Budget time often means putting on the Learning and Development (L&D) dog-and-pony show. You brag about what you’ve done in the past year. You try to convince your bosses to let you do it again next year. How do you approach the annual budget time process?
Is This Your Approach at Budget Time?
- Do you tell senior leaders how many courses you held?
- How many students took training?
- That students said they liked the courses on surveys and smiley sheets?
- How much money you saved on travel by using e-learning?
Here’s the bad news: All that has ZERO to do with business value so your bosses don’t care.
You’re Measuring the Wrong Metrics
Why? Because these are “efficiency” metrics.
“Efficiency” metrics describe how many, how fast, and how much. They describe activities, time, and money spent.
Here’s what they don’t describe:
- What impact did training have on the business?
- What knowledge, skills, or capabilities were added to the business?
- How did the business improve after training?
- Reasons why your bosses should give L&D more time and money to spend next year.
Since most L&D groups use an LMS or project management tool to manage their processes, they have no choice but to report efficiency metrics—because that’s the only information they have. (Should you consider a Learning Impact System instead?)
In fact, using efficiency metrics to justify training budgets has become the norm for L&D.
Here’s the problem with that. Other departments—Accounting, R&D, IT, Sales, Marketing—use “effectiveness” metrics.
The Metrics That Matter
With “effectiveness” metrics, other departments can say, “We did X and that resulted in business value Y.”
For example, the sales and marketing team might say, “We improved lead qualification that created 1,600 new leads per year that resulted in a 14% increase in total sales.”
Or the operations and administrative team could report, “We streamlined a step in the patient intake process that sped up the process by 4 minutes allowing us to intake 15 more patients per day.”
The accounting team throws out the fact that, “We reduced the accounts payable backlog from 52 days to 45 days, which provided a monthly cash-on-hand increase of 8%.”
You get the idea.
How L&D Can Speak the Language of Business
Other departments have real results to show for their efforts. Their improvements are quantified and show dollar value added to the business bottom line. They describe results in the language of business.
This reveals the growing divide between the results provided by L&D and the results that senior leaders expect—and get—from every other department.
So why is this a big deal?
If you can’t show business value, then the business feels no obligation to support L&D or set aside money for training. It keeps L&D in a precarious situation every year at budget time.
When training professionals use efficiency metrics to show their value they are saying, “Our value comes in doing the most tasks the quickest.”
When training professionals use effectiveness metrics to show their value they are saying, “Our value comes from programs that increase the capability and profitability of the organization.”
Which approach do you think will make budget time easier and make your bosses view L&D not as overhead, but as business partner?
Do you want to learn how to choose metrics that will show the true value of your training programs? You can check out these posts to learn more.
- Training Impact Measurement Is a Blind Spot for Business
- Can You Create Measurable Training?
- Training ROI Is A Struggle But Shouldn’t Be
My next post will dive deeper into this subject. You can also contact us at eParamus if this is a struggle you are facing now. We’d love to help.
Please follow eParamus on LinkedIn and feel free to connect with me, Laura Paramoure, PhD. I’d love to know more about your training challenges.