Magazine article Talent Development

Learning Investment & Hours Are on the RISE: Compared to Last Year, ATD's 2017 State of the Industry Report Shows Gains in Learning Expenditure and Learning Hours Used

Magazine article Talent Development

Learning Investment & Hours Are on the RISE: Compared to Last Year, ATD's 2017 State of the Industry Report Shows Gains in Learning Expenditure and Learning Hours Used

Article excerpt

Organizations continued to make healthy investments in employee learning in 2016, according to the Association for Talent Development. Its 2017 State of the Industry report, sponsored by LinkedIn Learning and Study.com, found that organizations spent $1,273 per employee in 2016 on direct learning expenditure compared with $1,252 in 2015.

Confirming organizations' commitment to learning, the average number of formal learning hours (which are standalone hours that are not embedded in work activities) used per employee also grew, reaching 34.1 hours in 2016, up from 33.5 hours in 2015. In fact, this is the fourth year in a row that has seen an increase in both the direct learning expenditure and the number of learning hours per employee.

Because formal learning hours do not capture time spent learning while working, ATD also provides a picture of on-the-job learning, which can happen during activities such as employee knowledge sharing, coaching by peers and managers, stretch assignments, job shadowing, and rotational training. ATD found that, for around two-thirds of organizations, on-the-job learning is a key priority.

A closer look at learning spending

The average direct learning expenditure per employee of $1,273 in 2016 represents a 1.8 percent increase from 2015. To provide some context for that figure, in 2016, the average inflation rate for advanced economies calculated by the International Monetary Fund (IMF) was 0.8 percent, so growth in learning spending outpaced inflation. More than 80 percent of the 299 organizations that submitted data for the State of the Industry are headquartered in advanced economies.

Direct learning expenditure can be divided into three broad categories: internal costs, external (outsourced) services, and tuition reimbursement. Internal costs include in-house development, delivery and administration expenses, and staff salaries. External services include consulting services, external content development and licenses, and workshops and training programs delivered by outside providers. Tuition reimbursement expenses include programs and courses at colleges and universities, as well as continuing professional education and certification.

In 2016, 61 percent of direct learning expenditure was directed toward internal costs. Just over a quarter (26 percent) went to external services. The remaining 13 percent went to tuition reimbursement.

Figure 1. Average Direct Expenditure per Employee

2009  $1,081
2010  $1,228
2011  $1,182
2012  $1,195
2013  $1,208
2014  $1,252
2015  $1,229
2016  $1,273

Note: Table made from bar graph.

Looking closely at the efficiencies and expenditures data also reveals that economies of scale are at work in the market for learning. Larger employers often can offer a program at a lower cost per person because they can spread out the development and delivery costs over more participants. The data reflect that: Small organizations with fewer than 500 workers spent, on average, $2,016 per employee on learning, whereas midsize organizations with 500 to 9,999 employees spent $973 and large organizations with at least 10,000 workers spent $673. Despite having the lowest average per-employee expenditure by far, large organizations saw their employees use more learning hours, on average, than workers at midsize and small organizations.

Differences also can be seen across industry groupings. In the latest State of the Industry, ATD provides benchmarks for four such groupings: finance, insurance, and real estate (FIRE); healthcare and pharmaceutical; management consulting; and manufacturing. Employees in some industries require more costly training than employees in others, or the knowledge they need evolves rapidly, necessitating changes and additions to learning content. Illustrating that, management consulting firms spent, on average, $1,967 per employee on direct learning expenditure. Their employees may require specialized knowledge, and these firms often are small or midsize. …

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