A strategy for maximising the impact of training spend

Most would agree that employee training is a very necessary part of running a successful organisation. Not only should it improve employee, and therefore organisational, performance, but it evidences to your employees that the organisation is committed to their development as individuals.

However, training comes at a cost and, as always, that cost must be justified in terms of the organisational improvement which is realised.

So, what are the issues to be considered when prioritising where to spend a finite training budget?

Issue 1. Which roles are critical to delivering the organisation’s strategy?

All roles within the organisation are necessary, but some are clearly critical roles that add a disproportionate value to organisational outcome. Identifying these latter roles requires a deep understanding of the organisation’s strategy and what is critical to the delivery of that strategy. For example, in a construction company, the front-end engineering design (‘FEED’) process is critical to developing a customer solution that both meets the customer cost and specification requirements and can be delivered profitably by the construction company. For an online fashion retailer, website design can be a major differentiator - ?and hence, value add- in attracting and retaining customers. Cyber security in a financial services organisation is key to customer protection and confidence.

Understanding which are your critical roles and then evaluating the capabilities of your current team in each of these areas can give a key pointer to prioritising where training dollars should first be allocated. It can also be done faster than a broad-based training needs analysis (‘TNA’) which may not unlock the clue to best prioritising training spend, but may, instead, merely create a list of potential training need across the wider employee base.

Issue 2. Where does recruitment offer a better, faster or more cost-effective solution than training?

Where skills gaps are identified in organisational capability in critical roles, the solution is not always training. Depending on the nature of the role, the extent of the skills gap, and the prevailing market skills availability, it may be better to look to external recruitment to bolster those organisational capabilities. Of course, recruitment comes at a cost, so organisations should develop a better understanding of the relative cost of recruitment vs internal development.

This decision is perhaps one of the hardest to make as it will depend on so many organisation-specific issues, such as the extent of the current skill gap, any time pressures to bridge the gap, the cost and availability of the right external skills in the marketplace etc.

Issue 3. How to allocate the ‘residual training budget’

When clear training spend allocation decisions have been made through considering issues 1 & 2 above, there remains the question of how to allocate the remaining available training budget. The percentage amount available for broader training needs will depend on the original proposed budget and the extent that ‘critical roles’ training needs have eaten into that budget. ?It will then require decisions on where training spend in this category is required. ?Typically, this general base of residual training spend can be split into two categories:

a)????? Technical training specific to each job role and designed to improve the technical level of ability e.g. accounting skills, project management skills etc

b)????? Behavioural training which may be applicable across all job functions and relate to certain personal attributes required to be effective and/or to reinforce the company culture e.g. effective time and meeting management, teamwork, customer centricity etc.

For category a), there may well be specific professional development courses available through institutes specific to the technical skill area. Here, a training strategy may be to put the onus on technical personal development back to the employee. After all, it is the employee’s long term career prospects that benefit most, and there should be a sense of personal responsibility to better oneself in one’s chosen professional sphere. The organisation may support/subsidise such training costs, but a clear commitment from the employee needs to be evidenced.

For category b) the organisation may contract with a third-party training provider to deliver these programmes in-house. This will allow the organisation to develop a relationship with a training supplier who will then start to understand the specific requirements of the organisation and work with the organisation in the development of tailored programmes that meet the cultural and values needs that the organisation is trying to imbue within each of its current employees.

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The above approach to training will allow a more comprehensive training and recruitment strategy to evolve and will maximise the organisational and employee impact from training spend. As always thoughts and opinions are welcome. If you would like to discuss any of these issues further then please also contact the author on [email protected]

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Author’s Bio

Nigel Penny is a leading global expert on strategy, performance and leadership techniques. His focus is to ensure the sustainable future success of clients through effective strategic management processes.

Nigel has over thirty years international experience implementing consulting solutions encompassing all aspects of business and people management. Between 1996 and 2002, he worked closely with Dr. David Norton and Professor Bob Kaplan, the co-founders of the Balanced Scorecard approach, and was Vice President of the Asia practice of Balanced Scorecard Collaborative. Nigel was also partner in charge of KPMG’s performance management practice in Australia, and a member of their team developing global methodologies for Balanced Scorecard development and implementation techniques.

Nigel has facilitated strategy and business performance improvement programs in food, manufacturing, financial services, retail and utility industries, as well as working extensively with governments and not-for-profit agencies. He has worked in UK, USA, Europe, Asia and the Middle East and has lived in UK, USA, Singapore, Malaysia and Australia.

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