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Bersin & Associates’ New Research Finds Organizations Spending Significantly More on Employee Development to Combat Skills Gap in the Labor Market

Training Budgets Rose on Average 9.5 Percent to $800 per Learner, while Large Business Investment in Social Learning Nearly Doubled

Oakland, CA – January 16, 2012Bersin & Associates, the premier research and consulting firm empowering Human Resource (HR) organizations to drive bottom-line impact, today announced new research that shows spending on employee development rose 9.5 percent to an average of $800 per learner in 2011, as organizations moved to combat the current skills gap in the labor market. The findings appear in The Corporate Learning Factbook® 2012:Benchmarks, Trends and Analysis of the U.S. Training Market, which is part of Bersin & Associates’ series of Factbooks that help member organizations grow more efficient and effective by benchmarking their spending, staffing and resource allocations against peers and best practices.

The research found U.S. training organizations continuing on the road to recovery, following double-digit spending cuts in 2008 and 2009 with a slight uptick of two percent in 2010. The research also found that the large business investment in social learning tools in 2011 nearly doubled to $40,000 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,” said Josh Bersin, chief executive officer and president, Bersin & Associates. “Organizations are turning away from formal classroom training – and even traditional e-learning programs – to deliver bite-sized learning on a continuous basis. In fact, our research shows that today, the demand is for ‘just the learning you need, just in time.'"

He added that the doubling of investment by large businesses on social media shows that social learning is no longer an experiment. “Companies are using social learning to drive innovation in their learning organizations,” Bersin said. “By allowing users to actively interact and share knowledge, organizations are both empowering users to teach one another and are actively encouraging conversations that organically foster creativity and problem solving.”

Conducted in partnership with Workforce Management magazine, the research is based on a study of about 600 companies and includes in-depth interviews with about a dozen learning and development (L&D) leaders.

The study also found that employees received more development in 2011, with learners averaging 15.3 hours, up from 12.8 hours in 2010. However, much of the focus is outside of the formal learning event. L&D organizations have realized that these formal learning events must be reinforced to provide lasting benefits. 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.

BJC HealthCare, which operates 13 hospitals and multiple community health care centers in Missouri and Illinois, is one company that is making greater investment in L&D, despite lower Medicare/Medicaid reimbursements and a growing number of uninsured patients. The reason is a track record of success, achieved by ensuring training is relevant and reality-based. For example, everyone on the L&D staff twice a year participates in job shadowing exercises where they accompany nurses during their 12-hour shifts. The shadowing gives L&D team members a deeper understanding of nurses’ daily duties and challenges, so that they can design training initiatives to help nurses provide better patient care.

Through initiatives such as job shadowing,” said Jeanne Bonzon, director, Learning & Development, BJC HealthCare, “our L&D team has been able to demonstrate how we can add value by carefully targeting L&D initiatives that will boost staff productivity and contribute to bottom line results – and do it cost effectively. We use The Corporate Learning Factbook to benchmark our results against the industry and to show how cost effective our programs are.”

Similarly, Abbott Nutrition, based in Columbus, Ohio, began last year using Chatter so that learners could more effectively communicate with and support each other.

“Our use of Chatter has encouraged strong collaboration and was a factor in accelerating results delivering a record setting year,” said Jackie Winner, manager, retail sales training, Abbott Nutrition. Winner adds that The Corporate Learning Factbook is one of the resources her organization uses to benchmark itself against industry best standards, and as a decision-making guide.

The study also found that:

  • High-impact Learning Organizations commit more time and financial resources but fewer staff to achieve results. Organizations that are more efficient, effective and aligned with the business spend $1,021 per learner on training – significantly more than the national average. They also deliver more training – 20 hours per learner annually. These organizations deliver their services with 4.3 L&D staff per 1,000 learners – a significantly lower ratio than the U.S. average of 5.2. How do they achieve all this? By utilizing staff effectively, pushing more delivery to local resources, and building informal learning environments to develop and support learners. Most importantly, these organizations outsource more learning services – allocating 20 percent of their training budgets to external providers, versus a U.S. average of 14 percent.
  • L&D teams are extending their reach through non-training professionals, such as subject matter experts and managers. Although L&D teams added staff this year, the additional headcount has been far outpaced by faster growth in learning populations. As a result, the overall ratio of training staff relative to the employee population has declined to 5.2 L&D staff per 1000 learners in 2011 from 6.7 L&D staff in 2006.
  • The shift to online training and social learning has changed the mix of competencies needed on the L&D team. Most traditional classroom instructors now find themselves spending much of their time outside of a physical classroom to deliver more training online and in one-on-one sessions with learners. In addition, L&D organizations are moving out of the mode of “order taking” to build consulting skills and to provide effective recommendations and solutions to business partners.

“In addition, the increased focus on measurement and analytics is putting pressure on training groups to hone their reporting and analysis capabilities,” said Karen O’Leonard, director Research Methods & Analytics and principal analyst, Benchmarking, Bersin & Associates. “Tracking and analyzing data can spotlight issues with cost structures and utilization, as well as assess the value and impact of training on the business. This analysis is critical to making sound investment decisions.”

To download a complimentary copy of the Executive Summary of The Corporate Learning Factbook® 2012, go to: http://marketing.bersin.com/corporate_learning_factbook_2012.html

The full report is available today: $795 for a PDF and $945 for a print copy. For more details, go to: The Corporate Learning Factbook® 2012: Benchmarks, Trends and Analysis of the U.S. Training Market

Register to join Karen O'Leonard, director, Research Methods & Analytics and principal analyst, Benchmarking for an online webinar at 2 p.m. ET/19:00 GMT Feb. 16, Training Budgets and Metrics: Where Should Organizations Spend their Money in 2012?

Those interested in learning more about Bersin & Associates and its WhatWorks® membership may email info@bersin.com or call (510) 251-4400.

For media queries, email laura.evenson@bersin.com or call (510) 251-4406.

About Bersin & Associates

Bersin & Associates empowers HR and learning organizations to drive bottom-line impact through world-class research and consulting. The company's WhatWorks® membership gives human resources, learning, and talent acquisition professionals the information and tools they need to drive change in their organizations as strategic business partners.

Bersin & Associates members use our insights and tools to benchmark themselves against best practices, design and implement programs across the HR and learning spectrum and select and implement systems. A piece of Bersin & Associates research is downloaded every other minute during the business day. More than 5,000 organizations worldwide, including more than 60 percent of the Fortune 100, use Bersin & Associates research and consulting to guide their learning, talent, and human resources strategies.