Allocating your training and development budget
Proper training and development should be considered an investment, not a cost — it should generate a return within a reasonable time and largely pay for itself. It will only do this if it is well-planned and co-ordinated with company objectives. Training towards a well defined performance target (i.e., ‘to reduce the wages percentage by 2% over the next year’), will yield a far better result than ad hoc training administered by ‘the seat of the pants’.
A fairly constant percentage of company income should be devoted towards training. Most well-run hospitality companies spend between 2 – 5% of their total payroll. The upper end of this scale may seem extravagant, but training as intensively as this pays very large dividends — profits, customer service, staff stability. Our experience would also suggest that to exist in the upper end of any hospitality market, the reality of your performance should match both your advertising and your customer expectations. High standards and consistent performance only come with thorough training and professional management standards.
As a rough guide, 70% of the training budget should be spent on the top two-thirds of your pyramid. This is because training is specialised and far more expensive at management level than at the lower levels, and usually requires the services of external organisations. The remaining 30% of the budget still represents sufficient money for an excellent standard of general staff training because skills training can be mass-produced and largely handled in-house at this level.