Why employees should control their learning and development budgets

January 14, 2021
June 26, 2023
Learning And Development

Spending more on learning doesn’t necessarily mean more learning will happen. There, we said it! In 2020, 57% of L&D professionals planned to spend more on online learning, with self-directed learning and engagement priorities for 35% of those people.

But what happens when the budget goes up without asking people how it should be spent? That doesn’t sound like the best way to engage people or motivate them to learn independently.

The truth is that people value autonomy as much as they do opportunities to develop, and these are often overlooked when it comes to deciding how learning budgets are spent. But if you let employees look after the learning pennies, will the return on those pounds take care of itself?

What’s the typical learning budget?

50% of respondents in the 2018 UK L&D Report revealed that they spend up to £200 per employee each year, the most common answer by far. However, while 17% and 13% answered £201-400 and £401-£600, respectively, 12% stated their employee learning budget is upwards of £1,000. That’s a pretty sizeable investment when it comes to talent development.

The average employee learning budget according to ISSUU

Source: ISSUU

To give a little more context on employee training, the worldwide average exceeded $1,000 USD in every year from 2008 to 2018, peaking at $1,299 in the latter. The challenge for many organisations is that they follow traditional training budget routes which could limit their return on investment and the bang they get for their learning bucks. And when you consider the mass shift towards online learning, and away from in-person instructor led training, that also requires a perspective shift when it comes to budgets.

The issue with the traditional way learning budgets are spent.

What frequently happens is that a company takes their full L&D budget and invests in an extensive course library – something every learner can access. Because there’s a great cost per course, they often feel like they’ve got a good deal. That is until we pose questions like what happens if nothing in there appeals to learners or no course that will make them better at their job? Are those training resources really worth the money…

Should they simply learn something for the sake of learning and to justify the spend? What about if enough colleagues have the same experience? Suddenly the course completion rate is looking as low as that cost per course. And with the learning budget tied up in that course library, employees are likely to hear their requests for events, workshops or books outside the system turned down.

Another issue is when they decide to divide the learning budget by the number of employees, and ask for them to pick a course or event they’d like to attend by a certain deadline. While that’s easy to manage from an admin perspective, it poses questions like what happens if I find a much better event but I rushed into the other one just to meet the deadline. Yearly learning budgets are yearly learning budgets for a reason – the goal is to spend it across the course of the year and not by an arbitrary deadline.

Why giving learners more control is the answer

Studies have shown that greater autonomy at work leads to greater satisfaction, and the same can be said for opportunities to develop and progress. So, when you put the two together, you get the idea that greater control over development means people are more invested in progress. When you’ve got more input into how your learning budget is spent, you’re more motivated to provide return on investment, more determined to spend it in the most effective way possible.

How about an outside-the-box analogy that links back to why those traditional methods might not be best?

Imagine you were looking to buy a car and a friend promised to take care of it for you. They pick out a £10,000 brand new car and you’re thrilled with the gesture, but you know in the back of your head you could have spent it better. You would have picked out a £5,000 car, ensuring you had enough left in the tank to fill up your tank, buy insurance and road tax – instead the budget’s blown and you’re left thinking how it could have been spent better.

That’s probably how a lot of learners feel when they’re presented with a costly content library or sent on a leadership development course that’s been decided for them. They wish they’d been given the option to research and pick it out for themselves, after all they know how they learn best, what types of content appeal to them and where their career is headed.

Setting and managing a learning budget in HowNow

Let’s recap some of the things we’ve settled on here. Employees enjoy autonomy and the opportunity to progress, but the blanket approach of giving everyone access to a library doesn’t necessarily mean more learning. Managing learning budgets can be time consuming for leaders, which often leads to the setting of deadlines for committing to learning.

Essentially, the remedy would be a tool that lets people choose what they want to learn and manage their learning budget, but makes it straightforward for managers to track and approve spend. And that’s exactly how our Learning Budget feature works in HowNow!

Here’s how simple it looks from a manager’s end, a few boxes to fill out, dates to set and roles to assign.

Setting a learning budget for your employees to manage in HowNow

The budget’s set and now it’s back to the learner. The ball’s in their court whenever they find something they feel will help them on their learning journey. They can submit a request to spend their budget on that book, event, workshop or whatever it may be.

As you can see below, there’s a chance to explain why and justify why the spend is worthwhile in terms of meeting objectives or learning a new skill.

Those requests go back to the manager, both in their inboxes and in the Budget section within HowNow. They can check out which are still pending and view an explanation like the one below, before deciding whether they approve or reject the request. This is also a useful tool in leadership development, especially when you’re building a batch of new managers. Rather than responding on the spot, they’ve got the chance to digest the request and consider how it’ll help their employee develop and grow.

A learner request to spend part of their learning budget in HowNow

The budget is just a part of the larger learning puzzle, you’ve got to measure skills, set goals and understand progress, to ensure that budget is being spent effectively. And that’s much easier if you can do it all in one place.

We’d love to show you why HowNow is the ideal one place to develop an effective strategy. Whether that’s on-demand, in a live demo or you taking the platform for a free trial.

Why the latest data supports this argument even more (a 2022 update)

In 2020 – the most up-to-date full year for data – we spent about $360 billion globally on training and learning. Thats’s the GDP of around 160 countries!

And yet the number of people who had positive things to say was remarkably low that year.

  • 75% of employees were dissatisfied with their company’s L&D function.
  • Only 12% reported applying new skills from that learning on the job.
  • 60% wouldn’t even recommend their company’s learning opportunities.

How can so much be spent with so little impact?

Primarily, it’s a lack of engagement. But to hone in on the budget exactly, it’s because too often the person we want to learn has so little involvement in how the learning budget is spent.

👉 A course library gets bought without a consultation on the current problems people are facing.

👉 A piece of learning tech’s introduced without those end users ever testing it.

👉 Decisions get made about what someone should be learning without them having the right input.

The more this happens, the more money is wasted.

And it’s a symptom of people investing in resources or tech, before establishing the problems that need to be solved.

Then we’re trying to retrofit the solution, which severely reduces our ability to drive impact.

Check out our other learning and development resources