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Should training budgets be centralised or decentralised?

30 Aug 2019

Does your company have visibility over its learning spend? 

The answer to that question often depends on whether your training budget is centralised or decentralised.

Centralisation versus decentralisation of budgets tend to go in cycles.

For many years, having a centralised learning budget was the only way to get things done. That is,

until staff demand a more responsive and adaptable way of procuring learning services...

So, what are the benefits of centralising learning procurement?

With a centralised approach, you have:

  1. Visibility over spend
  2. Visibility of learning trends
  3. Greater buying power - meaning better economies of scale
  4. Better strategic position

However, there are a few drawbacks with a centralised system: 

  • A lot of work is needed to develop a good understanding of business needs
  • Typically, it's slower to organise and approve budgets
  • Business units using project budgets or other workarounds to "get things done"

On the other hand, with a fully decentralisation approach, individual teams or business units may lack the budget for large training programmes. Plus, there's likely to be a lot of duplication of work across teams - adding to the overall costs.

As with most things, it's best to aim for a happy medium.

Yes, it's important for capability and culture to be driven strategically. But some flexibility should be given to individual business units to make decisions that improve their efficiency quickly.

Of course, working with an experienced training partner, like Auldhouse, means you can be assured your training budget is well spent. A good training provider will work to ensure the professional development needs of your team is met, regardless of whether the budget is centralised or decentralised.

Having a single training partner for all your training needs also makes it easier to have full visibility of how your organisation's overall budget is spent - no matter which department head signs the cheques.

About the author: Chris Jones is a Learning Solutions Consultant and client manager for Auldhouse based in Auckland. He works with his clients to identify problems and opportunities - while enabling them through learning and technology.