Posted by Tim Youngman ● March 8, 2022
Getting Corporate Training Budgets Approved: 3 Considerations for Justifying Costs
Corporate training programs are critical to an organization’s growth. But L&D teams still have to find a way to justify training costs – and convince skeptical leaders – that ROI is possible. Here are 3 key considerations to make it easier.
There are many reasons why companies create corporate training initiatives. They range from required safety and compliance training to leadership training and upskilling. No matter the topic, corporate training comes with a cost.
And that up-front cost can be a deterrent to some internal stakeholders. If you want to get buy-in from leadership and make sure that your corporate training program has everything it needs to succeed, you need to be able to present your case.
Here are a few ways you and your L&D team can justify the cost of corporate training and prove value through metrics and measurement.
3 Critical Cost Considerations with Corporate Training
If you want to make the up-front cost of corporate training a little easier to stomach, consider the costs in terms of…
- Cost per participant
- The criticality of the skills that need to be trained
- The importance of holding onto company knowledge
Through these lenses, you can find clear ways to justify the cost of corporate training and use them to convince leadership of a program’s merits and make informed decisions on how a training project should proceed. Let’s get into each one.
#1) Cost Per Participant
First, look at the cost per participant. It may seem like a simple figure, but it can go a long way to easing any sticker shock caused by a five (sometimes six) figure number.
It can help people understand how the cost of the training is spread out through the company. The cost per participant figure can also give people an idea of the scope of the proposed training program.
Think of it this way. If you’re recommending a $30,000 eLearning course, that $30,000 is much easier to make a case for if 1,000 people will be taking the training as opposed to 100.
And if your training group is only 100 people, you can take that figure and explore options that are less expensive but still effective.
Cost per participant can also help your L&D team make some early recommendations on creating the corporate training program. It allows you to make informed decisions on less expensive routes that will be effective.
#2) The Criticality of the Skills That Need to be Trained
The next way you can justify the cost is through the importance of the course material and the skill that needs to be trained. Think of it in terms of military language and ask yourself “is this material mission-critical?” Without it, would your company face steep consequences?
This insight gives you something to compare the cost to. If the cost of failure is much higher than the cost of training to avoid that failure, you’ll have a strong case to get buy in for your corporate training initiative.
Some examples of “mission critical” training can include required safety training and training around new technology. Without required safety training, your company faces compounding legal costs. Without the training around new technology, your company risks falling behind.
#3) The Importance of Holding onto Tribal Knowledge
People who have worked in your company for years built up a lot of tribal knowledge over that time. Having a way to document, codify and train that knowledge is a great way to provide a lot of value to your corporate training initiatives.
Your company may have processes in place. But through their years of experience, your tenured employees may have found better, more efficient ways to do their work. The problem is that knowledge may not be written down anywhere. And when that employee retires, that knowledge walks out the door with them.
When you onboard new employees, you need to get them up to speed as quickly as possible. Imagine the value of having that tribal knowledge codified in an effective training, so you pass that knowledge to the next generation of employees.
Keep in mind that creating new course material costs a lot more than using material that already exists. So, as you’re searching your company for that tribal knowledge, stay on the lookout for documents and materials that already exist.
Take the time in your planning stages to see what tribal knowledge and existing material is out there in your company. If your instructional designers can work with, use it. Find ways to cut costs without sacrificing the quality of the training. That will go a long way when presenting your plan to internal stakeholders.
Using these three factors separately or together, you can create a compelling case to justify the cost of a corporate training initiative.
Using Metrics and Measurement to Justify the Cost of Corporate Training
There are basic metrics you can measure like:
- How many people completed the training;
- How satisfied they were with the training; and
- How well they remembered the information.
These metrics are good at getting a base level of knowledge about the corporate training’s effects.
But you can go a level deeper and get a better picture of the overall effect on the company the training had.
The way to do this is to make sure that the training is tied to an internal business goal like an increase in sales or a decrease in turnover rate. This focus gets to the heart of why the company needs training in the first place.
Making sure you’re measuring the right metrics should start at the very beginning of the corporate training initiative. During planning you need to make sure everyone is on the same page in terms of what problem the training is trying to solve, and how the effectiveness will be measured. So, at the end of the program, you can see if the training had a positive impact on the problem it set out to solve.
Conclusion – Keep Everyone Aligned
Justifying the cost of corporate training comes down to alignment. Everyone needs to understand why you’re doing the training, what you need in order to accomplish it, and what it’s going to cost. For training to be successful, you must be able to explain the rationale behind the cost to ensure buy-in and alignment.