Module 4/6 25 min
Training budget: build and defend
Step 1 / 3·Three budgeting methods
0/3 steps done
Learning objectives — after this module you will:
- Compare 3 training-budgeting methods
- Allocate budget deliberately by category
- Defend the budget with a business argument
Learn ~7 min
Three budgeting methods
Choose the method that fits your organization's maturity.
3 training-budgeting methods
| Method | How it works | Pros / Cons |
|---|---|---|
| % OF PAYROLL | Take 1–3% of payroll as the budget (a common industry benchmark) | Simple, easy to benchmark / Not tied to real strategic needs |
| BOTTOM-UP | Sum up needs from departments | Close to needs / Always balloons; whoever asks loudest gets most |
| PRIORITY-BASED | Budget follows the 3–4 pillars of the strategy house (Course 1), each with a business case | Tied to strategy, easy to defend / Requires a clear TD strategy and the discipline to say no |
In practice, mix them
Use % of payroll to set overall SIZE and benchmark the industry; use priority-based to ALLOCATE inside. Use bottom-up only to gather signals, not to decide — otherwise the budget flows to whoever asks loudest, not where strategy needs it most.
A reference allocation structure
- ~60% for strategic pillars (leadership pipeline, strategic capabilities)
- ~25% for mandatory operations (safety, compliance, onboarding) — non-negotiable
- ~10% for emerging department needs (a flexible fund with criteria)
- ~5% for experiments (AI, new formats) — an innovation fund, accepting controlled failure
Key takeaway: % of payroll sets the size; priority-based allocates inside; keep a 5% experiment fund.