Magazine article Training & Development

How Much Do Employers Spend on Training?

Magazine article Training & Development

How Much Do Employers Spend on Training?

Article excerpt

What do we spend on training? For years, training managers and researchers have struggled with that question and a surprising lack of information on the scope of workforce training in the United States. In spite of growing interest in training as a means to improve company performance, reliable benchmarks for training time and expenditures are notoriously difficult to come by. Fortunately, a study released in July 1996 by the U.S. Bureau of Labor Statistics provides some enlightening new figures.

Until now, the absence of information on the scope of training in U.S. firms has made it impossible to get a complete picture of training in the United States. Though several past studies investigated employer-provided training, they fell short of determining how much training actually occurs in companies.

For example, the 1991 Current Population Survey provided a wealth of demographic details on the characteristics of employees that received training, but it made no connection between those employees and the companies in which they worked. A 1993 BLS study detailed factors that contribute to a formal company-training program, but it provided no insight into the extent of the training. Until the July BLS survey, the federal government had never attempted to estimate the scope of either formal or informal company training.

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The 1995 Survey of Employer-Provided Training was conducted in two phases. During the first phase, BLS surveyed 1,800 organizations with 50 or more employees on their training practices and programs. Training logs documented all of the skill-development activities sponsored by the employers during a two-week period. The data collection took place May through October 1995.

Previous research confirmed

The 1995 Survey of Employer-Provided Training provides three types of information:

* the scope of training in companies, including the number of hours of formal training, number of participants, and cost

* estimates of the total wage and salary costs for formal training

* information from employees from which we can estimate the total amount and percentage of time spent in formal and informal training.

The results from the employer portion of the survey confirm many of the findings from previous research. The new data also clarifies the factors contributing to the existence and scope of company training programs.

First, the survey examines how employees spend their time in formal training programs. The survey reports both the number of training activities per employee and the average training hours per year, in nine industry classifications. The survey also reports the average expenditure per employee by industry and firm size.

Findings on training time and expenditures show organization size to be a major determinant of employer-provided training. Across all industries, small organizations (50 to 99 employees) spent less money on training and provided significantly less training time per employee than larger organizations. Employees in the small companies also participated in the fewest number of training activities.

That situation is largely because organizations without formal training programs almost always have fewer than 100 employees. In 1993, BLS found that nearly 98 percent of all firms with more than 100 employees had formal training programs, compared with only 69 percent of small employers.

The 1995 Survey of Employer-Provided Training also investigated several workplace characteristics for their possible effects on formal training. The survey found that high levels of employee turnover and part-time employment correlate with low expenditures and less employee-training time. Across all industries, innovative workplace practices and employee benefits corresponded with high levels of training expenditure and training hours per employee.

Training abounds with high commitment

Overall, the survey findings provide additional evidence that employer-provided training is more likely to be found in firms with a high degree of employer-employee commitment and involvement. …

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