The learning and development budget has always been under tremendous strain and the COVID-19 pandemic exacerbated the challenge. Following years of stagnant budgets with only incremental growth, many companies faced cuts during 2020 through 2021.
At the end of 2019, only 13% of companies said they were facing a decrease in the L&D budget. In July 2021, 40% said they had seen budget cuts as a direct result of the pandemic. At the same time, organizations began to lean heavily on the L&D function to rapidly upskill and reskill the newly remote workforce and prepare them for the future of work.
If You Have Experienced a Reduction in the L&D Budget, What Was the Percentage?
The learning budget can be a large and complex animal. Keeping track of what is spent where and when is a daunting task. And while most of the budget in a typical learning department is strategically managed by controlled procurement-spend processes, more than 20% often goes largely unmanaged. In general, the largest allocation of the budget goes to headcount.
What Percentage of the Learning Budget is Allocated to the Following Areas?
Budget challenges are repeatedly cited as one of the top challenges to any learning initiative. It’s the number-one challenge for personalizing learning at scale, the number-three challenge for making compliance training more strategic and the number-two challenge to properly measuring learning.
To What Degree Is Each of the Following Negatively Impacting Your Learning Organization’s Efficiency and Effectiveness?
- Do we have a full accounting of where the L&D budget goes?
- Have we carved out enough of a technology budget for today’s complex learning solution environment?
- Are we spending the budget appropriately for the right audiences and the right experiences?
DON’T SPEND TOO MUCH AT THE TOP
It has always been critical for companies to develop a strong leadership pipeline to ensure the organization’s success. To that end, they spend a significant chunk of the L&D budget on leadership development, which takes up one of the biggest percentages of the budget, second only to technical skills development. With such a large portion of the budget for a relatively small portion of the workforce, it’s not surprising to find that companies spend a tremendous amount of money per person each year developing leaders. Nearly two-thirds of companies spend more than $1,000 annually for each senior leader they are attempting to develop.
What is the Estimated Annual Per-learner Budget for Training for the Following Employee Levels?
ALIGN SPENDING WITH THE STRATEGY AND LEARNER NEEDS
Using the 70:20:10 model, the vast majority of what people learn comes from experiential learning — learning by doing, trial and error, etc. Just 10% comes from formal learning environments, but that is where companies have traditional spent the most resources. Things have shifted over time, and companies are doing a better job of spreading the learning budget across different kinds of learning.
What Percentage of Your Learning Delivery Falls into Each of the Following Three Categories?
BUDGET WITH AN EYE ON THE FUTURE
The future of work is essentially here, in that the pandemic has created a volatile, uncertain environment with a mix of on-premises and remote workers. While trying to solve for the immediate challenges this environment presents, keep in mind that these solutions should be more strategic and long-term, not stopgap measures. The technology that gets you through the next few months may not be right for the next few years. Additionally, the learning function will need to include new skill sets, which usually mean talent acquisition — which can be expensive.
Does Your Organization Plan to Add Any of the Following Roles to L&D?
Additional Resources: Learning and Development Benchmarking
The business environment has never been more challenging for the learning function. The learning technology landscape has exploded with a myriad new tools, applications and platforms designed to improve the learner experience. At the same time, organizations look to L&D to help carry them through digital transformation, ensuring the workforce has the skills and knowledge required to succeed.
Our Research Data Highlight on L&D Benchmarking shows where organizations are investing their resources as well as five tips for success in managing your L&D Budget.