Article
July 18th, 2023 · 4 min read
Making the most of your L&D budget in 2024
Many aspects of learning and development (L&D) continue to accelerate, expand and move up, and that includes the financial end. This year, 41% of L&D leaders expect to have more spending power, with total global investment in L&D estimated at $395.2 billion.
While the level of investment will always depend on your organization’s unique financial situation, one thing holds true for most: making the most impact with your budget is a top priority. Read on to get a clear understanding of how to power your company’s L&D path with the right budget strategy to earn the best possible ROI.
What should be included in your L&D budget?
Unless your organization is brand new to L&D, it’s unlikely that you’re starting from scratch. Therefore, when building a budget, start by taking a look at all of your existing programs and initiatives, then work backward. Thinking through all of the individual items might feel like a daunting task, so consider starting off broad.
Here are five general categories to consider:
- Program design: The costs associated with assessing the skills needs of the organization and developing and/or curating learning content based on these needs (whether outsourced or in-house).
- Learning technology: Includes the hardware and software solutions required for delivering, tracking and managing learning programs.
- Non-technical resources: The educational content itself, as well as learning materials such as textbooks, e-books, videos, digital libraries and subscriptions.
- L&D team: The salaries for all full-time L&D team members and the cost of any external vendors or contractors that you work with.
- External learning: Funds and travel costs allocated to external L&D activities such as workshops and industry conferences.
Specific budget allocations within these larger categories will depend on the learning needs and budgetary capacity of your organization.
How to get the most out of your L&D budget
More investment doesn’t always mean better results. Regardless of how big your budget is, it’s always important to view budget planning from the lens of impact. Here are a few practical tips to keep in mind that will help you maximize your spend:
- Be metrics driven
All of your L&D initiatives should be measurable. You can't manage what you can't measure, so be prepared to demonstrate how you will track the returns on your investments. - Focus on business objectives
Your L&D programs should ultimately serve the greater goals of your company. Items listed on your budget should have a clear connection between their proposed implementation and a specified organizational objective. - Champion forward-thinking initiatives
L&D is a long-term game. Your budget proposal should include long-term projections when possible and draw influence from wider L&D trends in your industry. Prioritize making changes now that will impact your workforce positively in the future. - Remember that less can be more
An effective L&D strategy doesn’t require you to offer up every training course or degree program. Prioritize the line items that deliver the most impact and closely align to the skills needs of your workforce. Optimize or eliminate line items that are difficult to measure and be selective when it comes to technology spending. A bigger technology stack isn’t always better.
Making a business case for your L&D budget
Once you have a budget drafted, the next step is getting it approved. Leadership teams expect investment to yield results. That’s why it’s important to have justification for all of the requested spend, as well as a clear measurement plan.
Here are some best practices to keep in mind:
- Track metrics that will drive business outcomes
Vanity metrics, such as course completion rate or training hours, are important when monitoring the progress of your initiatives, but they don’t demonstrate business impact. It’s key to make sure that these metrics are complemented by others such as performance improvements, knowledge retention and internal mobility/promotion rate. - Provide comparative benchmarks
Add credibility to your budget proposal by showing that it’s backed up by research. Look online to see what learning budgets look like for organizations of a similar size within your industry. You can use this external data as a benchmark. This added context is beneficial in helping your leadership understand how your L&D budget compares.
You should also look at your internal historical data to understand how the budget has changed throughout the years and what impact that’s had on the business. - Set clear expectations around timelines
It takes time to develop and administer high-quality learning programs. Similarly, it also takes time for your employees to grow and develop skills. Unlike other business functions that might generate more immediate results, learning and development is a long-term investment. Set clear expectations with your leadership team on estimated timelines and how you’re planning to measure and communicate on KPIs.
Take your L&D dollars further
So, your L&D budget got approved. You might be thinking, “Now, what?”
For new initiatives, it’s go time. Start working on an implementation plan. Keep tabs on how your initiatives perform throughout the year and always keep in mind when your budget is up for review. That way, when the time comes, you’re prepared with a year's worth of notes and data to help shape your budget for continued success and growth.
Need to take fast action on L&D? Access this comprehensive guide for tips on how to fast-track skill-building for your workforce today.
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