Best practices

Insights and best practices: Optimizing your training budget in 2024

Insights and best practices: Optimizing your training budget in 2024 for maximum impact

Business needs change. Tools get outdated. And processes often need a shake-up. Sticking to the same old routine won’t cut it in a fast-paced world. As we gear up for the new year, it’s a perfect chance to re-evaluate how we approach business operations, challenge the status quo, and get ready for what’s next.

Let’s zero in on training. It’s more than just ticking a box. Training is the secret sauce that keeps our teams sharp and ready. In 2024, it’s not only about budgets. It’s about investing smartly in people.

In this article, we’ll dive in, figure out what really works, and set the stage for a year of growth and success through strategic L&D initiatives.

How do companies allocate their training budgets?

Globally, businesses spent more on training from 2008 to 2019. Training budget cuts first appeared in 2020 as the pandemic caused a slowdown. However, instead of reducing L&D budgets, companies shifted their focus to online training due to the rise of remote work. Traditional methods (i.e., in-person training) decreased while online employee training flourished. By the end of 2020, 79% of L&D professionals planned to spend more on online training, while 73% expected to spend less on in-person training.

Currently, most companies allocate budgets of $500 to $1,000 (29%) and $1,000 to $3,000 (28%) annually for L&D. Notably, 15% of companies invest over $5,000 per employee in training and development. In 2020, over a third of global L&D experts faced budget challenges, citing a lack of funds as the primary obstacle.

However, 67% of surveyed HR managers anticipating an increase in L&D budgets. Despite progress, challenges persist, as 52% of HR managers encounter resistance when seeking budget approval, and 54% of them note that leadership often views L&D as a cost rather than an investment.

What we learned in 2023 to redesign L&D for 2024

Wrapping up 2023, stats demonstrate that companies wanted to link training with business goals and boost employee skills. But, there was a drop in how well these plans matched up with what organizations really needed. Managing L&D training budgets became tricky, and there were issues with workplace tools and doubts about using AI wisely.

Let’s delve into each of the most prevalent issues. And with those lessons in mind, we can start redesigning L&D for 2024.

Aligning business goals and L&D

In 2023, companies aimed to align learning programs with business goals, enhance employee skills, foster a culture of continuous learning, and boost employee retention. A notable 87% of organizations aspired to build a people-centric future and turned to L&D for support. Job skill requirements have already shifted by approximately 25% since 2015, and experts anticipate this number to double by 2027.

In 2021, 77% of survey respondents thought their L&D strategy was aligned with organizational and people priorities. Two years later, though, 67% agree there’s an alignment. Therefore, in 2024, companies need to work harder to align L&D with business goals. Additionally, leaders are now less inclined to recognize the impact of L&D on these priorities, with a decrease from 81% in 2021 to 67% in 2023, according to the CIPD.

In 2024, companies will prioritize aligning learning with business goals. There will be a shift toward making learning initiatives directly contribute to business objectives by integrating them into daily work. This will help organizations better adapt to industry changes, maximize ROI on training investments, boost employee engagement and satisfaction, plus strategically develop talent.

Handling L&D budgets

Forty-six percent of L&D professionals lack clarity on their spending per employee, as revealed by CIPD. This confusion is linked to a 53% increase in workload, potentially leaving practitioners overwhelmed. Factors such as reduced reliance on external suppliers and a quarter’s increased dependence on in-house expertise contribute to the spending ambiguity. Moreover, close to a third report adverse effects on their physical and mental wellbeing due to the heightened workload.

On a positive note, the same CIPD report indicates that 69% of respondents witnessed either an increase or maintenance of their training budget. With 41% expecting more spending power, according to LinkedIn’s research.

There is a need for clearer training budget management and increased spending power in 2024. L&D professionals will aim for clarity in spending per employee, addressing the confusion highlighted in 2023. Despite increased workloads, there should be a focus on maintaining or increasing training budgets. This change suggests a better understanding of the financial aspect of L&D.

Making tech knowledge more accessible

Creating obstacles in the quest for knowledge is as simple as introducing friction. Which harms how learning is perceived and decreases the likelihood of future learning endeavors.

This issue is rooted in two main problems: the lack of consistency in the tools being used and the overall perception of the value of the tech stack. 67% of individuals expressed dissatisfaction with their current workplace tools and technologies, facing challenges with existing solutions. Additionally, 35% believe there’s a need to minimize the number of apps and tools required for their work.

Companies address dissatisfaction with workplace tools and technologies in 2023. Now organizations are recognizing the need for consistent tools. So, there’s a push to minimize the number of apps and tools, acknowledging that accessibility and value perception impact the effectiveness of training efforts.

Using AI more purposefully in L&D

Google searches for AI learning and related terms show a consistent upward trend, indicating a growing interest among L&D teams. However, there’s a crucial moment approaching when the use of AI needs to shift from being a novelty to being purposeful. The message is clear: L&D should stop using AI just for the sake of it and focus on solving real problems.

Having AI doesn’t mean it should be used without considering the actual needs. The key point is that if the basics aren’t right, AI will only magnify existing issues. Meaning, using AI without the right skills and strategy can create more problems than solutions.

Approximately 67% of employees surveyed need training in utilizing new AI tools. People do show enthusiasm to integrate this emerging technology into their daily tasks. However, they can’t keep pace with the latest developments. Why? Only 51% of them report that their company updates them about how AI can influence their roles.

From novelty to purposeful application of AI in L&D is the main focus in 2024. While interest in AI is growing, the emphasis is on using AI purposefully to solve problems. Simply having AI is not enough. It should align with the organization’s needs, focusing on the fact that incorrect implementation can exacerbate existing issues rather than provide solutions.

Time and engagement are barriers to learning

The CIPD report delivers some not-so-great news. It says time and engagement are the big problems for L&D in supporting goals. Why? Mostly because higher-ups in the company aren’t fully on board.

Time is a hurdle because many companies don’t blend learning into everyday work. If you can quickly find useful info to solve a problem, learning doesn’t take much time. But here’s the catch: engagement drops because L&D teams focus on creating content. They’re surprised to find nobody engages with it. Why? Because it’s often the wrong content at the wrong times. If it’s not right in the moment, it feels like a distraction.

With many employees feeling learning was disruptive, in 2024, there will be an increased focus on integrating learning into everyday tasks. Organizations prioritize seamless integration of learning into their daily routine, ensuring that learning is timely and relevant to avoid disengagement.

Insights and best practices: Optimizing your training budget in 2024 for maximum impact

How to allocate your training budget in 2024

In the dynamic landscape of 2024, companies are redefining their strategies for workforce development. As organizations navigate evolving industry demands, the allocation of the training budget in 2024 becomes a pivotal decision.

To better guide this investment, let’s look at key focal points that businesses should prioritize. From embracing AI-enhanced learning platforms to honing in on future-centric skills, let’s outline strategic areas to ensure training initiatives meet the current needs of the workforce. Plus, prepare teams for the challenges and opportunities ahead.

1. AI-enhanced learning platforms

Allocate a significant portion of the training budget to cutting-edge learning platforms that harness the power of AI. These platforms use artificial intelligence to analyze employee learning patterns and preferences. This will help businesses tailor training content to meet individual needs.

By investing in such platforms, organizations ensure the training material isn’t generic but personalized, maximizing engagement and knowledge retention.

2. Skills of the future

Direct resources towards courses that focus on the skills needed for the rapidly evolving landscape. Consider offering training in data analysis, soft skills, and AI applications. This strategic move ensures your workforce is equipped with the expertise needed to follow the ever-changing demands of the industry. All while staying competitive and innovative.

3. Employee wellbeing programs

Prioritize employee wellbeing by allocating your training budget in 2024 for comprehensive wellbeing programs. And include mental health support mechanisms. Recognize the connection between a healthy, supported workforce and productivity. Investing in the mental and emotional health of employees contributes to a positive work environment, reduces burnout, and enhances job satisfaction.

4. Blended learning approaches

Recognize the diverse learning preferences within your workforce by incorporating a blend of virtual and experiential learning methodologies. Allocate training budget to create a versatile learning environment that accommodates different learning styles. This approach makes training effective and flexible, promoting active engagement and understanding.

5. Upskilling and reskilling initiatives

Stay ahead of industry shifts by dedicating resources to upskilling and reskilling initiatives. Identify the emerging skills needed within your sector and provide targeted training. This proactive approach allows your workforce to remain adaptable and well-equipped to meet the evolving demands of the market.

6. Continuous learning culture

Invest in mentorship programs and peer-to-peer knowledge sharing to cultivate a culture of continuous learning. Your training budget in 2024 should include initiatives that promote ongoing learning beyond formal training sessions. This creates an environment where employees are motivated to learn from each other, fostering a collaborative learning culture with sustained skill development and knowledge sharing.

Adapting to change: The flexibility imperative in training budgets

Overall, the success of training initiatives depends on the flexibility of training budgets in 2024 to meet the ever-changing landscape of business and employee needs.

A nimble approach allows organizations to pivot swiftly, embracing emerging technologies, addressing skill gaps, and prioritizing employee wellbeing.

By fostering a continuous learning culture supported by adaptable financial strategies, organizations can navigate the present challenges and thrive in the dynamic workplace future.

Improve your employee, partner and customer training with our enterprise-ready learning management system. Book a demo now and see why our diverse portfolio of customers consistently give us 5 stars (out of 5!)

Book a demo