Want to Get Your Training Budget Approved? Track These 3 Metrics

— April 14, 2017

Training Budget

As a training manager, you are already your company’s biggest champion of learning and development. You’re well aware of the value leadership training brings to your company.

But convincing your executive team to renew your training budget—much less increase it—can be a tough sell.

Without concrete data to demonstrate the effectiveness and the value of these programs, it’s harder to make your case.

In an earlier post, we outlined some important guidelines for measuring the ROI of leadership development.

It’s been one of our most popular posts to date, so we wanted to take it a step further. Here are the three most important metrics you can measure to determine the impact on your bottom line.

1. Year-Over-Year Percent Increase in Program Participation

If your employees don’t believe in training and development, no one else will. If participation is increasing year after year, it’s a good indicator your employees still find these programs valuable.

Autodesk, a developer of computer-assisted design software, has more than 9,000 employees across the globe. When senior HR and learning development manager Harry Wittenberg first introduced online training courses nearly a decade ago, the response was good, but it was only a small percentage of the total workforce. As he expanded program offerings to include virtual leadership training, he saw an increase year after year. In 2016, more than 1,400 people participated in training, which was 15 percent of the total workforce.

2. Number of Program Participants Promoted

If the goal of your program is to help potential leaders build skills and advance their careers, your company should keep track of how many participants move into leadership positions within a year or two of completing it.

This will help you assess how well participants are able to apply what they’ve learned and use it to move your company forward.

3. Average Cost of Recruiting & Onboarding New Leaders

Developing leaders within your company requires a substantial investment in time and resources, but it’s almost always more cost-effective than recruiting and onboarding new leaders. Research from the Center for American Progress finds the average cost of losing an employee can be as high as 200 percent of their salary, depending on their level of seniority.

Of course, the numbers vary widely from one company to the next.

Keeping track of your own recruiting and onboarding costs, as well as the number of employees promoted internally, can help you put a true dollar figure on the value of your programs. Using this simple formula can help:

(Number of leaders promoted internally) x (per employee cost of recruiting/onboarding) = Total savings

(Total cost of leadership development) – (total savings) = Return on Investment

Bonus Metric: Employee Engagement Scores

While leadership development is just one of many factors that impact employee engagement, it can be a powerful indicator of your company’s health.

At Autodesk, Wittenberg conducts an annual employee engagement survey. He began to ask questions related to training and development as part of that survey.

Year after year, he has seen an increase in the number of employees who say they are participating in training and believe their manager cares about their development.

Making Your Case

Making the business case for leadership development can feel like an uphill battle at times, but arming yourself with data will make it easier.

Re-framing your request can also help. Rather than asking for a certain dollar amount because that’s what it cost last year, ask your executives to consider how much it would cost your company if you didn’t have those programs in place. How many new leaders would you have had to recruit? How many months of lost productivity would you have experienced while bringing them up to speed? How much business might have been lost during those transitions?

When you put it like that, investing in leadership development is a no-brainer!

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Author: Darleen DeRosa

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