When tough times require budget cuts, employee training usually is one of the first line items in CFOs' crosshairs.
However, that may not be the case in this recession, at least for large companies that put a high priority on workforce learning, says the American Society for Training and Development.
ASTD's "2009 State of the Industry Report," released late last year, states that "despite the worst economic conditions in several decades, business leaders continued to allocate substantial resources to the learning functions in their organizations [in 2008]." While training and development suffered cuts along with all other operations, U.S. organizations "maintained a strong financial commitment to employee learning."
Furthermore, while numbers for 2009 have yet to be crunched, ASTD is optimistic that trend will hold. "Business leaders now understand that an ongoing financial and operational commitment is required to leverage human capital to the fullest, especially in difficult times," it states.
Spending benchmarks
U.S. employers spent $134.07 billion on T&D in 2008, which included staff salaries, administrative learning costs and non-salary delivery costs, ASTD estimates. On average, they spent $1,068 per employee, just 3.8% less than the $1,110 per employee allocated in 2007.
Companies' commitment to learning is even more evident when looking at T&D expenditures relative to organizational payroll, which has remained steady over the last few years. The average learning expenditure as a percentage of payroll actually increased from 2.15% in 2007 to 2.24% in 2008, indicating that "business leaders continue to see the value of learning relative to other 'people costs,'" ASTD maintains.
T&D expenditures as a percentage of organization revenue also have been consistent in recent years. On average, direct learning expenditure accounted for 0.59% of revenue in 2008 and 0.56% in 2007.
Outsourcing declines
Another trend has been the decline in spending on external training services. Since 2004, ASTD's annual survey shows companies have relied less on outsourcing every year. In fact, in 2008 nearly two-thirds of training expenditures went to internal T&D. The average percentage of the learning budget allocated to external services was only 22%, down from 25% in 2007.
Keeping T&D in-house seems to fly in the face of recession economics, but ASTD explains it this way: "Many learning departments have become firmly established within organizations over the past two decades, often including a sophisticated management and operational plan ... While some organizations did reduce learning staff and then outsource, the general trend suggests that the economy has not yet affected the growing capacity of internal learning departments."
Cutbacks haven't hurt
Learning professionals on HR staffs did more with less in 2008 - and did it well, ASTD's data show.
At survey respondents' companies, the average cost per learning hour decreased 8% from $1,660 in 2007 to $1,528 in 2008. At the same time, the learning staff worked more hours and handled more employees. The average number of hours used per learning staff member rose slightly from 5,497 to 5,507, and the the average number of employees per learning staff member was 253, up from 227 the previous year.
"The strained economy likely caused the loss of learning positions in some organizations, but the remaining learning professionals adapted and maintained volumes of work that were consistent with those from prior years," ASTD states.
Content and delivery
Training program content changed little in 2008 from previous years. Managerial and supervisory training, mandatory and compliance training, and process/business practices training remained in demand. Some categories that registered small drops included executive development, new employee orientation, customer service and basic skills.
Companies put slightly more emphasis on IT training, since knowledge in this area tends to increase efficiency, ASTD reports. They also ramped up sales skills training in hopes of driving business.
Mentoring also grew in importance at many companies, according to providers of formal mentoring programs (see chart).
Perhaps most surprising to ASTD was the finding that use of e-learning declined and instructor-led courses increased in 2008.
"After several years of consistent growth, the proportion of formal learning hours used and made available through technology-based delivery methods decreased in 2008," the group reports. "Instead, instructor-led, real-time classroom learning events rebounded and accounted for nearly two-thirds of hours used and made available. This is puzzling considering all the advances in technology-based training in recent years."
ASTD speculates that HR may have experienced pressure to maximize attendance at live instructor-led sessions. "Since the costs associated with those sessions are mostly fixed around instructor fees, employees likely were encouraged to attend as many in-person learning events as possible for the organization to break even on its investment."
This situation will probably be short-lived, and e-learning will quickly rebound, it says.
ROI measurement still lacking
The best way to ensure that training does not fall to the budget axe is by demonstrating the return on investment. Unfortunately, most companies are unsuccessful at this.
According to an ASTD research report titled "The Value of Evaluation," only one-fourth of 704 HR/learning professionals surveyed agreed their companies are getting a good return on money spent on T&D evaluation, and just over a third indicated their learning evaluation techniques help them meet their learning and business goals.
The report cites several barriers to proper evaluation, including the complexity of ROI metrics, the difficulty in isolating training as a factor in behavior, and lack of interest and support from senior management. However, these are not excuses for inaction, ASTD maintains.
"Learning professionals in many companies clearly need to take a hard look at their evaluation programs. If they don't think they're getting a solid return on investment, then they should conduct a rigorous analysis of how, in the future, this can be achieved."
Despite considerable challenges, learning professionals are "adapting and delivering," ASTD concludes.
"As economic uncertainty persists, there is an opportunity for the learning function to play an even more important role in preparing for the recovery. Contemporary professionals are demanding as much learning content as they can get, and there are a host of new technologies available to deliver it to them formally and informally. The coming years will provide plenty of opportunities for the learning profession to broaden its role within the workplace and set the stage for continued success."
