According to the 2023 McKinsey & Company report, Elevating Learning and Development, corporate learning needs a revolutionary makeover. An increasingly competitive business landscape shaped by rapid technological advances, multigenerational workforces, and constant uncertainty means knowledge is quickly becoming outdated and has brought the importance of upskilling and reskilling to the fore.
The most important solution lies in an updated and flexible corporate Learning and Development (L&D) plan — because if your employees aren’t learning, they’re not growing, and neither are you.
So, how can organisations optimise their L&D strategies to ensure they get the money they need, and where should they direct their budgets this year? We share insights on this below:
How a smart L&D budget can drive business growth
Unfortunately, when businesses try to cut costs, the L&D budget is one of the first to go. This is an unwise decision that will only hold your company back in the modern work environment. Here’s how your investment in L&D can loop back into your business.
Improves Employee Engagement
Investing in individual team members’ careers through reskilling or upskilling drives employee engagement, which improves performance and productivity. The PwC 2020 Global Digital IQ survey shows that 86% of respondents said their digital training and education programmes have improved employee engagement and performance.
Boosts productivity
When you give your employees the tools and skills they need to streamline everyday work (e.g. learning to automate processes that eliminate repetitive daily tasks), they free up time for function-specific creative problem-solving and collaboration.
This allows them time to innovate and deliver better customer value while advancing their careers. Another report by PwC showed that 93% of CEOs who have implemented upskilling programmes have seen increased employee productivity.
Enhances business agility
The pandemic brought forward major business practice vulnerabilities and highlighted the need for flexibility. Through skills development, leaders can drive agility and resilience within their organisation and ensure that their workforces are multi-skilled, diverse, and able to meet varying demands.
Consumer behaviour is also undergoing big shifts, especially in how they complete financial transactions. This means everyone working in the retail and finance industry, from customer service to IT, needs to learn new interpersonal and practical skills for the company to be competitive.
Attract and retain top-level talent
Companies that invest in their people’s development build up a solid reputation, making them attractive to top talent who prioritise workplace well-being. When you invest in furthering their learning, it increases employees’ loyalty and reduces absenteeism. People go (and stay) where they feel valued.
How to negotiate a higher budget for L&D
Buy-in from leadership requires communicating the Return on Investment (ROI) — a well-skilled, engaged workforce that delivers high-quality work and shows increased performance. Training and retaining the top talent sharpens the competitive edge and encourages investment, and here’s how you can achieve that in your company:
Intentional and pragmatic L&D: Those involved in L&D planning need to work more closely with business leaders to ensure they understand the business’s needs and goals. You need to justify why a training programme is the recommended solution to a business problem.
Personal development for professional growth: Engage employees regarding what they need to be more productive and effective (they should all have a Personal Development Plan) and where their knowledge and practice gaps are. This goes hand in hand with conducting a work and a company-wide skills gap analysis.
Data is key: Continuously collect and analyse data to use in your pitch alongside the stats in the reports linked in this blog. You can collect data through focus groups, observations, questionnaires and interviews, reports, KPAs, and performance appraisals.
Choose the best L&D partners: Work closely with training and development providers to ensure the training content matches the job requirements. A senior employee (or in-house subject matter expert) can help you identify appropriate content, as can a MasterStart consultant specialising in skills development and category B learning programmes.
Once these factors are locked down, you can hone in on the ROI of training by separating vanity metrics from effective business metrics. For more on what this means and how to do it, read How L&D Contributes to Business Objectives.
What should you do if your L&D budget is cut?
First, don’t panic. If your bosses remain unmoved by the fact that skills development will mobilise your workforce, drive your business goals, and boost economic transformation, or if the company finances are such that an L&D budget cut is in the works, you have other avenues.
One is Section 12H of the Income Tax Act, a tax incentive consisting of annual and completion allowances that provides payments per learner based on factors such as the NQF level of the qualification, the start and completion of the learnership, and learners with disabilities. Read more here and note this allowance has a sunset clause of 1 April 2024.
Then there are the Mandatory and Discretionary Grants available from the various SETAs, allowing companies to recover the funds they pay as their Skills Levy. These grants can cover the costs of your internal and external training.
Other options include offering internships and apprenticeships (they contribute to the B-BBEE Skills Development scorecard) and setting up a mentorship, work shadow, or volunteering programme.
Finally, there is the Internet. Remember that not all training takes months and costs an arm and a leg. Look for online courses on advanced topics that may be particularly relevant for mid-level managers, such as data analysis, negotiation, or conflict management skills.
Where should you direct your L&D budgets this year?
To find the answers, we hosted a Workplace Learning and Skills Development Trends webinar where we asked industry leaders and our most experienced voices the hard questions about L&D in South Africa. We covered the critical skills needed right now, how to align training programmes to business goals, and how digital transformation, B-BBEE compliance, and industry-specific training needs influence L&D strategies.
Being at the frontline of skills development in South Africa, we are excited to assist businesses in taking L&D challenges head-on in 2024. Read more about where to direct your L&D budgets in the report here.
