Highlights from ATD’s latest industry benchmarking report.
The average organization had a direct learning expenditure of $1,299 per employee in 2018. The result of that investment was that each worker used 34 hours (slightly more than four eight-hour workdays) of formal learning. Those statistics are from the Association for Talent Development’s 2019 State of the Industry report, which is sponsored by the American Management Association.
To reach their conclusions, ATD’s researchers analyzed data from 318 organizations representing a diverse range of industries, company sizes, and locations. In 2017, average learning spending and hours were almost identical to 2018, at $1,296 and 34.1, respectively. Formal learning hours are those that are stand-alone and not embedded in work activities.
Background
The majority of participating organizations have headquarters in what the International Monetary Fund refers to as advanced economies (these countries usually have a high gross domestic product per capita and are significantly industrialized). The IMF reports that inflation in advanced economies was 2 percent in 2018—larger than the very small growth in learning spending, which was less than half a percent. The IMF notes that after strong growth in early 2018, global economic activity slowed in the second half of the year, with trade tensions taking a toll on business confidence. According to the International Labour Organization, global unemployment was 5 percent in 2018, which is relatively low. Worldwide, employment in agriculture dropped while employment in services (a broad grouping that includes financial services, healthcare, and tourism, among other industries) increased.
For the average company in the State of the Industry, direct learning expenditure represented 1.2 percent of revenue in 2018, similar to the previous year.
Learning suppliers and tuition reimbursement
So where did the learning budget go? Direct learning expenditure can be divided into three categories: internal services, learning suppliers, and tuition reimbursement. Internal services include in-house development, delivery and administration expenses, and talent development staff salaries. Learning suppliers provide consulting services; external content development and licenses; and outside, nonstaff trainers. And tuition reimbursement expenses include programs and courses at colleges and universities, as well as continuing professional education and certification.
In 2018, 62 percent of direct learning expenditure went toward internal services. Just over one-fourth (27 percent) went to learning suppliers, which is similar to the previous year, and the remaining 11 percent went to tuition reimbursement. The figure for tuition reimbursement has ranged from 8 percent to nearly 15 percent in recent years.
A World at Work study shows that 92 percent of employers offer tuition reimbursement benefits to at least some employees. And TalentCulture has found that only 5 percent of workers use the benefits at these organizations, but the median annual reimbursement limit toward an undergraduate degree is a hefty $5,250 (note that in the United States, employees must pay taxes on tuition benefits over this amount).
Workforce size and key industries
The State of the Industry cautions that organizations should consider their workforce size when benchmarking learning spending and activities (see the “A Word About Benchmarking” sidebar below). Larger employers realize cost advantages—they can provide the same learning offerings at a reduced cost per person because they can spread out many of the development and delivery costs over more employees (economies of scale). For example, an employer with thousands of workers may onboard dozens of workers at once, while an onboarding session at a 75-person firm may only involve a couple employees.
ATD’s researchers broke down the efficiencies and expenditures data by company size and found that they support this story: Large companies (at least 10,000 employees) had an average direct-learning-per-employee expenditure of $707, compared with $787 for midsize companies (500 to 9,999 employees) and $2,412 for small companies (fewer than 500 employees). Even though they spent the least, large companies taking advantage of economies of scale saw their workers use the most learning hours by far (more than 50 hours per person in 2018).
The research team also explored the data by broad industry groupings. For example, the average direct learning expenditure for manufacturers was less than half of the average across all industries. Not only are manufacturers often large, but content may not need to be specialized or updated frequently. And even if manufacturers were headquartered in advanced economies, they were more likely to have operations in emerging market and developing economies, where the costs of goods and services and salaries are lower.
By contrast, finance, insurance, and real estate companies spent more than the average across all industries. This industry grouping covers a stunningly diverse array of companies, including some that provide complicated and heavily regulated services and products or complete single transactions or deals with extremely high values. Another industry grouping that spent more than the average across all industries is the software, information, and broadcasting group.
Content areas in 2018
The top learning content area continues to be managerial and supervisory (14 percent of the learning portfolio). It’s not surprising that companies are concerned about managerial skills; the ATD report Bridging the Skills Gap: Workforce Development and the Future of Work found that nearly two-thirds of talent development professionals thought their organizations were experiencing a gap in managerial and supervisory skills. Although managerial and supervisory training was the leading content area in 2018, there may be room to make that training more effective. ATD’s research report Developing New Managers: Key Elements for Success discovered that only 37 percent of organizations would rate their training for new managers as highly effective.
Mandatory and compliance takes the second spot (13 percent of the learning portfolio), while interpersonal skills (such as communication and teamwork) ranked third (10 percent of the learning portfolio). Bridging the Skills Gap reveals that the biggest skills gap exists in interpersonal skills. The fourth-largest piece of the learning portfolio is profession- or industry-specific skills (for example, accounting or nursing skills), followed by processes, procedures, and business practices; and then new employee orientation. ATD’s research report Onboard, Engage, and Develop: How Organizations Improve Effectiveness found that talent development professionals believe that onboarding will become even more important to organizations in the next few years.
Delivering formal learning
Slightly more than half (54 percent) of the formal learning hours used in 2018 were delivered using the traditional, live, face-to-face classroom, similar to the previous year. Organizations delivered another 11 percent of hours used through virtual classrooms, which rely on technology to connect a live instructor with learners. Employers can use virtual classrooms to reach dispersed workforces in real time while reducing or eliminating travel costs and time. The fact that about two-thirds of learning hours used were delivered in a traditional or virtual classroom underscores the importance of skilled trainers.
Self-paced online delivery (e-learning) accounted for 22 percent of hours used (see Figure 3). Among those companies that offer and track e-learning use, about eight in 10 have employees who access it on a laptop computer on a frequent basis and about seven in 10 have employees who use a desktop computer. Also, at slightly more than 40 percent of companies, employees frequently use smartphone browsers to access e-learning. However, use of smartphones to access e-learning varies widely by industry, perhaps due to differences in policies, security concerns, and attitudes related to the use of those devices in the workplace.
A closer look at on-the-job learning
Note that the detailed formal learning hours available and used only account for stand-alone learning occurring separately from job activities. However, at many organizations, learning experiences that happen during work are critical to employee development. Recognizing this, ATD asked respondents to assess their companies’ commitment to on-the-job learning activities (defined as any learning that is not a stand-alone activity and is intertwined with work activities).
In 2018, 55 percent of organizations emphasized on-the-job learning to a high or very high extent (see Figure 4). Another 33 percent emphasized it to a moderate extent. Only 2 percent did not emphasize it at all. Although knowledge sharing happened to a high or very high extent in slightly more than half of companies, some types of on-the-job training, such as rotational training programs and apprenticeships, were much rarer and were not in place at all in many organizations.
Download the 2019 State of the Industry report online at www.td.org/SOIR2019 or in the ATD Publications app.
About the Survey
The target survey population was organizations of various sizes and industries. The Association for Talent Development distributed a link to an online survey to the target population in June 2019. The survey closed in August.
A total of 318 unique companies submitted data for fiscal or calendar year 2018. All organization-level data are confidential; responses are aggregated, and only summary statistics across groups are reported. ATD does not share, sell, or discuss any individual-level data.
A Word About Benchmarking
The data presented in the State of the Industry report will aid readers in benchmarking their own organizations’ learning expenditures and activities against those of other organizations. To make benchmarking comparisons more meaningful, review the data by industry and workforce size groupings when possible.
However, be aware that all figures reported here are averages across groups, and the circumstances your company faces may be vastly different from those the average participating organization or even the average organization in the industry faces. Therefore, companies should not aim to replicate the numbers provided in the report but rather use the data as a benchmark so they can better understand their own learning expenditures and activities, as well as those of their peers.
