Learn From Our Mistakes – Build a Better Training Budget

When you hear the phrase “training budget,” what’s your initial reaction?  Are you suddenly energized to the point of opening an Excel workbook and diving into the details?  Or are you inspired to dawn your red, “panic and freak out” coffee mug, signaling to your coworkers you’re best left alone?  Chances are pretty good that it’s the latter.  As learning and development professionals, creating a realistic training budget is often a daunting task… but it doesn’t have to be. 

In our most recent publication, WHY YOUR LEARNING AND DEVELOPMENT DOLLARS AREN’T PAYING OFF, we identified the trouble areas that often hamstring a firm’s ability to adequately educate their workforce.  By learning from the mistakes we’ve already made, readers will find in the recommendations below the 5 go-to strategies for doing just that:  aligning your training dollars so that they DO pay off. 

Aligning Learning Goals with Business Objectives:

Before delving into budget discussions, it’s essential to ensure that learning goals are in sync with broader business objectives. This likely involves adapting to emerging technologies, fostering leadership skills, enhancing technical competencies, or staying abreast of regulatory changes. 

As the former leader of a learning and development team at a top 35 public accounting firm, I recall a specific example of that firm’s goal to become the recognized leader in leveraging data & technology.  This business objective translated directly into a comprehensive learning program that led to the creation of internal data and automation scientists.  Though it was a capital-intense commitment, it was a strong success and fully supported by the firm’s senior leaders.

Collaborative Budget Agreement:

Crafting a realistic training budget is not a solitary endeavor; it requires collaboration and consensus among various stakeholders throughout the firm. Research conducted by McKinsey & Company in a 2020 survey found that when finance teams, HR departments, and service-line leaders collaborate in the budget development process, the likelihood of senior leaders approving the budget increases by 30% compared to when the process is siloed. By voicing their insights and expectations, stakeholders provide invaluable input for learning leaders as they work to determine the financial resources available.

This bias towards collaboration ensures that budgetary decisions are informed by a broad understanding of the firm’s needs and priorities. Open communication and transparency throughout the budgeting process not only mitigates “surprises,” but also leverages the collective input of stakeholders’ expectations, leading to more robust and effective training initiatives.

Pro-tip:  if your firm has operational leadership embedded within its service-lines, make it a priority to engage with these resources.  They provide an invaluable bridge between leaders’ expectations and day-to-day realities.

Strategic Allocation of Resources:

When allocating resources, it’s crucial to consider the various components that contribute to the overall cost of training initiatives. Expenditures on training materials, technology infrastructure, and external resources such as specialized subject matter experts (SMEs) or online learning platforms need to be factored in.

In their 2022 “State of the Industry” report, the Association for Talent Development (ADT) found that the average organization spends around $1,280 per employee, per year.  Based on additional anecdotal research, we have found that public accounting firms spend, on average, around $1,800 annually per FTE. This investment total includes vendor and technology costs but excludes salaries for internal learning and development team members. Striking the right balance between these elements ensures that the learning experience is not only effective but also cost-efficient.

Balancing Cost-Effectiveness and Quality:

While it may be tempting to cut corners to save costs, compromising on the quality of learning experiences can undermine the effectiveness of learning and development priorities. We’ve likely all experienced the “check the box” training events, where the clear objective was quantity over quality.  These instances are toxic to a firm’s learning culture and need to be removed from practice.  Instead, focus on maximizing value by investing in programs that offer the greatest impact for the resources allocated.

Many firms work to save money by asking experienced client facing leaders to develop and deliver training. While initially it might appear you are spending less, it’s important to consider the opportunity cost of pulling a highly chargeable leader away from client work. On average one hour of content requires eight hours of preparation. When you do the quick math on that commitment of time, it might be wiser to invest in using an external provider.

A cost friendly yet impactful approach to leveraging the expertise of team members is the always popular “lunch and learn.”  This is an example of leveraging technology for scalable training delivery while also exploring innovative learning resources already available to you. Consider having team members complete a self-study course to learn the key training concepts prior to attending the “lunch and learn” session and capitalize on the facilitators time and expertise by using the hour together to review a case study or to discuss practical application of the learning the team recently attended.

Lastly, try and negotiate favorable rates with vendors; you may be pleasantly surprised with the results you achieve without having to sacrifice quality.

Regular Review and Adjustment:

The journey towards a realistic training budget doesn’t end with its initial formulation. It is truly evergreen.  To remain responsive to changing business needs and industry trends, learning leaders must regularly review and adjust their learning and development spend. This iterative process enables organizations to reallocate resources based on evolving priorities, emerging skill gaps, or external market dynamics.

A small but highly valuable tactic to leverage is detailed General Ledger codes (G/Ls).  Work with your finance team and/or Controller to identify these.  Some examples are training materials, equipment rental, certification and exam fees, learning resource subscriptions, conference registrations, external CPE purchases, training software, external trainer fees, printing costs, or software licenses for learners.  Having effective budget management at a granular level allows for better tracking and future planning.

Creating a realistic training budget doesn’t have to be scary.  Adopt a collaborative mindset and a commitment to balancing cost-effectiveness with quality. Align learning goals with business objectives, foster insightful dialogue in budget discussions, and allocate resources that prioritize quality. Lastly, maintain a process of regular review and adjustment so that your firm can optimize their investment in learning.

We understand what it’s like to be overwhelmed & frustrated as you determine your learning & development budgets.  This is why we have provided guidance and education to hundreds of accounting firms to help them design better learning & development strategies. If you’d like to learn more about how Spiirall can help you capitalize on your training and development investment, contact us at info@spiirall.com.