Personal learning budgets (PLBs) have many names and come in various forms.
You may know them as learning stipends, development budgets or even L&D allowances, but what you call them doesn’t matter half as much as the amount you’re putting into your people’s pockets.
50, 100, 500, 1000, unlimited? We’ve seen it all and each amount works differently for the business implementing it.
While we can't tell you right here, right now what personal learning budget amount is right for you, we can give you five guiding principles to inform your decision and set you up for success.
1. Does Your Company Have an L&D Budget?
If the Answer is Yes…
Looking at your company’s L&D budget is the first step to knowing what learning budget amount is possible for your people.
These are some things you’ll need to consider:
- What is the budget currently being spent on?
- Is there anything you want to continue to spend budget on?
- Is there anything you want to stop spending budget on?
From there you can determine what of the L&D budget is available for your people’s learning budgets.
Often companies will spend a significant amount of their L&D budget on company wide subscriptions to learning providers. Cutting back on these can be a great way to free up cash for your people to use.
The odds are, most of your people won’t be engaging with them anyway and the money is wasted. If you take that wasted money and give it to your people, they can buy subscriptions, books, courses and other learning resources that they’ll actually use.
If the Answer is No…
For some companies, especially start-ups, deciding to allocate PLBs is the first step they take toward implementing any sort of L&D function.
So it’s normal that until now they wouldn’t have set aside a budget.
If you’re in a similar position, you’ll need to speak to leadership and finance to see if there’s an opportunity to create a budget now or in the near future. You’ll probably need to wait for a new quarter or financial year to actually introduce PLBs but this means you have plenty of time to determine the right amount and to make a strong business case.
With start-ups and scale-ups, a new fundraising round is a great opportunity to set aside a learning budget. Alternatively, you can approach team leads and discuss allocating budget from their pots to cover the learning costs of their team.
2. What PLB Size Are Your Competitors Offering?
If one of your business goals is to attract top talent, competitive personal learning budgets are a great way to stand out from others in your industry.
Research by McKinsey and Company shows that L&D opportunities rank among the top priorities for job seekers.
Knowing what your competitors offer sets a benchmark that you can either meet or exceed. In competitive industries like fintech, a £500 PLB will be far more attractive to a potential hire than a company that offers £100.
PLBs are far more empowering and attractive than mandated training so showing that you have them signals to prospective talent that you value trust, autonomy and learning in your culture. You can clearly show your PLB and L&D offering on your careers page.
One of our clients, GoCardless, makes it clear on their website that they offer their people a £500 PLB through Learnerbly.
Anyone who applies for a role at GoCardless knows that if successful they will get access to a learning stipend that they can use to develop their skills and advance in their career. It might be the thing that makes them apply for the role over another in the first place.
3. What Does Each Role Require?
Not only do PLBs depend on the size of the company and its L&D budget, but they will also vary according to the skills that are needed to compete and grow.
Some roles require frequent upskilling to keep up with the demands of their industry.
For example, if your company hires software engineers there’s a good chance that they will need bigger PLBs. Engineers need to develop at the same pace as technology and have a budget that allows them to continuously develop.
While there are many free resources out there, there are also many courses and resources for engineers that will require a significant investment. So a software engineer may require a larger learning budget than others in your company.
It’s also important to note that engineers are in high-demand and hard to attract and retain. By giving them a large learning budget you’re showing how much you value them and that you’re willing to invest in their development. This goes for other roles that you are regularly competing for.
It also saves your people the cost of having to pay for upskilling programmes in an industry that requires constant learning.
Your action item here is to identify which roles in your business may need a little more than others and work within your overall budget to accommodate them the best you can. But don’t neglect roles or create too much disparity in budget amounts. Be as open as you can with your people about why the budgets are the way they are and keep it as equitable as possible.
4. Which Skills Do Your People Want to Develop?
Before finalising your PLBs, you need to think about what skills your people want to develop through your company’s L&D offering.
If they want to focus on developing hard skills like video editing, coding, UX design or search engine optimisation (SEO), you will need to set a higher PLB.
This is because hard skills generally require training through accreditations, academic qualifications or longer courses, which tend to be expensive.
Some companies also offer coaching as a way to deliver L&D to their people.
At an average price of £500, the organisation would need to set their PLBs higher than that to allow their people to access these resources.
People skills (also known as soft skills) like teamwork, critical thinking and leadership can be taught through books, podcasts, videos and short courses.
These L&D resources tend to be less expensive and would require a smaller PLB.
On average, our clients spend about £50 on books within the first few weeks on Learnerbly because they’re such an accessible and universal learning method.
This is why we would recommend a PLB of about £400 to ensure that users have enough money left over to spend on other resources such as courses.
5. What Does Your Company Culture Look Like?
PLBs should also be based on what you want to achieve with your company’s culture.
Some organisations simply want to facilitate an opportunity for book clubs and improved productivity which can be accomplished with a smaller budget.
But if you want to foster a learning culture that empowers your people to pursue growth opportunities, then a bigger PLB may be a better fit, providing you have the budget.
This will ensure that your people are able to request different types of resources and develop multiple new skills in a year without too many limitations.
On average, our clients set PLBs between £300 and £500 but sometimes add money to budgets as their people spend to support further learning.
If we see that their people have spent most of their budget after the first year, it’s an indication that there is a demand for more resources.
Larger budgets also allow employees to either really invest in one part of their personal and professional development, or explore multiple upskilling opportunities.
Debunking the Myth of Unlimited PLBs
Some companies maybe tempted to offer unlimited PLBs because it signals a significant investment in their peoples learning and encourages learning on any scale.
Although it’s a good idea in theory, there’s a lot of research to suggest that unlimited policies—such as annual leave and PLBs—have the opposite effect.
When companies offer unlimited paid time off (PTO), they actually find that their people take fewer vacation days.
This is because people either feel that they have not earned the time off, or feel unsure about how much leave they can actually take.
A similar trend happens with unlimited PLBs. Many people don’t use a lot of their stipend because they worry that they will spend too much money.
Is there a place for unlimited personal learning budgets?
That’s not to say there isn’t a place for unlimited PLBs to thrive in your organisation. You can make sure people use their stipends by giving them guidelines on best practices.
For example, you could say that within a quarter they should spend at least £150 and have regular one-to-ones between managers and their direct reports where development is the focus.
What Are the Benefits to Getting PLBs Right?
Let’s look at why getting your PLB amount right is important for your business in the first place.
Improved Employee Engagement
Jobs are no longer just a means to an end. For most people, a great job is one that helps them pay their bills, provides a healthy work-life balance and develops their skills with the future in mind. People can and should get a lot of enjoyment out of their work.
Businesses that prioritise their people’s learning see engagement rates 30-50% higher than those that don’t.
This is because learning cultures encourage people to pursue their development interests, which makes their job more valuable to them.
A PLB is a practical way that you can show your people that you are invested in their development and want to help them become more well rounded.
Not only does this help employees feel more valued, it also enhances their commitment to your company.
Higher Retention Rates
Some companies worry that they’re going to invest in developing their people, only for them to leave the business in the future.
However, research shows that investing in L&D is one of the most effective ways to retain existing talent.
54% of immediate retention is associated with an employee’s belief that the company they work for prioritises their development.
Giving your people PLBs shows that your company is committed to helping them progress in their careers and achieve their goals. One day, they probably will leave and that’s okay! Hopefully you’ve created a work environment that supports that and leaves the door open for talent to return (boomerang employees).
PLBs Promote More L&D
Earlier in this article we mentioned that PLBs empower people to take ownership of their L&D and promote autonomy.
When people have more control over how they spend their PLBs, they are more likely to engage with the learning resources available to them.
This is because PLBs encourage employees to find material that is both suited to their preferred learning style, and will benefit the skills they want to develop.
This allows your people to gain more knowledge, but it also allows your company to benefit from the skills that they learn.
These new skills and learnings can be taught to other members of your company, either through mentorship programmes, reskilling initiatives or conversations and in-the-flow work.
What Happens if You Don’t Get a PLB Right?
You might be wondering what will happen if you don’t set the right PLB amount, and we definitely think it’s important to consider.
It Limits Growth
If you set your company’s PLBs too low, there’s a very good chance that you will limit your people’s access to learning resources.
Not only will this prevent them from developing in the way that they want, but they may also feel that the PLB is a superficial investment in their growth.
By not championing continuous learning through a competitive PLB, it may also mean that your people’s career growth and personal development will stagnate.
This was one of the main driving factors of the Great Resignation that saw people leaving their jobs in droves for better career development opportunities.
It Holds Your Company Back
If your company chooses not to prioritise its people’s learning, it will also have a difficult time keeping up with the ever-changing world of work.
To stay competitive, retain existing talent and provide your company’s people with meaningful career development opportunities—it’s vital that you put thought into what PLB amount will best serve your people and the business.
But don’t worry too much if you don’t get it quite right in the first place, there’s always room to iterate.
Set Your PLBs with Confidence
There is no one-size-fits-all approach to setting PLBs. Only you will know what is best for your company.
The five considerations above should give you a better idea of how to set learning stipends for your people, as well as some of the outcomes your company can enjoy from PLBs.
When people feel empowered to take control of their development, they’re more likely to make the most of L&D resources and feel more engaged in their work.
Not only is this one of the best ways to retain talent, but it also helps your people feel more valued within your organisation.
Interested in offering your people a personal learning budget through Learnerbly?
We manage each budget for you and provide a curated marketplace of top learning resources and providers for your people to spend it in.
Book a call to learn more.
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