The Union Budget of India 2019 is set to be announced this Friday, the 1st of February 2019. And, as the entire nation waits in nervous anticipation for the D-day, we take a look at how annual budgets in an organization impact some of the important functions, especially HR and learning & development.
Annual budgets are an integral part of the overall planning, be it on an individual level or for SMBs or big MNCs; everyone understands the value of prioritizing and distributing their finances effectively. But, budgeting is a rather complicated process, given the difficulties in assigning appropriate values to different priorities, especially when it comes to business functions like HR and L&D, which have always struggled to quantify their efforts in terms of ROI and business growth.
With workplaces evolving rapidly and newer technologies emerging on a daily basis, business processes are experiencing major obstacles adapting to the changing skill demands, just as India’s workforce is feeling the pressure to adapt to the changing skill preferences. As a result, L&D and HR professionals are left in quite a conundrum while zeroing down on budgeting priorities, especially when business leaders are demanding more returns for their annual expenditure on the respective functions.
But, before companies can gauge the ROI from these functions, it is necessary for leaders to truly understand the learning budget as it leverages resources almost across the whole organization, as well as external resources, including resources such as workforce, technology and content.
Learning budgets have interestingly evolved over the past few years, growing beyond the traditional Learning Management System (LMS) towards an array of technologies like Artificial Intelligence, Machine Learning and reporting & analytics that complement the LMS. All of this essentially translates into inflated budgets, especially when L&D budgets are feeling stretched altogether.
According to Brandon Hall Group’s Training Benchmarking Study, organizations spend between USD 100 to USD 1000 per learner annually. Although this amount fluctuates depending on the size of the organization and the training needs or the workforce, it is still quite straightforward to estimate the annual expenditure over L&D. As a result, it has become increasingly critical for L&D leaders to get the most out of the assigned budget and look at innovative ways to further the talent development process. But there are only so many ways to squeeze every ounce out of your L&D budget, especially when the finance department scrutinizes your each spend. Such scenarios then point to the fact that organizations are limiting their employees’ learning experiences, and hence need to prioritize L&D during their annual budgeting process.
It is also important to understand that the L&D budget is affected by several factors, the most pressing one begin the constantly evolving learning landscape. Organizations are rapidly shifting from traditional training methods towards newer, technology-based experiences, resulting in a gap in the way learning is measured. For example, companies could calculate how much ‘an hour of learning’ would cost, but now with micro-learning, video-based learning, the learning ecosystem has changed incredibly and the measurement scale just doesn’t hold up. On the other hand, L&D leaders need to assess the measurement methods and apply them to the ‘creation of learning experiences’. Thus, by assessing the time taken to create as opposed to time taken to consume, L&D leaders can have better clarity on their budgetary requirements.
A nation’s annual budget also more or less affects the training and skilling demands of the workforce, especially in a country like India, where 5 million more individuals are seeking jobs. Speaking strictly in terms of the upcoming budget, the government is still delivering on its earlier promise of ‘job creation’, where it launched several initiatives, including Make in India, Digital India, Startup India and Skill Acquisition and Knowledge Awareness for Livelihood Promotion Program (SANKALP), to create more job opportunities for India’s growing workforce, with the Skill India program spearheading the mission to ensure that workforce is adequately skilled to get well-paid and satisfying employment. With an investment of over Rs. 4000 crore, these programs were to provide proper training and up-skilling opportunities to more than 350 million individuals. Likewise, the 2019 budget is also positively aligned towards creating better skilling opportunities in accordance with industry demands.
Taking into account the budgetary subsidies, skilling initiatives are also set to get a major boost by leveraging e-learning platforms. Companies engaged in developing e-learning platforms (LMSes) can meet the demands of the workforce by utilizing latest technologies to make skill development as engaging and productive as possible.
In my opinion, given the recent state polls, the government is under immense pressure to use this interim budget to make it a more populist budget. Keeping the upcoming general elections in view, there are strong chances the government will use the interim budget to announce sops to address the growing unemployment in the country by investing in skilling and training programs. However, with lower than expected GST collections, will the interim budget be a pragmatic, prudent or a populist one, remains to be seen.
Over and above, be it an organization or an entire nation, as the learning landscape keeps evolving, it is critical to take a hard look at L&D budgets in order to meet the rising demands of the marketplace. Because, as older and more traditional learning technologies are incapable of delivering more diverse and effective learning experiences, a limited and stretched L&D budget is incapable of keeping up with the growing needs of the modern learner.