How to effectively plan training budget?

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Do you think training / learning and development activities are necessary for your organization? If yes, do you get adequate Return on Investment (RoI) on these training activities?

Only 8% organizations feel, that they get RoI from training

McKinsey & co conducted a survey on this. Response to the survey result was as under:

1) 90% companies responded that Learning and Development activity is a top priority for the company.

2) Only 25% companies felt that training programs were effective,

3) Only 8% companies measure Return on Investment on training.

putting a value on training


50% of the training budget must be spent on post training activities instead of 5%.

In an another research done by Dr. Brent Peterson in Columbia University suggested that training budget spending and it’s value are not aligned properly.

Dr. Brent Peterson divided training budget into three parts

  1. Pre training
  2. Training / Learning Event
  3. Post Training

According to his study

  1. In pre training activities like 360 degree assessment, gap identification, personal interest identification, identifying relevant projects for post training implementation etc. companies should spend 26% of the budget, where as actually they spend only 10%. (Under-spent)
  2. In training / learning event like workshop, classroom training, e-learning content delivery, outbound training etc. companies should spend only 24% of the budget, where as actually they spend around 80%. (Overspent)
  3. In post training / learning activities like working on a real project, hand holding, mentoring, coaching, feedback, review and recognition, etc. companies should spend 50% of the budget, where as actually they spend only 5%. (Under-spent)

Training Budget Utilization


70% of the learning happens on the job (During implementation)

Also research from Josh Bersin and Associates that concludes that:

  1. 70% of learning occurs on the job
  2. Only 10% of learning occurs during the training event (20% occurs prior to the event)

How Employees Learn


Your training budget may not be effective, if it doesn’t consider above facts. This may eventually lead to less or no RoI (Return on Investment).

How organizations should measure training effectiveness?

Dr. Donald L. Kirkpatrick was Professor Emeritus at the University of Wisconsin and Honorary Chairman of Kirkpatrick Partners until his passing in May of 2014. Don is credited with creating the Kirkpatrick Model, the most recognized and widely used training evaluation model in the world. According to his model, training effectiveness can be measured in four levels.

Level 1: Reaction

The degree to which participants find the training favorable, engaging and relevant to their jobs

Level 2: Learning

The degree to which participants acquire the intended knowledge, skills, attitude, confidence and commitment based on their participation in the training

Level 3: Behavior

The degree to which participants apply what they learned during training when they are back on the job

Level 4: Results

The degree to which targeted outcomes occur as a result of the training and the support and accountability package

The Kirkpatrick Model


Common Mistakes in Traditional Training

Common Mistakes in Traditional Training

Solution 1: Change the process of traditional training. Link training to improvement projects.

Instead of identifying training need first, look at the top problems or priorities of the organization. Convert problems or opportunities into doable projects. Decide training topic and faculties who can bridge these gaps. Identify target groups who are required to solve these top priority problems.

Traditional approach Praining approach

Solution 2: Sign project charter before training

Create a project charter (a two page document) that describes problem statement, goal statement, team, timeline and tangible / intangible savings expected from an improvement project. Have this charter signed by various stakeholders and participants. Download template here.

Solution 3: Impart training in phases and monitor progress

Divide training into logical steps / phases. Impart training in pieces. Monitor progress of improvement project and participant’s learning and move further. Have multiple intermediate reviews to evaluate whether entire process is yielding result or not.

Solution 4: Provide more hand holding / mentoring for implementation

Support participants to implement the learning with use of internal or external mentors / coach. This will increase their confidence and ensure that participants are working in the right direction. Mentor / coach will help to convert transnational knowledge of the participant into a transformational. To more click here.

Solution 5: Use E-learning (Blended Learning) to reduce training cost and increase flexibility.

Use professional E-learning platforms wherever possible. Most of the organizations are facing it difficult to ensure availability of the participants for traditional classroom training. E-learning provides a flexibility, as it can be accessed anytime, anywhere and on any device. The best idea is to blend classroom and E-learning. This will ensure that your training days in classroom are reduced at the same time cost is reduced. To more about this click here.

Solution 6: Use “Pr@ining” instead of Training

Pr@ining™ is a unique approach developed by Concept Business Excellence Pvt. Ltd. based on 20 years of experience of supporting organizations for improvement.

Pr@ining™ is a Practical, Project Oriented, Performance based Training which transforms your training budget in line with Dr. Brent Peterson’s suggested model to get maximum ROI (Return on Investment).

The focus of Pr@ining™ is to transform employees from Problem Reporters to Problem Solvers. This is more sustainable than achieving just temporary improvements. For more details click here.

Author: Nital Zaveri

  • CEO and Director
  • Concept Business Excellence Pvt. Ltd.


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