6 tips to create an accurate budget for your Business Skills training
The demand for Business Skills training continues to grow. People require new training to deal with changes in legislation and business practice, the growth of new subject areas (like Mental Health in the workplace) and the need to maintain and sustain CPD.
There’s also competition from other sources of information: Google, YouTube, various wiki sites. The challenge for any organisation is to find a way to keep pace with these rapid developments and create the budget to do so.
The overriding question for budgeting for training is how to know what to spend and where to spend it. It doesn’t matter whether you are maintaining or upgrading current training, moving to a new training model, like from classroom-based to eLearning), the first step is to create an accurate budget. That means not only knowing what everything costs, but also how to evaluate what you have and how to ensure that what you buy pays back dividends.
Here are some tips on creating a budget and how to use it to understand the value and ROI of your Business Skills training.
1. Knowing what you have
It seems an obvious statement, but the answer may not be so straightforward to calculate. Most organisations will have a training budget and know what they spend on training each year. But calculating the budget is not just about knowing what you have spent, it’s also about knowing what you need to spend and what you’ve got for what you’ve spent. You need to consider too what resources you have that you can leverage now and in the future.
This is the first step in creating a baseline that you can use to know your budget and ultimately measure your ROI. This can be a basic inventory of assets to start with, but it is only the start. As you consider the uses to which these assets are put you begin to create a more complex budgetary picture that can help you understand the real, tangible value of your training.
2. Costing your assets
Any training whether it’s created internally or bought in will generate assets. In the first place, these are the pieces of content that you have created or have been created for you. You need to make an inventory of these and then measure them against your training requirements to identify what fits and crucially where the gaps lie. This will help you determine what future costs you’re looking at.
Training assets, though, go beyond simple content. You should evaluate your in-house L&D expertise. Who leads and coordinates training? What technical skills does your organisation maintain? If you’re using elearning you may need ICT staff to look after an LMS, Graphic Designers to work on customising content, Instructional Designers and Content Developers to plan, write and edit content. The answers to these questions need to be included in your budgeting.
3. Making cost savings
Training is often regarded as a burden, inflicting additional costs on an already constrained organisational budget. One answer to this criticism is to do training smarter and more efficiently. By introducing elearning you can make obvious cost savings. elearning means you no longer need to send people away to training courses, making obvious savings in the cost of travel and the loss of productivity. Often, training sessions clash with other demands on employees’ time which means that key personnel miss the training session and another one needs to be organised.
Traditional, classroom training sessions tend to be one-off events. Although attendees may walk away with their takeaway handouts or a link to the online version of the content, very few will actually bother to review them.
elearning, on the other hand, can be made available continuously allowing employees to learn in their own time and at their own pace – something they can return to at will without the need to reschedule a training slot.
4. Counting maintenance costs
Even though elearning may appear to be a cheaper option, it does come with other costs. Even with ready-made content, you need to be able to deploy and maintain it. If you don’t have the ICT skills in-house you may need to buy them in. If you don’t have the requisite IT infrastructure, like an LMS, you may need to license or purchase this from your elearning provider.
There may be costs based on the number of employees who will enrol in the courses. Content may be licensed on an annual basis, so there will be future costs to ensure roll over to subsequent years.
Changes in subject areas may require elearning to be updated. You may have the resources to make these changes, or you may need to buy in the expertise. If the changes to an area are substantial (new legislation, for example) you may need entire new courses. Again, the question is whether you have the expertise to deliver new training or whether you need to find a provider to deliver courses.
For global organisations, there’s also a potential cost in localising content to deliver it in different languages and address market-specific issues.
5. Delivering cost effectiveness
To have a more comprehensive view of your training budget, you need to move from counting savings to measuring cost-effectiveness. This is harder to cost because it’s not the case of a simple outlay of funds. What you’re looking at here is a way to measure the outcome of your expenditure in terms of training, resulting in improved performance.
elearning is good at addressing one of the main drains on any training budget: that of forgetting it. Numerous studies have recorded the Ebbinghaus effect of people forgetting much of what they’ve just learned. Making elearning available across multiple platforms and devices 24/7 helps stem that memory loss.
Creating microlearning – small chunks of learning that can be taken and digested in 5 or 15 minutes – aids retention and allow people the chance to refresh their memory as and when they need it. elearning uses attention-grabbing multimedia and learning strategies like real-life scenarios and gamification to engage learners and motivate them to learn.
elearning also enhances the potential to re-use and repurpose content. This means that the content you create or buy can be used countless times and in a variety of different ways, reaching a wider audience more regularly. The return from this recycling approach represents a multiple of the original outlay.
6. Generating ROI
Studies have shown that investment in training results in a more productive workforce with a higher skills base. Investment in training is a good indicator of business success. It also leads to smarter working within the organisation with greater collaboration and dynamic sharing of information between peers.
A measure of training success is the extent to which it becomes part and parcel of the working environment. You’re investing your budget in creating a learning culture that becomes self-sustaining. This means you can target your interventions more closely and focus your training budget on investing in talent and collaborative learning.
Encouraging and enabling learners to take control and responsibility for their own training and empower them to train others, is the logical next step from allowing learners the time and pace at which to learn for themselves. This approach also moves training closer to the point of need, into the workflow, making its relevance more obvious and its benefits more tangible.
The real bottom line
When determining your Business Skills training budget, you need to have a baseline that covers what you have and where your resources are going. But you can move beyond that making ever greater refinements to that initial training inventory and bill to produce a much more accurate account of your training needs and costs. The picture you produce helps you better align your training aspirations with your organisational goals.
Remember too that budgeting is cyclical so that although you now have an accurate budget, you need to re-evaluate it regularly as circumstances change and demands on training provision and uptake grow. Just as training needs to be continuous and sustainable so should the planning and budgeting for it.
Business Skills training is key to the long-term benefit of the organisation and not just a line item buried in the annual accounts. You need a training budget that truly reflects its mission-critical status.
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