Why L&D is still seen as a cost centre and how to change that
Learning and development sits at an interesting intersection in most organisations. On one hand, it is widely acknowledged as essential for building capability, supporting early careers talent, strengthening leadership and enabling transformation. On the other, it is still frequently categorised as a cost centre, especially during periods of financial pressure.
This tension is not new. However, it has become more visible over the past few years as organisations have faced sustained economic uncertainty, rapid shifts in required skills and increasing scrutiny on return on investment. The question is not whether learning matters. It is why its value is still not consistently recognised in commercial terms and what can be done to change that.
Why L&D is still viewed as a cost centre
Understanding why L&D continues to be positioned this way requires looking beyond budget labels and into how value is perceived, communicated and measured within organisations. The challenge is often less about the impact learning creates, and more about how clearly that impact is linked to commercial outcomes.
Several structural and behavioural factors contribute to this perception, shaping how learning is prioritised and evaluated at senior levels.
1. Value is often described, not evidenced
Many learning teams articulate value in terms of engagement, satisfaction or completion rates. While these are useful indicators, they rarely connect directly to business outcomes such as revenue growth, cost efficiency or risk reduction.
Research from LinkedIn’s Workplace Learning Report highlights that while 89 percent of L&D professionals agree that building skills is critical, only a minority feel confident in demonstrating impact in financial terms (LinkedIn Learning, 2024). This gap makes it difficult for senior stakeholders to position learning as anything other than a discretionary spend.
“What gets measured gets funded. What gets described gets questioned.”
2. Misalignment with business priorities
Learning strategies can sometimes run parallel to business strategy rather than being fully integrated with it. When programmes are not explicitly tied to current commercial challenges, they risk being perceived as supportive rather than essential.
A report by McKinsey notes that capability building delivers the strongest impact when it is tightly linked to strategic priorities and embedded in day to day work, rather than delivered as standalone interventions (McKinsey & Company, 2023).
3. Time lag between investment and impact
Unlike many operational investments, the benefits of learning often emerge over time. Developing leadership capability, strengthening financial acumen or building risk awareness does not typically produce immediate results.
In environments where quarterly performance is prioritised, this delay can create a perception that learning is a long term cost rather than a near term contributor.
4. Limited use of commercial language
L&D professionals are highly skilled in facilitation, design and behavioural change. However, they are not always encouraged or equipped to frame their work in commercial terms.
Without a clear articulation of how learning influences metrics such as productivity, margin, customer retention or regulatory exposure, conversations with senior leaders can lack the clarity needed to reposition L&D as a value driver.
5. Legacy perceptions of training
In some organisations, historical models of training still shape current perceptions. If learning has previously been delivered as one off events with limited follow through, stakeholders may carry forward assumptions that it is an isolated activity rather than a strategic lever.
How to reposition L&D as a value driver
Shifting perception requires more than better communication. It involves rethinking how learning is designed, delivered and measured in relation to business outcomes.
1. Start with the business problem, not the programme
The most effective learning initiatives begin with a clearly defined business challenge. This might include improving sales conversion, reducing operational risk, strengthening financial decision making or supporting early careers talent to become productive more quickly.
By framing learning as a response to a specific problem, it becomes easier to define success in measurable terms.
For example:
- instead of “leadership development programme”, position “improving team performance through stronger management”
- instead of “finance for non finance”, position “enabling better cost control and margin awareness across operational teams”
2. Build measurement into the design
Impact should not be an afterthought. It needs to be designed into the learning experience from the outset.
This includes:
- identifying baseline performance metrics
- defining expected behavioural changes
- linking those behaviours to business outcomes
- tracking progress over time
Research by the CIPD emphasises that organisations that align learning metrics with business KPIs are significantly more likely to demonstrate value and secure continued investment (CIPD, 2022).
“Learning becomes strategic when it is measured in the same language as the business.”
3. Integrate learning into the flow of work
Learning is most effective when it is embedded in actual work rather than separated from it. This approach reduces the perceived opportunity cost of time spent learning and increases the likelihood of behaviour change.
Practical approaches include:
- using live business challenges as learning projects
- incorporating reflection and feedback into regular workflows
- supporting managers to reinforce learning through coaching
McKinsey’s research highlights that experiential, work based learning can deliver significantly higher impact compared to traditional classroom only approaches (McKinsey & Company, 2023).
4. Strengthen commercial capability within L&D teams
To shift perception externally, capability internally also needs to evolve. L&D professionals benefit from a strong understanding of:
- financial performance drivers
- organisational strategy
- risk and governance considerations
This enables more confident and credible conversations with senior stakeholders and allows learning to be positioned as a contributor to organisational performance rather than a support function.
5. Tell a clearer impact story
Data alone is not enough. It needs to be translated into a compelling narrative that connects learning activity to business results.
Effective impact stories combine:
- quantitative data such as productivity improvements or cost savings
- qualitative insights such as changes in decision making or leadership behaviour
- clear links between the two
This helps stakeholders see not only that learning works, but how and why it works in their specific context.
Practical insights for organisations
For organisations looking to shift how L&D is perceived, a few practical steps can make a meaningful difference:
- involve senior stakeholders early in defining learning objectives
- align every major programme with a measurable business outcome
- prioritise fewer, higher impact initiatives over a large volume of disconnected activity
- regularly review and communicate impact in commercial terms
- invest in building commercial acumen within L&D teams
These steps do not require a complete transformation. They require consistency, clarity and a deliberate focus on alignment.
From cost to capability investment
L&D is still seen as a cost centre in many organisations, not because it lacks value, but because that value is not always visible in the terms that matter most to decision makers.
The opportunity is to reposition learning as a capability investment. One that directly supports performance, reduces risk and enables organisations to respond effectively to changing demands.
At MDA Training, we work with organisations to design learning experiences that are closely aligned to business priorities, grounded in practical application and measured against meaningful outcomes. If you are exploring how to strengthen the commercial impact of your learning strategy, we would welcome the opportunity to support you.
