More than $156 billion was spent by U.S. organizations on employee learning last year.
Organizations continue to invest in organizational learning and development. In the ASTD 2012 State of the Industry Report sponsored by Skillsoft and Eagle's Flight, 461 organizations representing a diverse sample of industries, sizes, and locations report on their commitment to learning and development (L&D).
ASTD estimates that U.S. organizations spent approximately $156.2 billion on employee learning in 2011. Of this total direct learning expenditure, 56 percent ($87.5 billion) was spent internally. The remainder was split between tuition reimbursement, which accounted for 14 percent ($21.9 billion), and external services comprising 30 percent ($46.9 billion).
Efficiencies and expenditures
The average direct expenditure per employee decreased in 2011 to $1,182 from a peak expenditure of $1,228 ($1,267 adjusted for inflation) in 2010. This is a 4 percent (7 percent inflation adjusted) decrease on direct expenditure per employee on L&D activities and infrastructure.
Several factors influence the average spending per employee, including company size. Small companies typically spend more per employee on L&D than their larger counterparts. In 2011, small organizations with fewer than 500 employees spent on average $1,605, medium companies with 500 to 9,999 employees spent $1,102, and large organizations with a workforce size of more than 10,000 spent $825 per employee.
The most obvious explanation for this difference is that the cost to develop and administer an hour of training at a large corporation is spread among many more employees than at a small organization with fewer employees. This year's study includes more submissions from large companies than last year (119 versus 57). The influx of larger companies with lower L&D expenditures per employee contributes to the decrease in spending.
Two subcategories reported on in the study are BEST Award-winning organizations and companies recognized in Fortune magazine's Global 500 (G500).
BEST Award-winning organizations on average spent $1,272 per employee. BEST winners are organizations recognized by ASTD in 2011 for their efforts to foster, support, and leverage enterprisewide learning for business results. The sample is comprised of different organizations each year of various sizes across several industries. The changing winner list each year accounts for the fluctuation in this group's spending year over year. Despite this factor, historical data show that BEST organizations tend to invest more in L&D than most organizations, and spending is one of several characteristics that set apart these organizations from their peers.
The G500 organizations that submitted data for this report on average spent $1,034 per employee on L&D activities and infrastructure in 2011, declining 3 percent from $1,067 in 2010. This group provides insight into spending for large multinational companies, which typically spend less per employee. Similar to BEST, this is a small sample size that consists of different organizations each year. This fact, combined with the G500's short history in ASTD's State of the Industry Report, accounts for the fluctuation in spending per employee.
Despite the slight drop in spending, employees continue to use the L&D opportunities their organizations offer. On average, employees clocked 31 hours of training in 2011, which is about one hour less than 2010 and six fewer hours than a peak of 37 hours in 2007. However, it is five hours more than employees were using 10 years ago.
The number of learning hours an employee uses at each organization varies as widely as the organizations themselves. Employees at G500 organizations average slightly more than 35 hours of learning, which is almost five hours more than the consolidated average. BEST organizations are excelling at weaving learning into the corporate culture. For the past seven years their employees have averaged more than 40 hours of learning, and this year employees at BEST organizations used on average 49 hours of learning.
Similar to past years, while the number of hours of learning an employee used remained stable, the cost per learning hour used has increased. The cost per hour of learning has increased by approximately $10 each year for the past four years.
In 2011 there was a $13 (18 percent) increase for the consolidated group to a peak cost of $85 per learning hour used. Small and midsize organizations drive the higher cost. The average cost per learning hour used in a small company with fewer than 500 employees is $126, compared with $82 for a midsize organization, and $51 for a large organization with more than 10,000 employees.
To explain the increase in the cost per learning hour used, it's best to examine the impact of the reuse ratio on this metric. The reuse ratio refers to the ratio of learning hours consumed to the number of learning hours produced. For example, one hour of training that is consumed by 50 employees has a reuse ratio of 50.
The reuse ratio for the consolidated group in 2011 is 52.8, which is unchanged from 2010. As the cost per learning hour used has increased during the past four years, the reuse ratio has declined. This means that one hour of learning is not being used by as many employees.
Small and midsize organizations have lower reuse ratios because they do not have the ability to spread the cost of one hour of learning among as many employees as larger organizations do. BEST organizations are a good example of this. They have a high reuse ratio of 61.1 and a low cost per learning hour used of $38, and their cost per learning hour available is $1,968. That means BEST organizations are spending more on developing learning, and effectively deploying it to their staff to keep the cost per hour used low.
When benchmarking the L&D function it is not only important to understand the financial data, but also to evaluate the content being distributed and the methods used to distribute it to employees. To understand the types of learning employees are being offered by organizations, the study examines 12 common content areas.
The top three L&D content areas for the consolidated group in 2011 were managerial and supervisory; profession- or industry-specific; and processes, procedures, and business practices. Together these three content areas account for 36 percent of the learning content available in the reporting organizations. This is not significantly different from last year when the same three categories topped the list and accounted for 34 percent of the learning content available. The bottom three content areas, accounting for 17 percent of the total, are executive development, customer service, and basic skills.
Content areas are greatly influenced by the organization's size and industry, and even employee demographics can influence the type of training offered. The top three and bottom three content areas for the consolidated, BEST, and G500 organizations demonstrate how an organization's profile can affect the mix of content offered.
Profession- or industry-specific and processes, procedures, and business practices were in the top three content areas offered for all three groups. BEST organizations report IT and systems among their top three content areas, while G500 organizations include sales in their top three. In contrast, BEST organizations report sales in their bottom three, and interpersonal skills fell into the bottom three for G500 companies. One consistent finding is that all three groups—consolidated, BEST, and G500—report executive development and basic skills in the bottom three.
Organizations have a wide range of options when developing their plan to deliver learning content. Delivery methods include instructor-led, self-paced, and via technology. For most organizations none of these methods is used exclusively because they are choosing a combination of methods.
Organizations are increasingly implementing the use of technology, and methods such as mobile learning continue to gain in popularity. ASTD defines e-learning as "the use of electronic technologies to deliver information and facilitate the development of skills and knowledge." After a slight dip in 2010, technology-based methods have rebounded to account for 37.3 percent of formal hours available across all learning methods.
The consolidated group, BEST organizations, and G500 organizations all reported increased usage of formal learning hours used via technology-based methods. BEST organizations report a record high usage of technology-based learning with 50 percent of their formal learning hours being delivered via a technology-based method.
G500 organizations also have a strong and steady use of technology-based learning, delivering 42 percent of the formal learning hours via technology-based methods. Overall, the consolidated group reports a more moderate use of technology-based methods, accounting for 39 percent of respondents' formal learning hours.
For the past several years, mobile learning has been a hot topic in the L&D industry. After a slow start, organizations are making progress in offering training via mobile devices. The consolidated group reported 1.4 percent of their training is available on a mobile device compared with 0.4 percent in 2010. With the increasing popularity of mobile devices, this benchmark will be one to closely monitor.
Analyzing your organization's L&D strategy and deciding how to allocate training investments, which content to offer, and how to effectively distribute the content and develop a culture of learning can be a challenging undertaking. Despite this challenge, it is helpful to benchmark how other organizations or industry peers are investing in their workforce by reviewing aggregate data. This is the type of data ASTD's 2012 State of the Industry Report provides. The resulting report portrays a healthy environment for the L&D industry as senior leaders continue to value investments for the development of their staff.
To download or purchase the 2012 State of the Industry Report, visit www.astd.org/store.
Since 1997, ASTD’s State of the Industry Report has been the definitive annual review of workplace learning and development investment. This annual report provides data covering the strategic and operational activities against which organizations can benchmark their learning investments and practices.
This 2012 State of the Industry Report discusses learning and development trends and hot topics—including mobile learning and learning’s role in innovation. Also included is a synopsis of ASTD’s quarterly Learning Executive Confidence Index, which measures and reports the economic expectations and forecasts of learning executives for the learning industry.
State of the Industry Report data are presented in three groupings against which workplace learning professionals can benchmark learning investments and best practices in their organizations. The three groupings (or comparative categories) are consolidated responses, ASTD BEST Award winners, and Fortune Global 500 companies.