Training expenditure grows despite economic downturn

Citation

(2002), "Training expenditure grows despite economic downturn", Industrial and Commercial Training, Vol. 34 No. 4. https://doi.org/10.1108/ict.2002.03734dab.001

Training expenditure grows despite economic downturn

Training expenditure grows despite economic downturn

Keywords: Employee development, Training, Business development, Small-to-medium-sized enterprises, Trends

Companies are spending more on employee training and e-learning has reached its highest level since 1997, according to the 2002 ASTD State of the Industry Report from the American Society for Training and Development (ASTD).

Tina Sung, ASTD president and chief executive, observed: "The continued growth in training is encouraging. It illustrates that companies are beginning to understand the importance of investing in their people."

Training expenditures for many organizations did not decline with the economic downturn; in fact, companies expected spending on training to grow by 10 per cent between 2000 and 2001.

Tina Sung noted: "Savvy leaders realize the importance of linking their training investments to the strategic business goals of an organization. A learning plan is as important to an organization as a marketing or financial plan."

Mark Van Buren, director of research for ASTD, said: "Unfortunately, the public perception of training is heavily influenced by the impact of the economic downturn on large, global companies, like those in the Fortune 500. Some of these highly-visible companies have been hit hard. Most of these companies have experienced cutbacks in training expenditures that are likely to last into 2002. However, this is not the case for the small and medium-size firms. ASTD's data show that these organizations are continuing to invest in employee training, and these firms expect their expenditures to increase in the future."

Additional key findings of the study include:

• •

  Total training expenditure increased both on a per-employee basis ($677 in 1999 to $704 in 2000) and as a percentage of annual payroll (1.8 per cent in 1999 to2 per cent in 2000). Training expenditures are projected to increase in both 2001 and 2002.

• •

  Companies that made a dedicated commitment in 2000 to developing the knowledge, skills and abilities of their employees spent an average of $1,574 on training per employee – more than double what the average company spent.

• •

  Industry sectors spending the most on training as a percentage of payroll in 2000 included finance, insurance and real estate (2.8 per cent); transportation and public utilities (2.7 per cent); and technology (2.5 per cent).

• •

  E-learning reached new heights as firms began using learning technologies to deliver more training (8.8 per cent in 2000). Despite a levelling off of e-learning during past years, most firms indicated that they have made significant investments in e-learning systems and courseware, and that their e-learning expenditure would continue to grow into 2001 and beyond.

• •

  Outsourcing increased as firms spent a larger percentage of training expenditure on outside providers (19.9 per cent in 1999 to 22.2 per cent in 2000). Preliminary indications suggested that this percentage would rise in 2001.

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  Firms spent the largest share of training expenditure on training in technical processes and procedures and information technology (IT) skills (13.5’per cent and 11 per cent, respectively). Training in managerial and supervisory skills, occupational safety and product knowledge all gained 9 per cent of the typical firm's training expenditures. "Firms reported similar findings in 1999 and 1998, indicating that these kinds of skills continue to be important components of their training agenda", said Mark Van Buren.

Additional findings from the report include the major trends shaping the workplace-learning and performance industry. Practitioners and experts from various sectors – including business, non-profit and academia from around the world – identified the top ten trends affecting the future of training and the workplace-learning and performance fields.

The top three trends identified were:

1. 1.

   Money: increasing pressure from shareholders for short-term profits means that there is a greater pressure on employees to produce results and on training to show a return on investment.

2. 2.

   Diversity: the growing cultural diversity of organizations means a greater need for people with different backgrounds to work together and find better ways of balancing the local with the global.

3. 3.

   Time: the increasing expectation for just-in-time products and services is resulting in shorter timeframes for learning, often facilitated through technology.

These top three trends, in addition to others, create a rapidly-changing picture of the workplace-learning and performance field.

Mark Van Buren noted: "The data and trends in this report show that learners are taking greater control of their learning, training providers are trying to demonstrate the value of the services and products they offer, and practitioners are trying to make their work more relevant to the needs of organizations and their employees."

The 2002 ASTD State of the Industry Report includes findings from 367 US organizations that participated in the benchmarking service during 2001 and provided sufficient amounts of valid information on their training activities during 2000 and the early part of 2001.

The benchmarking service is free and participation is open to all organizations. Additional information on how to take part may be found on the Internet at: http://www.astd.org/virtual_community/research/measure/bnch_svcs.html