Training Budgets How Much Are Companies Investing

Almost everyone agrees that training budgets are tighter than ever before. That’s not to say that lots of money isn’t being spent, or even that increases aren’t evident in some cases. According to a June 1996 article in Across the Board, a magazine published by the New York City-based Conference Board, American business invested an estimated $30 billion in training in 1996. Late last year, Omnitech Consulting Group, based in Chicago, predicted a sharp increase in corporate spending for multimedia training budgets in 1997. Nevertheless, managers everywhere want to get much more mileage out of their training dollars than ever before.

June Maul, district manager of development and multimedia development for Basking Ridge, New Jersey-based AT&T, says, “As in most other organizations, our training budget is declining. As more corporations are looking to reduce costs, they’re also trying to make sure people get only the training they need.” AT&T’s School of Business and Technology, which Maul oversees, deals in part with its budget constraints by charging its employee-students for the courses they take. Rates, according to Maul, tend to be between 10 percent and 20 percent lower than alternative institutions might charge.

Northern Power’s corporate university system is helping save the company money, according to Mark Fritsch, director of the Minneapolis-based company’s Quality Academy. “We’re probably doing 20 percent more training with 30 percent less resources,” he claims. “Consolidating different training groups in areas that had some redundancy is one way. Also, by measuring the processes of our training, such as looking at what goes into needs analysis, helps us get better at delivering high-quality training in a short period of time, for a very low cost.”

Lynn Slavenski, vice president of education and organizational development for Atlanta-based Equifax, acknowledges that her company also is concerned about cost control, as evidenced by its cost-efficient use of grad-school interns. But she also stresses that budget takes a back seat to needs. “If we need it,” she points out, “we do it. Lots of organizations are realizing that learning is their competitive edge-more than ever before. As long as training departments concentrate on strategies and organizational needs, and work closely with senior officers to make sure they’re on target, then they can usually get funding.”

Not every organization is downsizing its training budget, however. Some are even coming back from sharp cutbacks, and reinvesting heavily in new training. “We believe we may have underinvested in training the past few years,” says Steve Wood, Spartanburg, South Carolina-based Flagstar’s senior vice president of HR. “One thing capital should be used for is more training. In the hospitality industry, what our guests tell us about the quality of service is just as important as the quality of the food we serve.”