Winning L&D Budget Approval

Winning Learning and Development Budget Approval

Developing and Delivering a Compelling Business Case for Learning & Development Programs

By: Judith Kors – Rhodes Business School

Are you finding that your Learning & Development budget has been shrinking? That winning approval for your training strategy has required far greater sales skills?

As any experienced, professional salesperson will tell you, good sales skills are not enough to win the approval of your customer (for the typical L&D Manager this being the HR Manager, CFO, or the entire C-Suite). You need to be able to build a compelling business case based on facts, good analysis, and a provable return on investment (ROI).

This article aims to provide you with the key steps for developing and delivering such a business case. When combined with some basic sales and presentation skills, this will help you win ‘buy in’ from those holding the purse strings so you can achieve all of your organisational capability goals!

Important info

Before you get started on putting your L&D business case together, there’s some important bits of information you need:

  1. You need to understand both your organisation’s recent (past 12-24 months) training spend AND the industry training spend trends in the same period*. This will help gauge how your proposed spend will be received and to show how your spend (and subsequent capability development) compares to that of your competition
  2. Then find out what the “spend” has been spent on (e.g. face-to-face training, online, distance, etc)
  3. Identify and understand the priorities of the C-suite (and, in particular, those of the CEO and CFO – e.g. reduce operational costs, increase productivity, expand operations, etc) so you can align your strategy and business case to them
  4. You need to fully understand the four critical elements of developing a learning and development business case

*Australian industry spend trends can be found on the Australian Bureau of Statistics website – www.abs.gov.au/AUSSTATS 

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The four key steps of a learning & development business case

Once you understand the above, you can get started on your training business case, which will comprise of four fundamentals steps:

  1. Identifying and defining the business requirement(s)
  2. Identifying and analysing the various solutions available
  3. Developing the training business case
  4. Delivering the training business case

Be warned – missing any of these steps can significantly reduce the chances of success! 

Step 1 – Identify and define the business requirements

  • Identify the opportunity or issue needing to be resolved (NB. based on the information you gathered before starting to develop your business case, the results of the solution should be closely aligned to organisational/C-suite goals and priorities)
  • Clearly describe the opportunity, result, and benefits that your proposed solution will provide in both capability and financial terms. For example ‘Increase productivity by a minimum of 17% resulting in a return on investment of a minimum of $3,000,000 per annum’ 

Step 2 – Identify and analyse the various solutions available

  • Consult the workforce members most affected by the opportunity or problem for their input and thoughts on the best potential solutions
  • Collect, define, and analyse information on each proposed solution
  • Where possible, identify and analyse relevant internal and external case-studies. Tthis information will both help you decide if the solution is viable AND, if it is, support your business case
  • Seek the input and advice of other L&D Managers – internal and external – that have had to resolve similar issues
  • Compare the various options in terms of benefits, risk, finances, and ease of implementation (for the finance aspects, consider the likely ROI and ‘payback period’)

A simple way of comparing different solutions includes the following tables:

Example table 1 – New training program return on investment example

Situation: It has been identified that poor leadership skills in frontline and middle management are resulting in high turnover of frontline staff. A leadership training program is a possible solution for reducing turnover.

Year  Training Investment  Current cost of employee turnover (lost activity, lowered production, recruitment costs, etc)  Turnover cost if reduced by just 10%  Return on investment 
 1 $150,000 (including implementation costs)  $2,500,000  $2,250,000  $250,000 
2  $100,000  $2,500,000  $2,250,000  $250,000 
3  $100,000  $2,500,000  $2,250,000  $250,000 
Total  $350,000  $7,500,000  $6,750,000  $750,000 
  •  Calculate the net benefit (the total financial benefit minus investment costs) – $750,000 – $350,000 = $400,000
  • Calculate return on investment (net benefit divided by the program cost) – $400,000 ÷ $350,000 = 1.14
  • Multiply by 100 to get the percentage of return on investment – 1.14 x 100 = 114% (i.e. the programs returned an ROI of 114%, so every dollar spent returned $2.14!)

NB: A ‘breakeven’ result would be 0% ROI

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Example table 2 – Alternative training solution comparison

Year Current Solution Investment P/A Alternative Solution Investment P/A
1  $1,000,000 $500,000 (including implementation costs)
2  $1,000,000 $400,000
3  $1,000,000 $400,000
Total $3,000,000 $1,300,000
Annual participant numbers 500 750
Average Per participant p/a $6,000 $1,733
  • Calculate the cost of the current solution per month – $1,000,000 ÷ 12 months = $83,333/month
  • Divide cost of the alternative solution by the monthly current solution cost – $1,300,000 ÷ $83,333 = 15.6 months to payback
  • Savings over three years: $3,000,000 – $1,300,000 = $1,700,000
  • Savings % over three years: ($1,710,000 ÷ $3,000,000) x 100 = 57%
  • Annual average savings per employee Average = $4,267
  • Additional employees trained p/a = 250

NB. The above example does not take into account savings gained from any reduction in training time the alternative solution may present

Financially unquantifiable benefits

Whilst it’s helpful to be able to put a financial value next to any proposed learning and development strategy, there are some elements that are extremely difficult to measure financially. However this doesn’t mean that they are not ‘of value’ and are therefore an important inclusion in any compelling L&D business case.

Some examples of common unquantifiable training program benefits include but are not limited to:

  • Increased workforce engagement levels
  • Flexibility in training delivery methods
  • Improved organisational reputation and brand perception
  • Increased opportunity for industry awards
  • Increased consistency of training content
  • Improved reporting systems and procedures
  • A safer workplace
  • Reduced carbon footprint 

Identify and analyse risk

As with any proposed strategy, it is important that any potential risks are identified, analysed, and mitigation measures considered. Some examples of the needs and suppositions as well as the probability of risk to each option include:

  • Participant availability
  • Attitude to change
  • Stakeholder support (e.g. managers, customers, etc)
  • Scheduling issues
  • Available training resources
  • Available technologies
  • Industry and/or local regulations
  • Economic considerations

Selection summary

To identify the best solution you must, consider the key elements of the following:

  • The financial ROI
  • The unquantifiable benefits
  • The risk level

Then seek the opinion of others whose judgement you respect and whose advice has value.

Step 3: Develop your winning business case

Once you’ve gathered the information from steps one and two, it’s time to actually develop your business case.

In order to clearly get your message across clearly and succinctly, it’s important to use a format with a simple and clear structure and that includes the following:

  • An overview of the current issue
  • An overview of your analysis and your recommended solution
  • A proposal summary

Overview of the current issue

This is your opportunity to grab the attention of the key decision makers and ensure their engagement in the rest of your presentation, you must therefore:

  • Clearly describe the current situation/problem and explain how your proposed solution solves the issue (or exploits an identified opportunity).
  • Provide a summary of the alternate solutions in a simple chart that clearly compares the financial analysis, the unquantifiable benefits, and possible risks of each option
  • Identify and stress the cost of NOT addressing the issue
  • Where appropriate, graphs are a highly effective way of showcasing the benefits of your recommended solution

Overview of your analysis and your recommended solution

Once you have clarified the issue, it’s important to provide information that supports your solution and provides more detail about its implementation. This may include:

  • Required resources, key implementation milestones, target completion date, etc
  • The inclusion of industry benchmarks to show how it compares to other ‘best in class’ solutions
  • Recommended services provider(s)
  • A recommended date by which time a decision should be made and a date that implementation should be commenced by (and the possible/probably ramifications of not doing so)

Proposal Summary

The proposal summary is your final opportunity to gain the required approval and commitment of the key decision makers to implement your recommend solution. It’s therefore extremely important to close the presentation of your business case as strongly as you began it by clearly recapping the organisational benefits (culturally and capability-wise as well as financially) of your strategy.

You should therefore aim to summarise your entire proposed solution (in an easy-to-read format such as bullet-points) on a single page or slide clearly showing how it aligns to organisational goals.

The summary should therefore succinctly include:

  • The situation – what is the issue?
  • Recommendation – what is the best way of solving this issue?
  • Benefits – how will the organisation benefit?
  • Consequences of inaction – your estimate of the cost of NOT investing in the proposed solution

Step 4: Deliver your business case

Whilst the data that you’ve collected, analysed, and presented is essential to winning support for your recommendations, it’s important that you ‘sell’ your proposed solution to the key decision makers.

Here are some tips:

  • Plan your delivery format. Keep it concise and to the point (don’t let yourself get off point and/or ‘waffle on’)
  • Plan the time, date, and place to best suite your audience (you don’t want decision makers to feel ‘put out’)
  • Develop your presentation skills – speaking clearly, succinctly, at an appropriate pace, etc
  • Developing your negotiation and influencing skills
  • Anticipate difficult questions and prepare answers for them
  • Consider additional resources that might be required for you presentation such as projectors, spread sheets, supporting statements, assisting colleagues, etc
  • Practice your presentation in front of people able to provide informed feedback

ARTICLE WRITERS NEEDED! Do you have something you’d like to contribute to Training Matters? If so, we’d love to hear from you. Please email us at AustralianLDN@yahoo.com.au or call 0412 299 181.

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2 thoughts on “Winning L&D Budget Approval

  1. Pingback: The bare basics of developing a Learning & Development stratgey | Training Matters - The Australian Learning & Development Network Magazine

  2. Pingback: Australian L&D Network Free Event Alert – ‘Presenting to Influence’ (Presentation skills for L&D Professionals) – Brisbane – 27/11 | Learning Matters - The Australian Learning & Development Network Magazine

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