HR DEVELOPMENT - New Study: Spending on Training Jumped by 12% Last Year

HR NEWS & TRENDS, TRAINING & DEVELOPMENT

New Study: Spending on Training Jumped by 12% Last Year

by  John Hollon on Jan 23, 2013, 7:00 AM

Here’s another small sign that the economy is slowly and gradually starting to improve: overall spending by businesses on workplace training and development increased by 12 percent on average last year, according to a new study.

The research in Bersin by Deloitte’s new industry study, The Corporate Learning Factbook 2013: Benchmarks, Trends, and Analysis of the U.S. Training Market, is based on a study of more than 300 training organizations representing a broad cross-section of company sizes and industries.

According to the study, the technology and manufacturing industries showed the biggest budgetary gains last year with both sectors showing 20 percent increases in training spending. Bersin’s analysis says that these significant investments are each backed by strong rationales because technology is a high-growth, fast-paced arena that demands almost constant change, and, U.S. manufacturing is undergoing major shifts to remain competitive at a global level.

Large businesses are spending a lot more

For the first time, this year’s study breaks out metrics for organizations at different levels of learning and development (L&D) maturity. This is important because the research shows that spending and resource allocations differ markedly, depending on the L&D organization’s focus and effectiveness.

Among the research study’s additional findings:

• Mature companies spend 34 percent more on training. According to Bersin: “In 2012, U.S. companies spent an average of $706 per learner. However, organizations with mature, effective L&D functions (high-impact learning organizations) spent $867 per learner – 34 percent more than spending by companies at the lowest maturity level. High-impact learning organizations focus on improving performance through training and other talent initiatives. These L&D functions help to build the required human capabilities within their organizations to meet business goals and respond to change.”
• Large businesses triple their spending on social learning. According to Bersin: “Social learning is one catalyst for the transformation in L&D. In 2012, large U.S. companies spent just over $46,000 on average in 2012, nearly triple the spending of just two years ago. Social learning can be extremely effective when incorporated into a more structured program, such as combining a formal course with a learner discussion forum. In addition, high-impact organizations are becoming effective at creating employee networks, connecting novices to experts through expertise directories, and sharing knowledge through communities of practice. In this way, social learning, combined with formal programs, experiential learning and ongoing support and reinforcement, is facilitating a shift from blended training programs to continuous learning environments.”
• The L&D footprint continues to shrink. According to Bersin: “Although many training teams added staff during the year, these additions were outpaced by faster growth in learning populations. As a result, the overall ‘footprint,’ or ratio of training staff relative to the learner population continued to decline in many companies. This trend is one sign of the changing role of the L&D function, which no longer is ‘the place’ for learning. Instead, the role of the L&D team is to facilitate and enable learning. L&D teams should build skills in performance consulting, gain expertise in new technologies including social and mobile, and work to cultivate strong learning cultures within their organizations.”
• More spending on products and services. According to Bersin: “U.S. companies spent on average 16 percent of their training budgets in 2012 on external learning services, up from 12 percent in 2009. The types of services purchased have changed, with more money going to off-the-shelf content and less to custom instructor-led training, as many companies turn to less costly and more time-efficient learning solutions. The research shows a different trend, however, among high-impact L&D organizations, which spend less on off-the-shelf content and more on instructor-led content development and delivery services. They also invest more in assessment services, which help them to develop skills where needed. Many training organizations start with standardized content, and then recognize the need for a more customized learning approach as they mature.”

“Rethinking how they operate”

“As the pace of innovation accelerates, and companies look to expand their operations, employees should acquire more specialized skills and adapt to a workplace that grows more transient, mobile and self-serving – what we call the ‘borderless workplace,’” said Bersin by Deloitte’s Karen O’Leonard, lead analyst, benchmarking, Deloitte Consulting LLP, in a press release about the new study.

She added: “Modern learning organizations are embracing these changes by rethinking how they operate to closely align with business needs. For U.S. organizations, that means committing more dollars to develop internal talent and to build the desired skills for competitive advantage.”

The Corporate Learning Factbook 2013: Benchmarks, Trends, and Analysis of the U.S. Training Market isn’t cheap (it costs $795 for a PDF and $925 for a print copy), but it is something you probably need to have if you want to dig into the latest trends in training & development and figure out what your own organization should be doing.

If you buy it, you’ll probably find it useful since Bersin by Deloitte (known until recently as Bersin & Associates) is “a leading provider of research-based membership programs in human resources (HR), talent and learning,” as they describe themselves, that has long been known for the high quality of their research — particularly as it pertains to assessing trends in the L&D space.