Article Summary
- Employee development plans improve skills, engagement, and overall business performance
- Investing in training helps attract and retain top talent while reducing hiring costs
- Effective plans align employee growth with company goals and future needs
- Key components include goals, training resources, timelines, and evaluation methods
- Budgeting should account for all training costs, including courses and tools
- Common budgeting methods include percentage of payroll, per-employee, or goal-based approaches
- Tracking outcomes ensures training investments deliver measurable business value
How to Build an Employee Development Plan into Your Business’s Budget
Since talented and effective employees are central to the success of every business, it makes sense to have an employee development plan. As Harvey S. Firestone, founder of the Firestone Tire and Rubber Company, stated, “The growth and development of people is the highest calling of leadership.” And American businessman Henry Ford, offered humorously, “The only thing worse than training your employees and having them leave is not training them and having them stay.”
The Benefits of an Employee Development Plan
The benefits of an employee development plan include:
- Sharpen employees’ skills. The business marketplace continues to evolve. Thus, to remain competitive, every business must invest in helping employees improve their capabilities and develop new tools for effective performance.
- Boost employee confidence and engagement. Effective training and development produce more confident employees, who then bring renewed energy, creativity, and motivation to their roles.
- Attract new talent. Most job seekers choose an enterprise that provides and prioritizes employee training over an enterprise that does not.
- Retain talent. An employee development plan enhances employee retention because it adds to the reasons that employees feel valued, heard, and supported.
- Achieve high-priority goals. Well-designed professional development is development that is customized to address specific challenges and thus, to meet an organization’s high-priority goals.
- Save a business money. Investing in a training plan can empower employees to hone new skills and extend their talents across various areas. And retaining well-developed employees saves the business money on recruitment and onboarding costs.
- Shape an organization’s future. Training helps prepare an organization for tomorrow.
How to Create a Successful Employee Development Plan
A successful employee development plan should be intentionally created based on four principles. First, in addition to appropriate skills, the plan should enable employees to develop resilience. Second, the plan should be designed for personalization. Third, it should enable different styles of learning. Fourth, it should incorporate mentorship.
The plan should include these components: goals, developmental activities, training and development resources, a timeline, an appropriate business budget, and an evaluation protocol.
How to Build an Employee Development Plan into Your Business Budget
- Determine your training needs. That includes identifying your strategic goals and organizational needs, including assessing any current skill gaps.
- Choose the right mix of developmental activities. These include experiential, social, and formal activities.
- To build a realistic business budget for training and development, you must account for all direct expenses, including course fees, licensing costs for Learning Management Systems, instructor fees, and certification exam costs.
- Implement a budgeting method. The options are first, a percentage of payroll, second, a per-employee amount, and third, an objective-based budget.
- Track and evaluate business outcomes to ensure the investment is paying off. Training and development expenses should be identified as specific line items in your budget. Metrics should be identified and tracked to evaluate your training plan.
- Utilize a professional accountant to help you budget these expenses and evaluate the program outcomes.
Seek Professional Accounting Assistance
Contact Orcutt & Company, based in Milford, OH. We deliver comprehensive financial management for small business owners & individuals, providing strategic solutions that best address client needs and aspirations. Our comprehensive accounting services keep you organized and give you the data you need to make prudent business decisions, including bookkeeping, payroll, and tax.
