Well this year, driven by the tremendous need for workforce skills, spending has exploded. As the chart below indicates, U.S. spending on corporate training grew by 12% in 2012, the highest growth rate since we started our research. (Source: The Corporate Learning Factbook®, Bersin by Deloitte).
Fig 1: Changes in corporate L&D spending since 2006
This increase likely reflects three major forces shaping the US workforce:
As technology becomes widespread around the world, corporate training has shifted . This year companies grew their “informal learning” spending by 39%, demonstrating a steady shift toward social learning tools, knowledge sharing, expert directories, and other forms of information sharing. Mobile learning is now becoming mainstream.
As this shift has occurred, the instructor led training industry has also evolved. Today, companies spend only about 30% of their total L&D spending on instructor-led programs and this level has flattened off. The early promise of “all online training” has not proved to work in many cases, and companies have settled into a world of one-third instructor-led and two-thirds technology enabled training.
Many High-Impact Organizations Spend More
In last 2012, Bersin launched our High-Impact Learning Organization Maturity Model®. This model breaks all training functions into four levels of maturity, using more than 10 years of research and studies of thousands of organizations.
Our research shows that the high-impact organizations (those at levels 3 and 4) deliver significantly greater business outcomes than those at level 2, and more than 50% greater outcomes than those at level 1. This year’s Factbook, for the first time ever, breaks down detailed benchmarks by maturity level.
While many organizations view corporate training and development as an expense, clearly the high-impact organizations see it differently. Companies at levels 3 and 4 actually spend 34% more money per employee than those at levels 1 and 2, showing that “reducing the cost of training” is not a sound strategy. Many high-impact organizations spend more, measure the impact of training more broadly, and get far more benefit. In fact our research shows that these companies not only perform at higher levels, they have higher levels of engagement, retention, and employee and customer satisfaction.
The New Era of Global Skills Imbalances
Today’s business climate is one of global skills gaps. New technology, shifting markets, and changing demographics mean that manufacturers, service providers, telecommunications companies, technology companies, healthcare providers, and many other industries live and die by their skills. As companies globalize their businesses, the ability to build skills has become a deep competitive advantage.
The global economy may not be in full recovery, but the world of corporate training is. We believe this dramatic increase in spending demonstrates improved business confidence and the clear gaps in the workforce. Now is the time to revamp your L&D organization, and we are here to help you.
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Josh Bersin writes on the ever-changing landscape of business-driven learning, HR and talent management.
His favorite topics include strategic talent management, creating high-impact learning organizations,
and how organizations drive business change and competitive advantage through talent strategy and technology.
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