Training Industry Magazine - November/December 2020 - 28

the business. This is what stakeholders
refer to as return on investment (ROI)
and applying a variety of cost-benefit
methodologies to arrive at an ROI for the
proposed asset purchase.

FORECAST AND
BUDGET FOR THE
LEARNING FUNCTION
Learning
professionals
must
acknowledge the learning function
is a business activity. It is an internal
business with a responsibility to
deliver value for internal clients and
the organization as a whole.
Like other support cost centers, learning
revenue is largely dependent on budget
allocations from profit centers. Learning
must budget accordingly and account
for its expenditures. L&D professionals
must engage with stakeholders to
forecast organizational growth. It
provides an opportunity to appropriately
budget and invest to meet operational
performance expectations.
This requires addressing two financial
aspects: the cost of supporting
learning and its ability to meet internal
client requirements.
Like any business, budgeting for the
learning function involves itemizing
costs essential for effective operation.
This involves everything from HR
needs to technology support for
specific tools. These are fixed costs
required to operate the learning

department and are not transferable
to internal learning requirements. It
accounts for current needs but also
forecasts for future growth.

employees learn; it is about ensuring
that performance expectations exceed
the cost of developing and executing
the effort.

Like every other support function, the
learning department typically receives
revenue from their internal clients'
budget allocation. Unlike profit-focused
areas, learning performs like a nonprofit,
delivering financial accountability and
performance value for their learners.

No one expects you
to be a financial
expert, but

These two elements guide your learning
offering and how much it will cost your
internal client. Involve your finance and
IT departments in the development of
your operational budget. When it comes
to developing learning initiative, cost the
initiative by identifying the direct costs
to learners' various business functions.
Remember, the client is paying for the
training activity, not for items you wish to
buy as part of the activity.

BACK TO BASICS
Estimating costs for learning is an
intentional, detailed and essential
process required to build credibility with
stakeholders. Learning professionals
will claim this isn't what they were hired
to do, but - to be part of the business
and to be taken seriously - you don't
have a choice.
Learning value, as with any other
operational endeavor, is what you must
demonstrate to stakeholders. However,
learning value is never about what

*	 Determine current and future business growth. Work
with operational stakeholders to determine their employee
knowledge needs, which allows learning professionals to
forecast learning requirements.
*	 Develop a learning department budget. Itemize and
determine the required costs to support L&D efforts for
the business. This should align with the business growth
forecast.
*	 Differentiate learning costs from expenses. Learning
costs are long-term infrastructure investments to
support learning activities and expenses are the actual
learning activities

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stakeholders do
expect you to enlist
support from those
who are.

It doesn't matter whether you're an
instructional designer, an eLearning
technologist or a trainer. Every
learning role and what they contribute
to improving operations is a cost to
the business. Account for your costs,
and demonstrate performance and
business value to every stakeholder.
This will build learning value and
establish stakeholder credibility.
Ajay M. Pangarkar, CTDP, FCPA, FCMA,
and Teresa Kirkwood, CTDP, are
founders of CentralKnowledge.com and
LearningSourceonline.com. They are
employee performance management
experts and three-time authors, most
recently publishing, "The Trainer's
Balanced Scorecard: A Complete
Resource for Linking Learning to
Organizational Strategy." Email Ajay
and Theresa.

*	 Identify learning infrastructure requirements. Learning
infrastructure costs, or investments, benefit the business
over the long-term or within the purchased asset's life.
Account for the cost of the item and associated lifecycle
and operating costs.
*	 Demonstrate cost to benefit analysis. Stakeholders
only worry when expected benefits don't exceed costs.
Demonstrate how the cost and learning expense will
tangibly deliver performance improvements by targeting
key performance metrics.
http://www.CentralKnowledge.com http://www.LearningSourceonline.com
Training Industry Magazine - November/December 2020

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