Why Do Some Companies Overlook Training Budgets? HR Pros, Share Your Insights!

In this competitive edge, we HR professionals understand the importance of the Training and Development function in industries, but some companies (even though they are multinationals) don't understand the importance of training for enhancing required employee skills and development. This is a challenge for HR in many companies. These companies have a training budget, but the management doesn't have time to utilize the budget effectively, or they don't want to spend money on training.

Kindly provide your valuable insights to overcome this challenge.

Thanks in advance.

Dear Vishal,

This happens because merely having HR understand the requirement for training is not sufficient. Your top management also needs to understand. But how can they grasp the importance of training?

For this, HR first needs to work out the revenue leakage due to skill shortages, attrition, etc. Just yesterday, I visited one of the companies. During my cursory visit, it emerged that since the warehouse staff was making mistakes in order picking, they were losing Rs 5,000/- per day.

Now, the target is how to reduce this revenue leakage. HR should present the case for training in the form of a business case. Management will accept it only then.

The other methods of calculating costs include scrap generated, rework, excess hours of work or operations, machine downtime, workers remaining idle, etc.

A large number of times, I found even senior HR managers were not aware of this revenue leakage. When they talked to me or called, the first question they asked was how do I conduct the training, whether my training has games, if the training is interactive, etc. Not many HRs asked me whether my training will help in reducing the cost! This lack of commercial sense among HR is a major challenge.

Ok...

Dinesh V Divekar

"Beware of false knowledge; it is more dangerous than ignorance."

Thank you very much for your reply and your valuable inputs for this post. I completely agree with your approach towards training. Yes, we HR professionals must do that exercise first and treat training like a business in the industry.

We know this and keep it somewhere in mind, but we must be very positive and try until the management is convinced and develops a learning culture. In our company, even though it is a very good MNC worldwide, our unit in India had some personnel functions and didn't have HR implemented until a year ago. Hence, we implemented the same almost, but it took us a year to develop a culture of Training & Development in the company, and we are yet to be fully effective in this aspect.

Thanks once again.

Regards,
Vishal