How to Handle Training Budget Changes in 2021

training budget

If 2020 was the year of change and flux, then 2021 is looking likely to be a year of picking up the pieces and adjusting to a new state of play. While the ripples of a global pandemic and upset markets have reached almost all corners of the organization, learning and development teams were amongst those most affected in terms of how they work and how they deliver training solutions to their learners.

Pre-2020, most L&D budgets were on the up and up. According to LinkedIn’s Workplace Learning Report 2020, more than a third of learning professionals expected their budget to grow this year. In reality, circumstances arose that resulted in budget freezes, redundancies, and cuts across the board for many organizations.

For lots of teams, this means plans for 2021 have to be scrapped and rebuilt according to a new, unexpected reality. So how should your training development budget look for the year ahead? And how can you adjust it based on recent changes?


Get further insight into what lies ahead in this on-demand webinar recording. Expert panelists Nick Howe and Fernando Sanchez-Arias share their insights and advice on how L&D can get ahead of change and lead from the front:
The New L&D Gameplan: How to Safeguard Against Uncertainty in Uncertain Times


How to Calculate Your Training Budget

Companies spend between $100 and $1,000 per learner on training solutions every year. This wide range is accounted for due to differences in company size and the training requirements across different industries. Your training budget must be defined according to the individual needs of your particular organization, it’s goals, and financial projects.

But, even if you had established a five year plan for L&D, the past year has likely turned a lot of those plans and objectives on their heads. So, you may be in a situation where you need to redefine your budget, your goals, and your key performance indicators.

Regardless, your budget should take into account:

  • L&D team members
  • Tools and technology
  • Content development/purchasing
  • Administrative needs
  • Travel and expenses

If a budget has been decided for you, it’s advisable to assign a percentage of your budget to each category in order of priority. 

If you’re calculating a budget for approval, one of the most common ways to calculate a budget is to spend a percentage of total salary cost on training. Another is to benchmark your organization against common per learner spending in your industry and apply that to the size of your workforce. 

Where to Assign Training Budget in 2021

No matter the size of your budget, projects and initiatives must be prioritized according to the overall objectives and needs of your organization. But there are a couple of areas to pay particular attention to when assigning your training development budget for 2021.

Digital Training Solutions

When it comes to prioritizing projects and changes for 2021, many L&D teams have had to scrap their plans in order to quickly adjust to unavoidable changes. For example, a lot of organizations were still relying heavily on instructor-led training sessions until now. However, working from home policies and social distancing has driven an immediate and rapid pivot to digital solutions.

While 2020 may have necessitated a quick and dirty approach to this pivot, training teams would do well to assign budget to ensure the quality of their digital training solutions rises to the occasion in 2021.

Reskilling and Upskilling

Back in 2019, L&D leaders were starting to pay close attention to the importance of providing reskilling and upskilling programs to their learners. In fact, 51% were planning to launch upskilling programs in 2020 and 43% were planning to launch reskilling programs.

When events unfolded with alarming speed in 2020, the importance of these programs became even more prominent and time-sensitive. The shelf life of skills is shortening, many roles throughout the organization are predicted to become obsolete, technology is advancing at a rapid pace, and responsiveness to change must become part of the organization’s DNA if competitive advantages are to be sustained. 

Putting reskilling and upskilling opportunities front and centre means L&D will play a critical role in empowering the workforce to sustain their performance and allowing the organization to remain competitive. 

Requesting a Training Budget Increase

If you feel the potential for a training development budget increase in 2021 is within your reach, here are few quick tips for submitting a successful request.

Know Your Audience

Those who hold the purse strings are generally not interested in the nitty gritty. They want a high level, to-the-point presentation that speaks to their interests and objectives.

Align With the Organization

Brush up on the organizational goals and objectives for 2020 and ensure your argument for an increased L&D budget is driven by the desire for L&D to play their part in achieving them.

Don’t Ask for Training Budget, Ask for Results

While you’ll need to thoroughly justify your need for more budget, try flipping the script. Rather than saying “I need X amount in order to achieve Y,” put your objectives front and centre by stating “L&D needs to achieve X in line with organizational goals. To do this, we will need Y budget.”

This toolkit is built to help L&D managers navigate requests for new learning technology, but is also applicable to requests for budget increases.

Dealing with a Budget Cut

The reality for many L&D teams is that they will be dealing with a budget cut or a budget freeze. In a survey conducted between March and May in 2020, 25% of companies had cut their L&D budget while 57% had already begun adjusting L&D programs in light of new business requirements.

While this may put a hold on many of your plans, it’s essential to make the most of what you do have at your disposal.

Prioritize

Getting back to the point of aligning your L&D strategy with the organization, make an inventory of your training initiatives and planned projects. Taking into consideration the budgetary requirements of each initiative, prioritize the list according to organizational impact to ensure L&D maintains its position as a strong strategic business partner and continues to support performance.

Trim the Fat

Whether it’s freelance instructional design work or off-the-shelf courses that are “nice to haves,” a line item report of L&D spending will help to identify any areas where spending can be cut.

Focus on Productivity

When a budget cut occurs, the question for L&D becomes “how can we do more with what we already have?” 

Productivity is about much more than making sure your team members are working at capacity. Look for opportunities to:

  • Streamline processes
  • Consolidate tools and technology
  • Find more efficient project management processes

You can learn more about increasing the productivity of your L&D team in The Training Manager’s Guide to Team Productivity and Meeting Training Demand

Regardless of what lies ahead for your budget, your team, and your organization, these practices will help ensure a robust defence of your existing budget, or your requested increase, in 2021.

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