How much to invest on training and development?
How much should you invest in training and development?
Investing in training is crucial to the development, engagement, retention and overall productivity of staff. That also means it is crucial to the bottom line. During the econmic downturns many businesses slash training budgets under the assumption they were a discretionary spend. It goes without saying that many businesses are now seeing the detrimental results of that approach.
So how much should you really be investing on training and developing your people?
The best and worst approach to spending
Smart businesses know that it’s not about how much you spend but how you make your training relevant and effective. There is absolutely no reason you have to spend big. It’s more important to be selective and work out exactly where it’s worth investing the money. In other words, you should be taking a return on investment approach.
That said, in my experience there are two key mistakes businesses often make.
First, some businesses overspend on structured training, seeing it as the panacea for getting people up to speed. “Go off and do this course and then you will be right to get on with it”. While this might seem to be the simplest approach, throwing money at training can be expensive and ineffective if it’s not aligned to the business needs.
Second, some businesses avoid any discussion of training altogether. Often they are scared that the costs will be too overwhelming. They’re terrified of opening the floodgates on a pointless training junket. “If we let one person go to training then we will have to spend on everyone,” they reason.
In these businesses it’s not uncommon to see employees rate their training rate very poorly on engagement surveys.
How to plan for effective training
Any training is likely to be more worthwhile and effective if it is supported by a simple training plan that addresses your goals as a business. There are several things you should consider:
Work out your training budget
Estimate the realistic costs of any training, the benefits that training will deliver to staff and company, and ultimately what your anticipated return on investment will be. Make sure you always work within your company’s budget. You don’t need to splash money around.
Define and prioritise your development needs
Prioritise the development needs of the business based on the summarised development needs of your people. There’s no sense on spending your budget sending just one person to Harvard for a week if, say, 20 of your people need leadership development.
Be resourceful and innovative. For example, you could try the “train one, share with many” approach, where one or two employees attend the formal training program then share with others.
Kickstart it with inhouse training
Inhouse training is just as important as external training, and can be very cost effective.
To keep costs down and get economies of scale, invest in technology rather than travel based training (eg: webinars, video conferencing, intranet and other online tools).
Determine what training can be done “on the job” via mentoring or an inhouse program.
For instance, most businesses have “experts” who can pass on knowledge. A cost-effective approach may be to train them in presenting and then let them run your technical updates inhouse. This gives you the advantage of a tailored and timely training program without a costly outlay.
Explore various options for formal external training
For certain industries, it’s important to keep skills up to date (e.g. certification, SETC) or even engage in compulsory training (e.g. CPD or CLE for lawyers ). Explore all the options available.
Measure the results
Like anything, you want to know you’re getting a true return on your investment so measure any investment in training to prove its value, and reinvest in the best training for your business.
For any business, investing in the best people is vital to success. So any investment you make in training and development should be an investment in the betterment of your whole company – no matter how big or small.
If you need help developing a training plan, feel free to book a 15 min call with us for a little guidance at this link.