It’s that time again. With EOFY fast approaching, it’s time to start thinking about L&D budgets. The good news is that after a tumultuous year for L&D budgets in 2020 (to put it kindly), the outlook for 2021 is much brighter.
In 2020, 42% of L&D professionals cited “lack of budget” as their biggest obstacle. However, in 2021, 57% of L&D professionals are planning to ask for an increase in their online learning budget. What’s more, one-third of L&D professionals expect their learning budget to increase in 2021, with only 19% expecting their learning budget to decrease (compared to 34% at the same time last year).
L&D’s budgetary bounce-back should come as no surprise, given companies that provide comprehensive training programs have a 218% higher income per employee and a 24% higher profit margin than those who spend less on training, according to the Association for Talent Development.
With this in mind, we’ve identified five essentials to maximise your L&D budget in 2021.
Ready to budget for success? Start here.
Online learning has been on the rise for years. However, for obvious reasons, L&D’s hand was forced in 2020, accelerating the shift towards online learning. Now, it appears that online learning is not only here to stay, but it will continue to be the norm over instructor-led training.
According to LinkedIn’s 2021 Workplace Learning Report, “the pivot L&D made from instructor-led training (ILT) to blended online learning — learning experiences with a mix of virtual instructor-led training (VILT) and online learning — will remain the status quo.”
While this trend was already occurring pre-pandemic, the shift to remote working has put things into overdrive. LinkedIn’s survey found that in early 2020, 38% of L&D professionals expected to spend less on instructor-led training and 57% expected to spend more on online learning. In 2021, those numbers have increased dramatically: 73% of L&D professionals expect to spend less on instructor-led training, whereas 79% expect to spend more on online learning.
Savvy L&D leaders must be aware of this transition and allocate additional budget space to online learning in 2021.
We’ve been banging the drum about upskilling and reskilling for a while. Put simply, shifting work conditions mean upskilling and reskilling are essential for L&D budgets in 2021.
In October 2020, the World Economic Forum estimated that 50% of employees would need to be reskilled by 2025. Accordingly, LinkedIn’s 2020 Workplace Learning Report found that 51% of L&D professionals plan to launch upskilling programs while 43% plan to launch reskilling programs.
The demand for upskilling and reskilling has only increased in 2021. LinkedIn’s 2021 Workplace Learning Report found that upskilling and reskilling (59%) is the highest-ranked area of focus for L&D programs in 2021 — a massive 15% increase from June 2020.
Further, Deloitte found that 84% of L&D professionals said they would increase their investment in reskilling programs, with 53% adding that they would increase this budget by 6% or more. As such, upskilling and reskilling should play a central role in your 2021 L&D budget.
The last year has fundamentally changed the way learners consume content. Between remote work and shifting skill requirements, static learning models are no longer sufficient. According to Training Zone, 55% of workers say that their daily work tasks have changed due to COVID, with 26% expecting their jobs to be permanently different even once the pandemic is over.
As a result, learners’ content consumption needs have also changed. However, L&D has been slow to adjust, with research showing that 69% of employees find training content to be “boring and disengaging”. The bottom line? Learners are crying out for new, innovative ways to consume content.
As 360 Learning notes, “old training formats don’t stand a chance against Netflix and Spotify in capturing your learners’ attention. Instead, we need to reinvent workplace training around a collaborative mix of micro-content, asynchronous exchange spaces, and creative activities. In short, we need new collaborative learning platforms designed to cater for these training needs and deliver people-driven, engaging learning experiences.”
This change in learner behaviour must be top-of-mind when planning your L&D budget for 2021 and beyond. The status quo is no longer enough. Instead, L&D must adapt to how learners are actually consuming content in 2021.
On a human level, we should all know the importance of diversity and inclusion. It brings out the best in everyone and is simply the right thing to do. We have discussed this topic extensively in our recent D&I blog series as well as our blog on unconscious bias in L&D.
From a budgetary perspective, the numbers show how essential diversity and inclusion is to L&D. LinkedIn’s 2021 Workplace Learning Report finds that nearly two-thirds (64%) of L&D professionals say that executives have made D&I programs a priority this year. What’s more, companies with robust D&I programs are 22% more likely to be seen as industry leaders with high-calibre talent, while “diversity and inclusion” ranked number two among programs that L&D professionals plan to deploy in 2021.
Additionally, McKinsey finds that diverse and inclusive teams are more effective, more profitable, and make better decisions. For example, companies in the top-quartile for gender diversity among executives are 21% more likely to have above-average profitability. Similarly, top-quartile companies for cultural diversity are 33% more likely to outperform less diverse companies on profitability.
As such, diversity and inclusion is crucial on both a human level and a business level. When planning your 2021 L&D budget, be sure to leave room for D&I.
Above all, every item in your L&D budget must have a clear rationale linking back to business value. L&D is not an isolated island. Rather, it is a crucial component in a larger structure. As such, L&D teams must align strategies and initiatives with broader business goals.
As we explained in our article on learning value vs business value, “focussing on learning value keeps L&D in a separate bubble, while business value means taking a step to ensure your learning is aligned with broader, top-level business goals.”
Michelle Ockers elaborated on this point in her recent blog, explaining, “solutions that drive business value are often holistic. Not only must knowledge and skills be improved, but other levers may be required to change behaviours and improve performance. For example, systems, processes, resources, work patterns or environment, reward and recognition. L&D must partner with others to create better solutions.”
For L&D teams to take the next step forward, aligning learning value and business value must become a way of life. There’s no time like the present to make this a reality, meaning business value should be front and centre when planning your 2021 L&D budget.
To learn more about aligning learning value and business value, be sure to check out our recent Carpe Diem L&D series, starting with Carpe Diem L&D by award-winning L&D Analyst Laura Overton.