How to effectively plan training budget for the year 2019?

Do you think training / learning and development activities are necessary for your organization? If yes, do you get adequate Return on Investment (RoI) on these training activities?

Only 8% organizations feel, that they get ROI from training

  • McKinsey & co conducted a survey on this. Response to the survey result was as under:
    • 90% companies responded that Learning and Development activity is a top priority for the company.
    • Only 25% companies felt that training programs were effective,
    • Only 8% companies measure Return on Investment on training.
    • Six Sigma improves human performance across the organization
    • Six Sigma is highly scalable
    • Six Sigma is a low risk investment

50% of the training budget must be spent on post training activities instead of 5%.

  • In an another research done by Dr. Brent Peterson in Columbia University suggested that training budget spending and it’s value are not aligned properly.
  • Dr. Brent Peterson divided training budget into three parts
    • Pre training
    • Training / Learning Event
    • Post Training
  • In pre training activities like 360 degree assessment, gap identification, personal interest identification, identifying relevant projects for post training implementation etc. companies should spend 26% of the budget, where as actually they spend only 10%. (Under-spent)
  • In training / learning event like workshop, classroom training, e-learning content delivery, outbound training etc. companies should spend only 24% of the budget, where as actually they spend around 80%. (Overspent)
  • In post training / learning activities like working on a real project, hand holding, mentoring, coaching, feedback, review and recognition, etc. companies should spend 50% of the budget, where as actually they spend only 5%. (Under-spent)

70% of the learning happens on the job (During implementation)

  • Also research from Josh Bersin and Associates that concludes that:
    • 1. 70% of learning occurs on the job
    • 2. Only 10% of learning occurs during the training event (20% occurs prior to the event)
  • Your training budget may not be effective, if it doesn’t consider above facts. This may eventually lead to less or no RoI (Return on Investment).

Solution 1: Change the process of traditional training. Link training to improvement projects.

  • Instead of identifying training need first, look at the top problems or priorities of the organization. Convert problems or opportunities into doable projects. Decide training topic and faculties who can bridge these gaps. Identify target groups who are required to solve these top priority problems.
A Value ‘Model’

Common Mistakes in Traditional Training

A Value ‘Model’

How organizations should measure training effectiveness?

  • Dr. Donald L. Kirkpatrick was Professor Emeritus at the University of Wisconsin and Honorary Chairman of Kirkpatrick Partners until his passing in May of 2014. Don is credited with creating the Kirkpatrick Model, the most recognized and widely used training evaluation model in the world. According to his model, training effectiveness can be measured in four levels.

Level 1: Reaction

  • The degree to which participants find the training favorable, engaging and relevant to their jobs

Level 2: Learning

  • The degree to which participants acquire the intended knowledge, skills, attitude, confidence and commitment based on their participation in the training

Level 3: Behavior

  • The degree to which participants apply what they learned during training when they are back on the job

Level 4: Results

  • The degree to which targeted outcomes occur as a result of the training and the support and accountability package

Author: Nital Zaveri

  • CEO and Director
  • Concept Business Excellence Pvt. Ltd.
  • ceo@sixsigmaconcept.com