This article is part of our ongoing series, This series focuses on how Customer Success team leaders can develop and execute learning and professional development plans that help increase employee retention and drive improved departmental results.
Learning and development strategies are crucial to the growth of your Customer Success department, but there’s usually one catch: these strategies require you to know how to build a budget. Sure, you can that has the power to transform your team, align that strategy with your business goals, and even build an incredible business case to convince the higher-ups of your venture, but ultimately, you won’t get very far without a budget.
This article will discuss:
The L&D budget landscape
Methods for building an L&D budget
How to modify your L&D budget
The L&D Budget Landscape
Before you figure out how to build a budget, you should have a general idea of what the L&D budget landscape looks like and what other employers are spending. One survey revealed that in 2019, worldwide employers spent about $1,300 per employee on training. And while 2020 brought about tumultuous changes to the work landscape, there is actually a lot of good news when it comes to the future of L&D.
LinkedIn’s 2021 Workplace Learning Report revealed that 64% of L&D experts agree that L&D shifted from a “nice to have” to a “need to have” in 2021. Also, there was a 10% increase in the amount of L&D experts who expect their budgets to actually increase in the future. We also know that leadership is actually on board with increases to L&D budgets. In March 2020, “only 27% of L&D pros report that their CEOs are active champions of learning.” Today that number is 63%.
While every organization is differently poised to support an L&D initiative, it’s clear that as a whole, experts and executives agree that L&D deserves proper budgetary support.
Methods for Building a L&D Budget
Figuring out how to build a budget for your next L&D initiative is a very individual process, because what works for one company might not work for another. Even what worked for you one year might not work so well the next year.
Here, we’ll discuss some ways you can start to come up with an L&D budget. The benefits to these techniques is that they prevent you from overspending, and help you tie your results to specific spending. When you start from scratch, it might be difficult to get your L&D budget right on the first try, but you’ll soon have data to work with, and can tweak your budget to reflect those results.
Set a budget from total salary spend
One of the easiest ways to set your L&D budget is to choose a percentage from the total of your employees’ salaries. Industry experts suggest anywhere from 1%-5% of your total salary budget can be allocated for training initiatives. That means if you spend $750,000 on salaries, and choose 2% as your budget, your L&D budget will be $15,000.
Set a budget based on individual salaries
With this next method, you do the same as the previous method, only with an employee's individual salary. If someone makes $100,000 a year, and you choose to invest an amount equal to 3% of their salary into L&D, they’ll have $3,000 set for training.
Budget for specific courses or certifications
When you’ve connected your L&D initiatives to your business goals, it’s easy to identify if a training program or specific course is likely to meet your needs. If this is the case, you can budget for your Customer Success Managers to complete these specific programs. This method is generally more precise than simply using percentages of your team’s salary spend and can be more easily tied to outcomes.
How to Modify Your L&D Budget
After you set your L&D budget and put it to work, you’ll get to see how well it performs and will start to have budget-related data. For example, maybe you accidentally under-budgeted but your L&D initiative is really showing results, leading you to want to increase your budget next year. You can use metrics and specific business goals to measure the success of your L&D initiative and budget.
At the end of the day, your L&D budget is going to be what enables your Customer Success department to truly train for success. Learning how to build a budget that works for your team might take some trial and error, but as long as you tie your budget to specific outcomes and metrics, you’ll be able to measure its success and modify it as needed.
Do’s & Don’ts of How to Build a Budget for L&D
DO understand that many executives are “champions of learning,” and many L&D experts expect their budgets to increase
DON’T fail to take your specific company and department needs into consideration when choosing a budget
DO decide on a method for an L&D budget and measure how that budget performs
