Here’s a familiar dilemma: Your boss just mentioned that next year’s budget is due and that you should be prepared to defend every item or risk losing it. “And, by the way, make it a zero-based budget because we are looking for some fresh thinking, not just last year’s budget minus 10 to 15 percent. You should include some creative solutions because we are all going to be doing more with less,” she explains.
Hopefully, your scenario won’t work out quite like this—but if it does, there are some straightforward thoughts on how to budget for training and development, but also shine as a brilliant strategist.
Start With Strategy
The way you do business will change throughout the next five years. Either technology or personnel (or both) will roll over. The marketplace and your clients’ expectations will drive some of this change, and time will drive the rest (for instance, many companies are concerned that baby boomers will be retiring). This simple fact presents both challenges and opportunities:
- Who shows interest and ability?
- Do you have anyone looking for a new challenge?
- Who might be leaving soon and can mentor a new, high-potential replacement?
- What needs to be learned, and how will that learning take place?
- Does acquiring new knowledge, skills and abilities require more education? Training? Mentoring? Reading? Structured cross-training or temporary job assignments?
Make a list for each position and person. This is your strategic training plan: It will drive your budget.
Communicate Your Plan
A simple five-year projection won’t take as long as you might think. The key is to test the assumptions you make with a trusted colleague. Ask for a bit of feedback and modify your plan accordingly. What have you missed? What don’t you know that others might be able to tell you? Next, present your plan to your boss and get his or her agreement. Then, share the plan with key stakeholders. Finally, explain your analysis to your direct reports. Depending on your situation, you might want to do this one-on-one in case you get some strong reactions or your plan contains confidential information. Follow up with a group meeting for general discussion and consensus-building.
What does communicating accomplish? At a minimum, it will get you a reputation for being forward-thinking and strategic. More importantly, communicating a five-year development plan lets stakeholders and direct reports know why development is important, where it is necessary, how it is likely to happen and what the future may hold, both individually and collectively. Communicating builds alignment and gains support.
How to Budget: A Primer
Start with a list of needs and wants:
- What training is absolutely required? This should include any legally mandated programs for compliance that could result in fines or lawsuits if not completed. Examples include training for safety equipment and procedures, or prevention of sexual harassment.
- What is required to keep skills up-to-date or to bring employees up to new standards? These programs include everything from learning new software applications to emerging standards for fields such as professional engineer certification and various certifications for health and safety professionals.
- What training or education needs did you discover when you built your strategic plan? Break those needs down and project-manage their development.
- What interests or developmental needs do your collective employees have? Could your group benefit from teambuilding or conflict management training?
- What development is interesting or desirable for your individuals? Do you have some people looking for a challenge or change of responsibilities?
There are generally four methods for establishing a realistic and workable budget. These methods are listed in order of preference and accuracy of results:
- Historical budgeting: This is done by reviewing past training of similar scope and size and the related costs.
- Quote shop budgeting: While labor-intensive, the “quote shop” method involves asking for two or three estimates from known vendors in order to establish a budget.
- Peer benchmarking budgeting: Peers in similar industries share information on costs associated with training.
- Blind or value budgeting: Often the training manager must work within a known or suspected budget, and thus establishes the budget based upon what the organization will tolerate and support.
How much should all this add up to? It is helpful to establish your budget in an easy-to-adjust format based on time, the typical measure used in planning training. Three useful measure points are:
- Cost per participant in audience group.
- Cost per project or initiative.
- Total training cost.
Since these costs are generally established by the amount of time in the classroom, you may wonder how much time is average. During the economically robust 1990s, the general rule was 40 hours of training per employee, per year. The 40 hours included everything on the list. In addition, it was an average—some employees went higher, some lower. More recently, a realistic average is closer to 20 hours of training per employee, per year, still including the list. What changed? People got creative about the way they got smart.
Stretching Your Budget: Think Creatively
There are many savvy ways to get smart. Have you noticed how many colleges and universities offer programs online? Been in a bookstore lately? Chances are good that for whatever you need, there is a “For Dummies” book for it. Formal mentoring programs are springing up for high school students, and most college degrees now require an internship in the chosen field. So, consider this partial list of low- to no-cost options (and feel free to mix or adapt them):
- Volunteer in a position that will teach you what you need. Want business acumen? Become a school board member or sit on a similar board.
- Get mentored or coached. Find the right person, set up a specific plan, learn skills and acquire a possible sponsor for a new position.
- Read the top three books published on your subject. Become an expert in applying the new knowledge.
- Go back to school, which can be tempting if tuition assistance or reimbursement is available. Consider going nights, weekends or enrolling in a distance-learning program.
- Look for a packaged tutorial program.
Your best bet may be to mix the above strategies. Reading and mentoring together, for example, may yield faster, more powerful results. And remember, any kind of self-study or online program requires considerable self-discipline: They are much easier to buy than to finish.
Still, there may come a time when the most efficient way to achieve your goals is to buy a formal training program.
Buying Training (Without Requesting 100 Proposals)
Most training and development strategic plans require outside assistance. HR and training professionals are some of the most pressed-for-time-and-resources individuals in the organization. How can you sort through the abundance of consultants and companies if you do decide to seek outside support in delivering on your plans? Keep a few things in mind:
- Ask your peers for recommendations on trusted consultants. The real-life experience of others is the best guarantee of finding a consultant who will fit your needs. Ask peers about behind-the-scenes work: Is the consultant timely and responsive? Do they consider the political underpinnings that drive the organization?
- Use your professional associations to locate potential vendors. Most reputable consultants will belong to professional associations, either with a training or HR focus. Don’t overlook industry associations, which may uncover vendors who specialize in both training and specific industries.
- Treat your selection of a consultant as you would a selection of a new associate. Be specific about your needs and requirements before meeting any vendor. Ask for samples of work and references. If the vendor seems too good to be true, it probably is.
- Don’t be lured by low prices. Of course, you need value for your money. The lowest-price option often isn’t the best value. A consultant who brings a strong track record, intellectual property, organizational savvy and, most importantly, a team of dedicated professionals, won’t undersell service.
- Ask your vendor for specific measures, deliverables and results. Expect some pushback from an effective consultant who will assume accountability, but will ask it of you and the organization as well.
Training can be very motivational. Employees like to know they are worthy of an investment. On the other hand, many walk out of a program only to face the enormous task of catching up on the work they missed. Want to be a hero? Find a way to make development available without the penalty of making-up work. Clearly this is not always possible, but in today’s “do more with less” atmosphere, the likelihood of compliance goes way up when you can.
Kelly Fairbairn is president of PPS International Ltd., the home of Lockwood Leadership International and SkillTeach human resources and professional development services. Mike Bensley is vice president of marketing and sales for PPS. They can be reached at email@example.com.