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Training budget apportionment


We are currently investigating the possibility of running our internal training department as a cost recovery centre. Individual business units would call off training services (courses, coaching, consultancy, etc.) and pay for them on an as-used basis. This would include corporate programmes such as company-wide management development, 360 feedback, opinion surveys and so on. Does anybody have experience of implementing such a scheme and what pitfalls do you foresee?
Terry Hodgetts

4 Responses

  1. There are easy ways and hard ways
    My experience of this was that when the line has to pay for the servcies of the training function they a) became far more reluctant to actually use it
    b) they started horse trading with external suppliers
    c) they became irrationally demanding in terms of the extra costs, eg accomodation etc.

    All these things make the training managers life more difficult but then life wasn’t meant to be easy!

  2. Training: user-pays basis
    I agree with Russel. In times of budget restraints and tightening of operational belts in many sectors, I believe training would be way down the list of priorities of individual business units if the option was to use the existing budget to fund projects which would more easily produce measurable business results.
    In my organisation we have moved across to a ‘bidding system’ – I hold centrally a fixed amount of funding and its use is determined by the business unit managers collectively rather than just myself (brings more democracy into the process and gets people thinking about the benefits for the business as a whole rather than “what’s in it for me/my unit”

  3. Costs and Benefits
    We can echo Russell’s experience as we have received work through competing with internal training facilities.

    Some of the more positive examples of clients have shown that where individual budgets are applied and ‘paid’ to internal functions the demands often raises the standard of internal provision.

    We provide study materials, resources, PowerPoint packs, and tutor manuals to internal provision in areas where to develop their own materials is too costly.

    The internal function can then offer more subject areas and just use external sources for the accreditation and materials. Thus the competitive element is removed.

    I would take accomodation out of the equation for internal training as it nearly always causes friction.

    Additionally our research shows that when managers are asked to reduce budgets training is the most popular for first ‘chop’. Business training for business increased performance is crucial and return on any investment is a fundamental requirement for this change.

  4. Experiences
    I assume that your currently centrally held training budget would revert to the business units and they would then use it to purchase training.
    I have lived through this in a coupl eof organisations. issues that arose included:
    1. It’s a big culture shift for some – they regarded central training as “free” and felt hard done by;
    2. Corporate policy needed to put boundaries around some training to safe guard Training staff jobs – ie Business Units must buy certain types of core training centrally.
    3. Business units with common needs can get cost efficiencies through collaborating and using central training unit to organise and manage (either internal and external delivery)
    4. Training staff need intensive internal professinal development work to shift to a “consultancy model” where business units are clients – ie they need to be able to deliver efficiently and get results – their jobs depend on good customer service.(ie they need to develop consultancy / client service capabilities- not just training skills)
    5. Corporate policies to back up mandatory use of the distributed training budgets.


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