TALENT DEVELOPMENT BUDGET
A Talent development budget (TDB) that accounts for the costs of attracting, holding, replacing, training, and developing Talent. A value-driven cost structure that measures the quality of work performed against the quantity of work Performed. It is recommend of having a contingency plan for key Talents. Special budgets for special people may send shock waves through an organization. Most organizations have been struggling to reduce inequities due to past discriminatory practices. Now if you propose a budget to deliberately increase inequities between classes of people, this new notion will encounter resistance. The sooner you face such resistance head-on by creating a highly visible TDB, the sooner you can get past this barrier. Every organization should have a TDB. Without one, senior managers might complain: "I can't afford to send this person to this conference" or "I can't hire these people because I don't have any money."They face that challenge because they have a production budget and a cash budget, but not a TDB.For growth, the talent development budget is more important than any other budget. All organizations, regardless of size, should prepare a TDB for the long term as well as for the short term. The long-term TDB may be prepared for more than one year to allow sufficient time to plan major expenditures for acquiring Talents, keeping Talents, and training Talents. This budget may help to determine the goals of the organization. By preparing a TDB, organizations improve effectiveness and avoid poor allocation of resources. After an organization sets its goals, it can estimate how much to spend on acquiring, holding, and developing the Talents to meet the goals. A shortage of key Talent will lead to severe problems. If management spends more money in one low-priority area of business, the whole business suffers.
Often Internet startup companies spend lots of money in advertising, which puts a company into a deep financial hole. Similarly, organizations cannot bear excessive costs on Talents. A TDB is not the same as a training and development budget. A training and development budget A training and development budget is not allocated for attracting and holding Talent or replacing Talent. For example, if your CEO quits and goes to a competitor, and you have no budget to replace that CEO, you suddenly must incur a significant, unbudgeted expense. If you don't have the budget, you don't know what to do when you suddenly lose a key person. And yet it is foolish not to anticipate losing key Talent Occasionally. For example, when a Fortune 10 company announced its new CEO after one of its most successful
CEOs retired, three other people in consideration quit immediately. They assumed that in the next ten to twenty years they might not have a chance to become the CEO of the same organization. So, they accepted positions in three different organizations. The company might have anticipated this, but if it did not have replacement costs budgeted at that time, it would have had to use unbudgeted funds, which is always awkward at that level. Even if it promoted internal executives to fill those positions, it would still incur a heavy replacement cost. Flawless hiring of key executives is one of the critical factors for success. To achieve flawless hiring, you must dedicate sufficient time to select the right people, hire them, and bring them into the organization. You have to invest a lot of money. You can't just put an advertisement in Fortune or the Wall Street Journal and be done. The CEO needs to be involved in interviewing candidates and talking with their references. Most senior managers don't do that because it costs money. Senior managers should have access to money in the TDB to recruit Talents or replace Talents who leave. The cost of attracting and holding Talent and the cost of replacing Talent are two critical costs beyond training and development. Typically companies place training and development costs within human resources; but they should spend more money to attract, hold, and develop Talent. High-potential Talent should receive the lion's share of the Talent development budget. Suppose seven of us work at a manager level in seven different divisions. Of the seven, maybe two of us are identified by the company as very talented people. So, rather than allow each of us $5,000 each for training and development, the organization should spend more money on the most talented of the seven. Give them growth opportunities. Make a special case for top performers who are the future of the company. Of those seven people, if the five other people leave, the organization may not suffer as much as if the two more talented were to leave. The Talent development budget can be sufficiently flexible to allow different spending levels for different people. The resulting disparities may cause the human resources manager some difficulty because of the apparent inequities. But that is the nature of attracting and keeping Talent. Talents are free agents.
After a company sets its goals and knows its capability, its management can prepare a TDB and plan to fund its key resources to meet the goals. For example, if a company plans to implement a Six Sigma initiative, its management may set goals to train three thousand employees in two years, spend $2 million on training and developing key Talent, and save $20 million on the projects. After the company sets such performance goals, management then allocates budget money to be spent in that way. Corporations now prepare production budgets, sales budgets, cash budgets, and capital budgets. It is very easy for managers to prepare those budgets because they can easily determine the value of hard assets such as machinery, buildings, land, and other physical resources. But they cannot.
