t matter how well the budget is supported by evidence if stakeholders don’t understand how the learning initiatives will deliver on the business case. Make sure that executive management sees the connection between L&D operations and corporate aims.

Learning organizations that have well-defined and carefully considered learning strategies aligned to enterprise goals and objectives are far likelier to achieve budget fulfillment.

The reason is obvious: Business leaders have a clear understanding of exactly what the funds will be used for and why it matters in the bigger picture.

Be able to explain in some detail the thinking and analysis behind each budget request. To this point, it’s critically important to have the right metrics and measurements in place ahead of time in order to clarify how the budget will ultimately add value back to the business.

Gregg Spratto, vice president of operations for the global customer service organization of California-based software company Autodesk, said when learning budgets are rejected, it’s often because the request was either too ambitious or the organizational payoff was unclear.

“Pretty frequently, people go after too much budget right away,” he said. “Go after the low-hanging fruit first. Solve that — show that ROI — and say, ‘If we can apply that technique across everything, here is the ROI we could get.’ ”

Illustrate the Alternatives

There’s the cost of training but there’s also the cost of not training.

If your budget requests are indeed defensible and justified, then there will be a tangible negative impact if funding fails to come through. Lay out the implications of a funding shortfall, making informed projections where necessary. Aim to explain in measurable terms the ill effects of subpar training. That could mean estimating a dollar figure for a given customer service mishap or calculating the lost productivity of workers taking outdated and inefficient training.

Don’t assume that business stakeholders fully understand these implications — make them understand. It’s up to you as a learning leader to make sure they’re working with a complete view of the situation.

In some cases such as compliance and regulatory matters, the cost of training may be dwarfed by potential penalties that could arise from poorly trained workers. For such mission-critical endeavors, it may be worthwhile to take a more heavy-handed approach.

Draft a risk assessment statement that details the knowledge and skills gaps that will persist if the training doesn’t take place and the ensuing liabilities and business challenges that will result from inaction. Then insist key decision-makers sign it. Beyond documenting your efforts to get needed training funded, this bold tactic effectively forces stakeholders to personally accept the risks associated with not moving forward with training, which they may be reluctant to do.

Or they may stand by their decision. Executives making budget decisions likely have a more complete view of the organization, including goals, outlook and finances. Freedman advises learning leaders not to give up when a budget request is refused.

“When a budget gets cut, it may not mean, ‘No, we won’t do that,’ ” Freedman said. “It could just mean, ‘Not now.’ ”

Tell a Story

When framing a budget request, craft a through-line: Start with the business problem, explain the identified solution, illustrate how the L&D initiative will achieve that solution and paint a picture of the desired end state. In other words, tell a story.

“Every budget needs a story,” Freedman said. “Otherwise it’s just numbers on a page … and people just want to cut the numbers.”

There are two basic methods of building a budget. The first is top down, in which total categorical expenditures are given spending limits with costs divvied among line items. The second is bottom up, where departmental subunits and managers make allocation requests which are then totaled.

Both approaches have benefits and drawbacks, which is why it’s best to use one method to cross-check the other. If you choose to start from a top-down approach, apply real world hypotheticals to the numbers to make sure they are workable and plausible. If starting from the bottom up, compare the categorical totals to past years’ actual data, trimming the fat where possible and taking budget requests down from a dream scenario to a more realistic level.

Prove Your Successes with Metrics 

An L&D organization that lacks an effective metrics and measurement program is going to have a difficult time proving its business value and that in turn means budget requests may not be taken seriously. Comprehensive learning metrics help L&D gain respect and trust from business leaders and it goes a long way toward getting talent development initiatives funded — both now and in the future.

When establishing a metrics and measurement program, it’s critical to measure training ROI but also important to measure things like a learner’s intent to apply the training, transfer of knowledge and whether desired performance change is taking place.

Take a strategic approach to budgeting and make this the year your learning organization achieves its true business potential.

Gary Schafer is president of Caveo Learning, a consulting firm that delivers ROI-focused strategic learning and performance solutions. He can be reached at

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