3 ways you’re wasting your learning budget

by Hillary Gamblin

A learning budget is easy to waste - deceptively easy. Perhaps it’s because learning leaders see learning (no matter what it’s about or how practical it is) as good. And to be clear, learning is good. But with shrinking budgets and rising skill gaps, companies can’t afford to be just good or beneficial. Today, companies must deliver the learning their companies need the most.

What we’re talking about here is misalignment. Too many companies throw money at learning that will do some good, but that good doesn’t address what the company needs the most. Typically, companies make three common misalignment mistakes with their learning budgets - three critical errors you can’t afford to keep making.

Know your learning targets

What are companies not aligning with when they spend (and subsequently waste) their learning budgets? Great question. To get the answer, learning leaders need to know three things:

The annual learning budget
The impacts learning needs to make
The timeline for delivering that impact.

Most of you reading this know how much money is available in your learning budget. You can’t forget it - even if you wanted to.

Usually, it’s the second or third bullet point where learning initiatives go wrong. With the second and third bullet points, don’t assume. Don’t guess. Don’t even rely on what C-suite told you two weeks ago. And don‘t accept feel-good or vague goals. Reconnect with other leaders and find out exactly what type of learning your company needs to keep the lights on and get a competitive edge.

Better yet, gather data, analyse it, and approach your C-suite with research on current skill gaps, future skills gaps, and other critical learning needs you must continue reacting to. Make a list - the more specific the better. (Feel free to use the example below to illustrate to leaders how explicit your list needs to be.)

Learning targets example

With a $25,000 annual learning budget, your C-suite wants to:

Onboard five new employees.
Keep the product competitive, by having two employees deepen their block-chain skills within the next six to eight months.
Curate an annual leadership programme for five promising managers.

Mistake no. 1: Learning resource misalignment

Are you focusing your money on your critical learning needs?

Not all learning is the same: how an employee learns new security policies differs from how they develop a new skill. Each type of learning requires different resources and time commitments, and not recognising these distinctions leads to wasted funds.

You spend more efficiently when you differentiate the kinds of learning your company needs. To keep it simple when planning your learning budget, categorise your spending into three essential experiences for workforce learning:

Core training
Everyday learning
Targeted skill building.

Each of these categories requires different learning environments, time commitments, and resources. While training can be accomplished in big groups and by using short, bite-size content, 10 to 15 hours won’t be enough to help someone learn Python. Each of these three learning experiences is critical for a company, but every company is unique. Your job is to tailor your budget, so you can give employees the right resources that deliver the right kind of learning.

If skill development is a top priority, scrutinise your traditional resources. Skill development rises in importance every day with the growing skills gap, and plugging that gap is a critical learning need. But not many legacy learning programmes and resources align with that need. Undoubtedly, the most common way people will misuse their learning funds in the next few years will be by investing in legacy learning programmes while expecting skill development to continue as it used to. Don’t be one of these companies!

A common pitfall: Using expensive content licenses to develop skills

Providing company-wide access to resources like LinkedIn Learning is one of the most popular ways corporations deliver employee development. Resources like this have a time, place, and purpose - but skill development isn’t one of them. If you spend a good portion of your budget on an expensive content license, some training will wind up spread thin. For example, an engineer might find six to ten courses - about ten hours each - useful. But it might not be enough for that engineer to learn to write code in a new language.

A better solution

If skills are the goal, move your money from a content license to providing specialised content and skills-based programmes focusing on job-ready skills. Invest in time-bound, intensive experiences, like boot camps, certificate programmes, and academies that can offer content focusing on the skills you need.

Mistake no. 2: Time used badly

Are you wasting your money on learning programmes that take too long?

As the world of work speeds up, companies must become increasingly mindful of the length of their learning programmes. To put it bluntly, some learning programmes will simply take too long to give you and your employees the right ROI. This is especially the case with popular, reimbursed learning programmes that take years to complete, like college degrees.

Why the change in pace? The unprecedented rate of technological advancement has decreased the shelf-life of skills. According to an IBM report, “the half-life of professional skills was once estimated at 10 to 15 years, “ but today it’s about five years “and even shorter for technical skills.” When skills could last for almost a decade, companies could afford to invest in learning programmes that took employees a few years to complete. Now, spending years developing a skill that will become obsolete in a few years makes little financial sense.

While companies have less time, the same goes for employees. Just glance at the resume of someone in the tech industry and it’s likely you’ll notice they’ve switched companies about every two years. And it’s not just tech employees playing musical chairs: the average length of American employees’ stay with a company continues to drop. Between 2012 and 2022, “the median job tenure dropped nearly 11% from 4.6 years to 4.1 years.” If you only have an employee for a few years, putting them in a learning programme that takes years to give you results doesn’t deliver the skills you and your employees need.

A common pitfall: Investing in slow higher-ed programmes for quick skill development

Higher-ed reimbursement programmes are one of the most popular corporate learning programmes. But these programmes don’t align with many companies’ timelines for quick skill development. If you need to fill skills gaps at your company ASAP, don’t sink $5,250 a year into a multi-year programme. It will take lots of money and time that you may not have, and a degree doesn’t guarantee job-ready skills.

A better solution

Take your higher-ed reimbursement budget and put it toward shorter programmes focused on job-ready skills. Alternative programmes like boot camps, certificate programmes, and academies fit shorter timelines and optimise employee effort because they’re often completed in the flow of work.

Mistake no. 3: Overlooking scale

Are you overprescribing generalised and expensive one-size-fits-all learning resources?

Another easy way to waste your learning budget is by splurging for company-wide access to the wrong learning resources. Today, many SaaS companies offer discounts to customers that opt for a site-wide license. These deals can save companies buckets of cash, but those buckets can be leaky.

Company-wide licenses aren’t cheap, so you need a high utilisation rate to reap the cost savings. When a tool is used by every employee on a daily basis, like Zoom, you save money on a company-wide license. But depending on the learning resource or programme, you might not get the utilisation needed to effectively engage your employees or develop skills.

A common pitfall: Locking yourself into a single-provider content license

Many companies invest in expensive sitewide content licenses, but their utilisation doesn’t justify the expense. Of course, it all depends on your learning targets and the resource in question. But generally speaking, utilisation, learning, and engagement suffer if the resource you’re purchasing for everyone doesn’t allow for personalisation or specialised content.

A better solution

Instead of buying expensive company-wide solutions that require a high volume of usage to be cost-effective, companies can target their spending on specialised content and hands-on experiences as well as engage those employees who - by building new skills - can have the most impact on productivity, leadership, and innovation. Checkr, an innovative HR company, saved $50,000 by canceling its company-wide content license and having employees request individual licenses a-la-cart from a content marketplace.

Spend smarter by aligning your learning budget

It’s time to take a hard look at your learning budget. See if you make the three common misalignment mistakes with your current budget, and then get things back on track. Avoiding these pitfalls in the future will give your organisation a competitive advantage. Why? Even though learning budgets continue to shrink, they’re more business-critical than ever.

Business success belongs to those who spend their lean, but critical, learning budget wisely.

Useful resources:

Degreed is the workforce upskilling platform for one in three Fortune 50 companies. We integrate and curate all the resources people use to learn - including learning management systems and millions of courses, videos, articles, books, and podcasts.

Visit our website.

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