Learning and Development Spending Soars

Companies invest to close skills gap

To address the ever-widening talent gap in a job market where organizations compete heavily for skilled talent, overall spending on learning and development (L&D) rose 10% to $1,004 per employee in 2014, according to new research from Bersin by Deloitte, Deloitte Consulting LLP.

The 2014 findings mark the fifth consecutive year increase and appear in Bersin by Deloitte’s new industry study, “The Corporate Learning Factbook 2015: Benchmarks, Trends and Analysis of the U.S. Training Market.”

Summarized in a WhatWorks market brief, the research shows that many organizations are increasing their investment in internally-developed talent because they realize that they cannot recruit all the talent they need from external sources.

The research also reveals that the roles and responsibilities of most L&D practitioners have grown more diverse. Traditionally, L&D practitioners were primarily responsible for creating and disseminating internally-developed content. These so-called “bedrock” roles of L&D, occupied 50% of surveyed practitioners’ time in 2011 and 41% of their time in 2014, a difference of nearly 10 percentage points.

In 2014, respondent L&D organizations allocated 8% of their staff time to curating information. That means L&D staff typically spend more time on sourcing and incorporating a variety of externally-produced content into current learning portfolios. Many L&D leaders say such externally-produced content can help them to better address the changing needs of both businesses and learners.

“The need to develop existing employees is a pressing matter, especially at a time when very few organizations believe their employees possess the skills necessary to perform their roles effectively, as indicated in the Deloitte ‘Global Human Capital Trends 2015’ report,” said Dani Johnson, vice president, Learning and Development Research, Bersin by Deloitte, Deloitte Consulting LLP.

“To compete in the marketplace, organizations should focus on long-term goals and ensure that employee development builds baseline proficiencies. They should also align workers with the needs of the business, and training staff to meet present objectives while ensuring that the talent pipeline is equipped to address future challenges.”

Data for this study was collected from 295 U.S. organizations from January to May 2015. Findings of the new research, which as in past years includes essential training spending metrics, reflect changes made to this year’s survey, which increased the minimum number of employees for respondent consideration to 1,000-plus (midsize organizations), from 100-plus (small-sized organizations) just a year ago. Bersin by Deloitte also adjusted the organization size definitions to provide a more granular level of insight into market specifics.

Among the study’s other key findings:

• L&D organizations reprioritize responsibilities. Typically, demands on the L&D function have increased at the same time as their availability to address these requests has decreased, forcing them to reprioritize their responsibilities. As a result, surveyed organizations increased their reliance on outside service providers by 4 percentage points in 2014, with external services comprising 13% of total L&D spending. Of this, 22% went to purchase off-the-shelf content and 15% to the development of custom e-learning content.
• Mature organizations spent 38% more. Surveyed organizations with mature, effective L&D functions spent $1,317 per learner on average, or 38% more than the least mature groups. Organizations at this level tend to focus more on professional and industry-specific training to help augment organizational capabilities and strengthen operations, while those at the lowest level often focus more on compliance and meeting individual needs through an ad hoc approach to training.
• Instructor-led training drops. While still the top delivery method among those surveyed, instructor-led training dropped 9 percentage points to occupy 35% of practitioners’ time. Some of this allotment was reallocated to e-learning, while some went to other up-and-coming and nontraditional method of L&D delivery, such as self-directed studying.