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Return on Investment | 10 min

Individual training budgets are growing in popularity: what now?

Individual training budgets are growing in popularity: what now?

In a recent AHRI webinar on enabling leadership capabilities, I mentioned my experience with an assigned individual training budget and how it really encouraged me to seek out and do some professional development relevant to my job. A lot of people let me know that this was their big takeaway to encourage lifelong learning in their own business.

Before starting in my current role, I’d never even heard of this way of giving people access to professional development, so this was a great reminder of how good I really have it. A new customer also has a similar structure in place, where their employees can use an allocated training budget each year for whatever they (and their manager) deem relevant.

Suspecting this was now a ‘thing’, I started doing some research to see how prevalent this individual training budget was (and what is the average amount).

I was surprised to see more articles on how employees can convince their boss to approve training than anything else. One even had a handy email template with spaces to outline the key benefits of the training they wanted to attend. My brain started playing that scene in Oliver of the poor little kid with the empty bowl saying “please sir, I want some more”.

If you’re announcing on one hand that your people are your greatest asset, why are you also making that asset beg for an upgrade?

I get that training is expensive and that there might be a fear that allowing people to pick their own development might lead to anarchy and ‘conferences’ in Bali. The thing is, you’re going to be spending the money anyway; according to Deloitte (2014), companies are spending more than $130 billion on training and development worldwide. If you’re already spending the money on training, at least invest it in what people really need. It’s a smarter way of doing things, plus HR no longer has to do all the legwork on researching training that might be relevant.

On top of that, this is an opportunity to advance your organisation’s strategic objectives in a really empowering way. Having training closely aligned with the overall goals of the organisation helps you to get the most value out of it (as with other people processes); this makes logical sense. Sure, you could decide what type of training will best help your people to contribute. Alternatively, you can make sure they know what you’re trying to achieve, then let them suggest the ways they can best enhance their individual abilities to help the organisation get there. Everybody wins!

Of course you’ll want to track what’s getting spent and the return on investment (ROI), that’s just the norms of good business. But doesn’t it make more sense to have individuals identifying their own training needs? After all, they are the ones who best know their role, their abilities and what will help them to contribute effectively.

Here are some of my top tips to track development needs and measure the value of training in your organisation.

 

Ask for Input

What’s the best way to find out what training your people need? Ask them! On your usual regular check-in with staff, add a question asking: Are there any areas you feel you would benefit from additional training in?

This is a great way to normalise training and show everyone in the organisation they are welcome to put their hand up and ask for development opportunities when they need them. It’s also important to keep in mind this process will be aided by ensuring all staff have a clear knowledge of the organisation’s strategic direction. In this way, they will be able to identify what skills gaps they may have by looking at where they need to contribute to the bigger picture.

 

Get Feedback

When employees do undertake training, ensure there is a way for them to provide feedback at set intervals afterwards. This will allow them to report back on what they learned and how it has impacted their work, while you as the HR team can understand which programs are most worthwhile and suggest them to more staff. By allowing the team member to record their own reflections on training and resulting performance, the organisation can get the full picture.

If you use intelliHR, this can be achieved using a workflow; every time training is recorded on the employee’s profile, they’ll automatically get the opportunity to provide feedback.

 

Track Training Investment

Using intelliHR, you can keep track of training records and their value to measure the ROI on different training programs. Employees can enter their own training and they will be asked about the hours spent in training as well as the direct costs. From here, this data can be compared against productivity to determine the effectiveness of different training initiatives.

 

Set a Budget

Now, of course, this all links back to having a defined training budget for your employees. If you haven’t allocated individual development budgets before, it can be hard to know where to start. With the right data we mentioned above, however, over time you’ll be able to draw on these insights to determine the best budget for each individual. This may vary between different experience levels, tenures or departments depending on the average cost of training in each group, but it’s important to keep in mind everyone can benefit equally from training; regardless of seniority or job role.

The key benefit of having set training budgets is it makes approving training a much smoother process as the employee and their manager are aware of how much they can spend. Having a budget that resets each financial year is also a good idea to keep things manageable. This ‘use it or lose it’ system also creates a sense of urgency, encouraging employees to actually take advantage and book that training in before they miss out.

 

Does your organisation have defined individual training budgets? We’d love to hear why or why not. Tell us what you think in the comments.

 

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