Spending Up for Learning, Development

Organizations are shifting money and commitment back to their learning and development plans — as ways to build skills and retain talent. The format of such training continues to evolve, and employees are increasingly taking ownership of the process.

IT Student with laptopOrganizations substantially increased spending on learning and development over the past few years, according to the two new reports.

The American Society for Training and Development’s 2011 State of the Industry Report finds that organizations in the United States spent $171.5 billion on employee learning in 2010, up from $125.8 billion in 2009 — an increase of 36 percent.

It also notes that employers spent more on employees’ development than ever before, with per-employee spending at $1,228 in 2010, a 13.5-percent increase from $1,081 in 2009.

Pat Galagan, executive editor at Alexandria, Va.-based ASTD, says, “The old-fashioned thinking that says training gets cut first has been disproved. Companies now realize that tough times are when you increase training spending.”

The report finds that the average expenditure in 2010 “represents the largest consolidated direct expenditure per employee since ASTD began collecting the data,” which is based, in part, on a survey of more than 400 organizations across all major industries.

She acknowledges, however, that the increase in per-employee spending “could have been because there may be fewer overall employees [benefitting from this expenditure] — but that still demonstrates a commitment to learning.”

Harry Osle, global HR practice leader of Miami-based The Hackett Group, says “one key driver” to increased spending on learning and development is “the desire to hold on to top talent.”

“If companies take the time to understand the career path, goals and aspirations for their top talent, and then respond with strong training and development options,” he says, “they can hold onto people longer.”

Osle says Hackett’s research finds that companies with more mature talent-management capabilities actually generate 18-percent higher earnings than typical companies.

Another report — this one by Oakland, Calif.-based consultancy Bersin & Associates — finds that spending on employee development rose 9.5 percent to an average of $800 per learner in 2011. The report attributes the increase to organizations “moving to combat the current skills gap in the labor market.”

The research, based on a study of approximately 600 companies and in-depth interviews with approximately a dozen learning and development leaders, also finds that investments in social-learning tools by large organizations nearly doubled in 2011, to $40,000 per company, on average.

“U.S. companies are now reinvesting in training to address a major skills gap, which we identified in the market more than a year ago,” says Josh Bersin, CEO and president at Bersin & Associates.

“L&D organizations have realized that these formal learning events must be reinforced to provide lasting benefits,” the report says. “As a result, these organizations are focusing more on getting employees to internalize the knowledge and apply the skills through continuous, reinforced learning environments. These efforts include manager coaching, collaborative tools and experiential exercises.”

Breck Marshall, an executive director in Accenture’s talent & organization management consulting group in Washington, says the reports offer good news.

“It’s encouraging to see that [organizational leaders] are investing in the development of their people because it signals that they are getting focused on a key contributor to growth: talent,” he says.

However, Marshall adds, in a survey Accenture recently conducted with 1,083 employed and unemployed workers in the United States, it found that the view from the trenches may be slightly different than the view from the top.

In that survey, only 21 percent of respondents reported developing new skills in the past five years through company-provided formal training, with 6 percent saying they built new skills from company-provided informal training, and nearly two-thirds — 63 percent — pointing to on-the-job experience.

“Our research also showed that workers are very open and willing to take responsibility for their own skills development,” Marshall says. “More than two-thirds of our survey respondents indicated that it was their primary responsibility — rather than their employer’s responsibility — to update their skills to remain valuable in their current and future roles within their current organization as well to remain marketable in their profession.

“We think these findings present a powerful opportunity for HR leaders to embed learning opportunities into everyday work to more quickly develop the skills of their people,” he says. “Our survey indicates that workers are eager and open to new learning opportunities presented to them — via formal training, informal training or on-the-job experience.”

ASTD’s Galagan says organizations must be willing and able to make the most of the latest training and development programs, as well as understand the ways in which employees are now accessing such information.

“Pay a lot of attention to mobile learning,” she says. “That’s going to be bigger and bigger as we go forward. We’ve now reached the point where more people access the Internet via smartphone rather than via desktop. You’ve got to learn how to leverage that change.”


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