The Product Manager's Guide to Using Your Professional Development Budget
While product management is a high-impact profession, it’s also incredibly fast-paced. To succeed in product management, we need to invest in our own professional development so that we hone our current skills and master new ones.
One particularly effective way to accelerate your professional growth is to use your professional development budget. Most knowledge worker professionals have a development budget that they can use to develop new skills.
Yet, in my experience, I’ve found that few professionals actually take full advantage of their professional development budgets. So, I’ve written this guide to help you maximize your growth and accelerate your product management career.
In this guide, I’ll first cover why companies have professional development budgets. Then, I’ll discuss why many professionals underutilize this critical resource.
Afterwards, I’ll identify the best ways that you can utilize your professional development budget. Finally, I’ll wrap up with a template you can use to lay out the business case to your manager, to help them approve your request to use your professional budget.
A side note before we continue: if your company doesn’t have a professional development budget, consider asking them for one.
If they refuse to entertain your request, remember that there are lots of other companies out there who value your professional growth. Check out the Product Teacher jobs board for product organizations who are committed to your long-term success.
So, let’s dive right in and discuss why companies have professional development budgets!
Why do companies have professional development budgets?
Companies are focused on creating long-term value for their investors and for their customers. Therefore, whenever a company offers an employee perk, this perk needs to benefit both the company and the employee.
We can therefore use both of these lenses to break down why companies provide professional development budgets for their employees. Note that professional development budgets are also called learning and development budgets (a.k.a. L&D budgets).
First, how do companies benefit investors by providing professional development budgets to employees? There are three main benefits:
They can continually skill up the company’s employees
They can reduce employee turnover and increase employee retention
They can expense these costs and reduce the company’s taxable income
Let’s discuss each of these in depth.
First, companies are always competing against other companies to build better products and to create more value in the world. One of the best ways for a company to compete is to grow the skills of their employees, because at the end of the day, products are built by human beings.
When people have more skills, they tend to build better products, which tend to earn the company more money. When people have fewer skills, they tend to build worse products, which then causes the company to lose against the competition.
So, to ensure that the company can return value to its shareholders, management teams prioritize the growth of their human talent.
Second, companies seek to reduce employee turnover and increase employee retention.
While employees are ultimately replaceable, they’re not easily replaced. Studies have demonstrated that replacing a highly-trained employee costs 150-250% of their annual salary.
Why does it cost so much? Well, when companies replace employees, they have to find new candidates, interview them, and train them. All of these efforts cost time and money.
On top of that, employees hold valuable institutional knowledge that can become lost forever if they exit the company.
As an example, a product manager who makes $150,000 per year in salary might cost a company between $225,000 to $375,000 to replace.
Replacing people is shockingly expensive. So, it’s in the company’s best interest to ensure that it retains its best talent!
Why do professional development budgets reduce turnover?
Well, one reason why employees leave organizations is because they no longer feel that they have opportunities to grow within the company itself. When employees feel that they’re stagnating, they start looking for opportunities elsewhere.
In fact, nearly 20% of employees decide to leave their current employer due to lack of career development.
To counteract this concern, companies provide professional development budgets for the employee to decide how they want to manage their own growth. When employees are empowered to set their own course, they tend to stick around with companies longer.
And finally, companies can expense training costs, which can lead to significant tax savings.
Rather than directly paying out those training costs as part of someone’s direct salary, allocating that money to professional development means that companies are subsidized by the government to train their employees.
Given the choice, a company would rather allocate $1,000 towards professional development budgets rather than $1,000 in direct compensation, because they can save on taxes by allocating the money towards professional development.
So, we’ve now made a compelling case for why a company and its investors care deeply about providing professional development budgets to their employees.
But, how does an employee benefit from having a professional development budget?
First, employees get an annual allocation for growing their skillsets, without having to pay money out of their own pockets.
Professional development budgets enable employees to save money while simultaneously gaining much needed skills for their careers. That then keeps them ahead of their competition, empowers them to strengthen their teams, and enables them to be promoted more quickly.
Second, professional development budgets typically give the employee the ability to self-determine what kinds of training or growth they need.
As employees, we typically will have a much better understanding of our own strengths and weaknesses, and we usually have a good sense of where we’d like to grow.
So, rather than making potentially incorrect assumptions on behalf of their employees, companies delegate the decision making to their employees so that they can self-select.
When employees have professional development budgets, they get to decide their own learning pace as well as their own learning objectives. This self-serve model frees up the company to focus on other priorities rather than dedicating a part of its efforts towards managing each person’s learning trajectory.
We now know why professional development budgets are valuable for both companies and their employees. But, why don’t more people use these professional development budgets?
Why don’t product managers use their professional development budgets?
One bizarre trend that I’ve noticed is that many product managers don’t use their professional development budgets.
Let’s dig into why this is the case.
First, product managers typically don’t have a lot of spare time to attend conferences, work with coaches, take classes, or read books. Product management is a high-velocity career, and free time is rare to come by.
Second, just about anything qualifies as product management professional development. After all, product managers need to master a wide variety of skills, and so it’s overwhelming to decide which skill to tackle next.
Should you learn how to code, or should you learn how to analyze data?
Should you learn how to negotiate, or should you learn how to price your product?
Should you learn agile methodologies, or should you learn industry trends?
These decisions can quickly become overwhelming for just about any product manager.
These two reasons are understandable. But, that doesn’t mean we can’t solve these problems!
With the right kinds of professional development investments, product managers can quickly unlock more time and achieve better work-life balance, which solves the first problem of “not enough time.”
As an example, when a product manager invests in time management training or invests in prioritization frameworks, they can unlock many more hours in a week.
They can then re-invest these hours into even more professional development, which creates a flywheel effect of sustainable growth. So, it’s almost always worth it to invest time into professional development, because professional development can help unlock even more time.
As for the second problem of “too many potential growth areas,” product managers often make the mistake of going it alone.
Take it from me - you don’t have to do everything yourself.
Your manager is deeply incentivized to ensure that you’re growing within the company, so you can always work with your manager to identify areas of growth.
Or, if you’re looking for an external perspective, you can work with a product management coach to decide where to focus your efforts next.
So, we no longer have any excuses for not using our professional development budgets. It’s free money on the table, and our company and our customers need us to keep leveling up!
That leads us to the next question: how should we best deploy our professional development budgets, in a way that creates value for our customers, for our company, and for ourselves?
How to best use your professional development budget as a product manager
To decide how we should spend our allocated professional development budget, let’s prioritize the options we have available to us.
Whenever we prioritize, we should prioritize from highest return on investment (ROI) to lowest ROI. ROI is calculated as “benefits” divided by “costs.”
When we assess various professional development options, the “benefits” side of the equation is typically pretty straightforward. We usually know exactly what we’ll learn from any particular resource. As an example, a book about “how to communicate effectively” will teach us how to communicate effectively.
But, the “costs” side of the equation is less clear, so let’s break that component down.
Whenever we want to invest in professional development, we need to incur three kinds of costs:
Monetary cost
Time cost
Flexibility cost
The monetary cost is the amount of money you need to pay to leverage that resource.
The time cost is the total amount of time you need to commit to professional development before you reap the results.
Flexibility cost is how much effort it takes for us to slot in this professional development into our busy schedules. A full-day workshop is less flexible than a 30-minute lecture, which is less flexible than “the ability to pick up or put down a book anytime.”
When we leverage our professional development budgets, we can set the monetary cost to zero, because we’re not paying out of our own pockets. So, the only two cost attributes we need to consider are “time cost” and “flexibility.”
This aligns well with the current problem that most product management professionals have. Time is their most limited resource and their most valuable asset, so they should be weighing the benefits of training vs. the time it will take to acquire those benefits.
Using our prioritization framework, here are the six best types of professional development that we recommend spending your professional development budget on, starting from the highest return on investment.
Self-paced courses
1:1 coaching
1:1’s with peers
Product management books
Live classes
Conferences
Resource #1 - Self-paced courses are the most valuable option for product managers, because they provide significant career benefits while also being the most flexible option available.
The benefit of a self-paced course is that you’ll receive the condensed knowledge of highly-skilled lecturers into the form of easy-to-digest modules.
On top of that, you’ll learn real-world examples, frameworks, and best practices from self-paced courses. And, self-paced courses will keep you accountable by giving you quizzes and assigning you homework.
Plus, most self-paced courses offer course completion certificates, which help you stand out no matter where you go.
From a flexibility perspective, self-paced courses let you start or pause the course anytime you’d like. On top of that, you can speed up or slow down the course.
Additionally, self-paced courses usually provide lifetime access to content, so you can repeat the course whenever you need it, whether in 1 year or in 10 years.
Resource #2 - 1:1 coaching is also a valuable option for product managers. They provide highly-targeted, personalized career advice while also being somewhat flexible to schedule.
When you work with a coach, you’re working with a full-time professional whose sole focus is to help you succeed. They’ll bring years of experience to the table, and they can assess your specific situation to provide you with personalized advice and actionable next steps.
The only downside with coaching is that you have to find time on the coach’s calendar, which is typically during the work day. That means that you’ll likely need to take time off of work. And, once you’ve scheduled a session, rescheduling the session takes significant coordination effort.
Resource #3 - 1:1 with peers is also a great way to level up your product management chops. By getting coffee or meals with other product management practitioners, you can learn about the challenges that they’re facing at work, as well as how they’re tackling those problems.
You can also get their perspectives on the challenges that you’re tackling, and you can jointly problem-solve while making new friends.
And, on top of that, you can solidify your professional network, which can help you find new jobs or find new teammates to join your current organization.
The downside here is that you’ll need to decide who specifically to reach out to, and you’ll need to coordinate all of the logistics of the 1:1 meeting.
Resource #4 - Product management books are yet another solid investment for product managers. Similar to self-paced courses, they condense years of experience into easy-to-understand guidance.
That said, most product management books don’t have a built-in accountability structure. On top of that, books typically take longer to read than self-paced courses, so books have a larger time cost.
Of course, product management books are just as flexible as self-paced product management courses are. After all, you can start and stop whenever you’d like, and you can always re-read the book in the future.
Resource #5 - Another good option for your professional development budget is to take live classes. Live classes are a great way to gain experience from professional practitioners, and they’re also a great way to meet other people.
That said, live classes are generally lower-ROI than self-paced classes because they’re less flexible. In other words, you have to attend the live class at a specific time, and live classes typically take multiple hours.
On top of that, live classes aren’t repeatable on demand. If you want to repeat a class, you have to pay the class fee again, and you have to find another time out of your busy schedule to attend the live class.
The key benefit you get with live classes is that you get to ask the instructor your questions in real time, which is something that most self-paced courses don’t have.
Resource #6 - Finally, conferences are also a good way to invest your professional development budget. It’s a great way to meet new people and to learn cutting-edge knowledge. The key benefit of conferences is that the speakers are typically industry leaders, so you’ll get unique insights that you otherwise can’t get.
That said, be careful not to over-prioritize conferences. With conferences, the learning agenda is set ahead of time, and you don’t have much of a say in terms of what gets covered.
On top of that, conferences are highly inflexible. You can’t reschedule the conference, and conferences will typically eat up a good portion of your work week.
Where possible, look for conferences where they’ll provide you with recordings after the event, so that you can revisit topics on your own schedule.
So, we’ve covered 6 ways for you to invest your professional development budget. We’ve summarized these 6 ways in this table below, for quick reference:
We’ve now selected the type of professional development we’d like to pursue. How do we get approval from our managers to spend our budget here?
How to get managerial approval for your professional development as a PM
Most companies typically require managerial approval to spend the professional development budget, as a way to sanity-check that the money is being spent well.
After all, companies are beholden to their investors to ensure that they’re maximizing the return on investment for their money, so it’s critical to get managerial approval!
How do we get management to approve our request? Well, companies make decisions based on ROI, so we can pull together a business case for our proposed budget spend.
As a reminder, ROI is “benefits” divided by “costs”, so all we have to do is lay out the benefits and the costs, and provide an argument that the costs are worth the benefits that you’ll reap.
But, here’s the twist. When you perform the ROI analysis on behalf of your manager, you now need to account for the monetary cost, because the company is paying for the resource!
And, here’s a secondary twist. In some cases, you can reduce the time cost in your analysis, because many times you won’t need to spend the company’s time on professional development.
As an example, let’s say that you read a product management book on the weekend. Well, that’s not company time that you’re spending, so the company isn’t losing any work bandwidth from you.
Therefore, we want to look for investments where the monetary cost is worth it, and where we can minimize the time cost to the company.
I’ve provided a resource request template that you can use to write up your argument for why the company should pay for your selected professional development resource. I’ve also provided an example resource request that you can use to model your request.
The goal of our writeup should be to demonstrate value for our managers. We should aim to maximize benefits and reduce risk on their behalf.
Where possible, aim to leverage resources that are covered by money-back guarantees or return policies. That way, there’s zero monetary risk to the company. As an example, Product Teacher’s self-paced courses and career coaching all come with 100% satisfaction guarantees, where you don’t pay a dime if you’re not 100% satisfied with the outcome.
Whew, we’ve covered a lot of information about how to best leverage our professional budgets as product managers! Let’s recap what we’ve learned.
Summary
One of the fastest ways we can accelerate our product management careers is by leveraging our professional development budgets.
We shouldn’t feel embarrassed about using the budget. Companies want us to grow, because that’s how we’ll build better products and earn more money for the company!
When determining what kind of professional development you’re looking for, be sure to weigh the benefits versus the costs. You want to select a resource that provides you with lots of benefits and doesn’t eat up too much of your time.
On top of that, you also want to select a resource that provides the company with lots of benefits, and doesn’t cost them too much money. You’ll also want to justify your decision to the company, so that they feel confident with your proposal.
By doing so, you’ll grow your own skill sets and you’ll provide value to your customers and to your company.
