Why might one wish to take a strategic approach to training? This is a question that many people ask.

Simply providing training can improve employee job performance. Training can have the same effect as the Hawthorne Studies found at Western Electric in the 1920s. As you may remember, the changes in lighting at the factories were accompanied by increases in production levels.

But, more can be done… Imagine that one provides effective training, rather than merely training. This is where one starts to look at the bottom-line business objectives which can be related to and supported by training.

Budgeting for Training

Training budgets seldom cover all of the training requests that an organization receives from its managers and other employees. That raises a question… How can an organization allocate its resources appropriately?

Let’s start the analysis by identifying the ways that an organization might allocate resources… For some organizations, the budgets might be allocated on a first come, first serve basis. In other organizations, training dollars may allocated based on spend in a prior period. A third group may decide to use a zero-based budget approach and require all training requests to be cost-justified. A fourth group could allocate training dollars based on the expected contribution that the training could deliver to the organization’s bottom line. A fifth group could allocate training based on organizational strategy. There are probably other choices as well.

Defining the Problem

There are many ways that the problem could be defined. Is the goal to merely allocate the training budget? Is one seeking to allocate the training budget in a way that is aligned with the organization’s business objectives and strategy? Is one seeking to maximize bottom line business results in the current period? Perhaps, one is trying to allocate training budgets in a way that is perceived as fair so that it will help the organization attract and retain employees.

The best definition of the problem will vary by industry, competitive environment, size of organization, organizational values, employee preferences, and culture. Circumstances exist in which each of these potential definitions of the problem would be “right” for the organization.

Strategy

The strategic approach to training starts before one even gets down to the decision of how to allocate training budgets. It starts at the organizational level. Is the organization aligned to achieve a clearly defined objective? If so, that will support a strategic approach to training. If not, a strategic approach to training may still be taken, but there will always be a tension between training and other parts of the organization. And, this is not necessarily a bad decision. Some very large organizations use this tension to slow activities down and to ensure that the organization does not go too far in any new direction.

A strategic approach to training

A strategic approach to training allows the dollars to be allocated in a way that reflects the organization’s goals, priorities, and values. It improves the chances that training dollars will be spent on the people and for the training that are most directly tied to the organization’s objectives.

The negative aspect of this approach is that, if used year in and year out, over time, organizations are likely to lose their best and brightest employees in other business units because those employees will conclude that their services are not valued. When that occurs the nonvalued employees are likely to move to other job functions within the organization, seek training externally, seek fulfillment outside of work, or even leave the organization entirely.

Strategy of balance

A strategic approach that many organizations rely on is a combination of allocating training dollars to support strategic goals and a company-wide training expectation. Their challenge often is in failing to communicate what constitutes training under the second criteria. Some of these organizations allow employees attending meetings or talking with suppliers to count that towards the company-wide training expectation.

Experience suggests that it is better for an organization to provide formal training - either internally or via suppliers. This allows the organization to control what the employees are learning. It also ensures that employees and their leadership are not incented to “game the system” by claiming that events are training, rather than standard business activities.

Conclusion

Allocating budgets to support organizational goals is important because it ensures that resources are available to meet an organization’s needs. For most organizations, goals include both direct bottom line revenue objectives as well as less metrics that are more difficult to measure, although are generally thought to be important. These second type of goals may include employee retention and morale.

When budgets are allocated to training or other functions based on strategy, it is important to remember all of an organization’s goals, rather than merely the goals related to revenue and sales.

Filed by Coleen Davis at 8:59 am under Planning Tips, Training