As organizations keep adapting to an ever-evolving workforce, whether through generational work ethic shifts, technological advancements or economic fluctuations, the challenge of not only attracting top talent but also retaining and nurturing their existing employees keeps growing. By fostering an environment for evolving, learning and upskilling, companies can stay on top of the competitive marketplace and thrive into the future. That’s where the learning and development team comes in.
“I think the pressure is really on learning and development at the moment,” says Laura Overton, founder of Learning Changemakers. “What we’re spending on, what we’re planning to spend on, we feel under pressure, because it feels as though content has been released.”
Over the last few years, L&D budgets have increased. And, according to BetterWork Media Group’s 2022 State of L&D Analysis report, nearly two-thirds of the 558 participants believe their budgets will increase over the next 12 to 18 months.
Why did budgets increase?
The workplace has changed dramatically since the COVID-19 pandemic. The sudden shift to remote and hybrid work challenged leaders to adapt their programs and training. Nicolle Mueller, senior L&D consultant at Slalom, says there has been pushback from some companies who had a negative experience with remote learning during the pandemic, and have tried to fully step back to in-person training exclusively and away from a blended approach that can suit a wider range of employees and their various learning styles.
These obstacles gave L&D quite the challenge of how to develop training and upskilling programs in order to retain their employees and continue to thrive as a company. Additionally organizational leadership realized they needed to begin prioritizing more budgeting to L&D in order to outsource critical learning tools and internally develop the initiatives.
“If you’re stuck delivering content in person via PowerPoint, for example, how would you scale that? It’s quite near impossible,” says Mueller. “Those that are in that hybrid space already, I think they’re set up for success. The rest of us organize to orient whoever you are.”
Another challenge in recent years has been employee retention and hiring. While there is an overwhelming amount of job openings, the labor shortage has still been at large for numerous reasons since 2020.In June 2023 alone, four million people quit their jobs.
“I think that the world of learning and development has evolved to where we understand now that just putting together a PowerPoint is not going to work for one company,” says Rachel Schell, founder of Emerging Leaders in L&D. “It might work for one company, but it’s not going to work for the next company. But the same thing can be said about e-learning as well, like we can’t put together this really beautiful e-learning with actual videos in it and expect that to work well across all companies.”
Deciding where to put the money
Recognizing the strategic significance of L&D is important for both companies and employees as leadership allocates their budget. A lot of the time, this comes down to solutions that align with the organization’s goals and will achieve the highest possible ROI.
“So any organization, whether it’s L&D within HR, whether it’s your legal department, your finance department, your IT department, whoever you are, you want to plan your your activities around: ‘How can I strategically use our expertise to support the goals of the business to support the things that are keeping our CEO and their executive team up at night? What are the things that they’re looking to solve?’” says Gary Ross, president of INSIDE COMMS.
Many organizations are already doing this. According to BMG’s State of L&D report, about 77 percent of L&D professionals indicated their departments “are aligned (or are aligning) with their organization’s business objectives.” They are also working to use funding to develop new learning techniques, adapt established programs, embrace social learning and more.
Mueller and Schell both indicated that a challenge with organizational budgets is that they are often not part of the decision process when they need to be. Schell says having learning as a part of these budget meetings will help the organization decide how to prioritize learning by asking questions.
“I would love to see learning and development having more of a seat at the table and leadership meetings,” says Schell. “And the reason I say that is not every problem that a company has, needs to be solved with training. But if you don’t have someone in learning and development at that leadership meeting so that you can pull on that expertise, how do you know?”
Key areas of focus for L&D professionals
With organizations expecting to have more effective learning opportunities, L&D professionals are focusing on several different spending areas to develop more custom content and adopt new learning techniques while adapting to new challenges, according to BMG’s report.
For the last four or five years, Overton has been working with the Chartered Institute of Professional Development on their 2023 Learning at Work report. The report discusses what professionals are planning to spend more on in 2024, what factors influenced the decision, what challenges L&D professionals face etc. Overton and the report highlighted similar areas of L&D focus with BMG.
“We asked the learning professionals, what are the big business issues and people issues in your organization right now,” says Overton. “And the priorities were things around growth, productivity, talent, retention and the skills issue, major for business moment.”
To continue to keep up with the pace of change, a main budgetary focus is “learning planning and strategy,” which centers on how to evolve L&D strategies for the best ROI. BMG’s report revealed that learning planning and strategy is a top priority for learning investments all around, with almost 74 percent of participants agreeing. Directional areas like learning delivery, content libraries and learning technology are also higher priorities.
“Using what’s called a ‘phased approach’ in how we create our training is a key right now,” says Schell. “That’s helping us decide the budgets that we have available during each phase and ultimately, how we’re going to solve our problems, but also look at the return on investment. If we solve this problem, is it going to be worth the amount of time and resources we’re using to develop the training in the first place?”
These initiatives are at higher priority as they help with not only ROI but employee retention all around. BMG reports that even in leadership development, the highest priority is retaining high-potential employees and future leaders. For this effort, onboarding and social learning are also critical, as they create relationships throughout the company.
“It’s not just onboarding in the technical sense of performing the role, but frankly, the company in the culture,” says Mueller. “There’s enough research out there, we all know that if it’s not a good fit culture wise with your team — if you don’t create those relationships — more than likely, even if you can perform the role you’re going to leave.”
Opportunities and areas that were more tactically oriented were ranked as lower priority in the BMG analysis report. Some of these areas were learning administration, performance consulting and L&D personnel.
Leveraging technology for the cause
Remote and hybrid work alone presented its own challenges in business. One of them that continues to plague companies is how to possibly leverage technology for organizations who were once completely in-person. Some challenges that have risen for L&D specifically, according to the report, are aligning technology operations across business units, aligning technology strategy with business goals and engaging and retaining technology-savvy employees.
Learning delivery has changed completely with technology. Many delivery methods are centered around self-paced e-learning. Several L&D professionals in the BMG study found that self-paced e-learning was suitable for many areas such as compliance training, business skills, onboarding and more.
“I think being able to deliver any technology that enables us to deliver learning on people’s schedules, where they feel that it’s flexible for them to fit it into their day and the way they best feel that they can do so on demand,” says Ross. “The better we can give them control over how they receive that learning.”
Artificial intelligence has also become a bigger trend in learning that professionals are looking to leverage. BMG’s survey reveals that AI, while still in the development phase, will play a significant role in future L&D initiatives.
“I’m not 100 percent sure where yet, but I really do think that more and more companies are going to have to start creating prompts and policies and training around how to use AI, rather than taking a blanket approach to ‘AI is not allowed,’” says Schell.
Looking ahead
There are a lot of factors in budgeting for the future, but L&D has proven to be an indispensable investment. By prioritizing the right areas, leveraging technology and focusing on what goals a business has, L&D can adapt, grow and ultimately thrive to benefit their leaders, peers and employees.
“The last thing is being deliberate,” says Overton. “If you want to be bold, it’s not being rash. It’s not being risky. It’s not being stupid. But, it’s about having that evidence informed thinking,” Overton says. “It might be taking a risk, but by using data, internal data, external data, like benchmarks, learning science data, to take new steps forward.”
