Despite current economic challenges, senior executives continue to invest in developing their employees and understand that a highly skilled workforce is a strategic differentiator. Data from more than 400 organizations across all major industries demonstrate that learning and development is critical to drive growth and sustain a competitive advantage.
The findings of ASTD's 2011 State of the Industry Report show that organizations are just as committed as ever to learning and development (L&D). ASTD estimates that U.S. organizations spent about $171.5 billion on employee L&D in 2010. This amount includes direct learning expenditures such as the learning functions staff salaries, administrative learning costs, and nonsalary delivery costs. Sixty percent ($103 billion) of total expenditures were spent on internal expenses and the remaining 40 percent ($68.5 billion) contributed to external expenses.
The 2011 State of the Industry Report data from more than 400 responding organizations across all major industries show that, overall, organizations continue to be committed to the delivery of knowledge and the development of employees at every level. As evidence, they're investing more in learning and development per employee, maintaining the same number of learning hours, and increasing their expenditure on tuition reimbursement.
Efficiencies and expenditures
Financial commitment to learning remained strong as evidenced by increased direct expenditure per employee. The average direct expenditure per employee increased from $1,081 ($1,098 inflation adjusted) in 2009 to $1,228 in 2010. Overall, that represents nearly a 13 percent (11.83 percent inflation adjusted) increase in the amount spent per employee on L&D activities and infrastructure. This year's average expenditure represents the largest consolidated direct expenditure per employee since ASTD began collecting the data.
Despite the fact that the direct expenditure per employee increased in 2010, learning hours used per employee remained stable in 2010 at 32 hours of formal learning content delivered per employee—revealing that organizations paid more for each hour of learning content used per employee. BEST Award winners historically deliver more learning content to employees than the organizations in the consolidated sample. The 2011 BEST organizations—comprised of this year's 32 BEST Award winners—delivered 24 more hours than the consolidated group, and registered the highest average volume of learning hours (56 hours per employee) since ASTD began collecting data for this group. The previous high average volume of learning hours was 47 hours in 2009, also achieved by the BEST group.
The direct expenditure on learning as a percentage of payroll has remained stable in recent years, and 2010 was no exception. For the consolidated group, this measure increased from 2.2 percent in 2009 to 2.7 percent in 2010. The BEST organizations average direct expenditure as a percentage of payroll increased by more than 1 percent, from 2.2 percent in 2009 to 3.3 percent in 2010.
Although the learning hours used by organizations remained stable in 2010, the associated cost per learning hour used increased by 14.2 percent, from $63 in 2009 to nearly $72 in 2010. In addition, the cost per learning hour available increased by 1.2 percent, from $1,399 in 2009 to $1,415 in 2010. The third data set—Fortune Global 500 companies (G500)—registered the lowest costs for these measures at $35 per learning hour used and $1,206 per learning hour available. The low costs for the G500 are primarily influenced by economy of scale and efficiency factors. They also commit a larger percentage of their L&D budgets to external services and have fewer L&D staff members per employee.
The reuse ratio—which refers to the ratio of learning hours consumed to the learning hours produced—dropped by 6 percent, from 56.3 hours in 2009 to 52.9 hours in 2010, meaning that each hour of content was delivered fewer times. The reuse ratio describes the reach of learning programs or the degree to which the learning function can, in the words of one learning executive, develop once/deploy everywhere. Although it is declining, the reuse ratio is above the 45.7 consolidate average over time.
Learning hours used per learning staff member decreased by 20 percent, while the hours available decreased by more than 7 percent—indicating overall decreases in the delivery and consumption of learning content for the year.
Driven by an organization's learning function, the training delivered annually evolves to meet the dynamic needs of the organization and its employees. Prioritizing the learning content topics, the volume of delivery, and the methods with which content is delivered can be driven by several factors, including the organization's size, industry, budget, and strategic learning objectives, among others.
In the report, 12 content areas are identified. The leading content area for the consolidated group is management and supervisory learning. Manager and supervisory content also registered the greatest percentage increase change, going from 10.4 percent in 2009 to 12.8 percent of the content delivered in 2010. Profession- or industry-specific content came in second at 11.3 percent, and mandatory and compliance third, at 10 percent. Not uncommon, the least amount of content delivered was basic skills, at 4.1 percent, indicating that organizations are focusing the majority of development on topics of strategic importance to driving performance and investing in more advanced skill sets.
Content delivery methods
Instructor-led classroom delivery continues to be the most widely used delivery method. About 70 percent (a 3 percent increase from 2009) of all training is delivered in the classroom—both online and live—and 60 percent of that is delivered by live instruction. The BEST organizations decreased their total instructor-led percentage from 73.5 percent in 2009 to 67.4 percent in 2010. The G500 deliver 64.7 percent of learning content via live instruction in a classroom.
In 2010, technology-based delivery declined overall for the consolidated group, from 36.3 percent in 2009 to 29.1 percent in 2010. Technology delivery also declined slightly for BEST organizations. G500 registered the highest usage of technology-based delivery methods, delivering more than 40 percent of content via some form of technology.
The 2010 decline in the total amount of content delivered via technology by organizations in the consolidated group is atypical of previous year's results and is a trend that we do not expect to continue over time. Many organizations are investing in technology-based delivery systems and methods, and the growing use of technology to deliver content—especially through social media tools—will continue to shape the future of the learning field.
For example, mobile learning is continuing to gain traction—and has the potential to revolutionize content delivery for L&D. Additionally, ASTD's research demonstrates that leading-edge L&D departments incorporate more technology components and processes than their lesser performing counterparts. As the economy and the employment situation stabilize, we expect a return to the growing use of technology to design, deliver, and manage L&D. Adoption of e-learning in support of L&D frequently produces efficiency gains, increases content reuse, and decreases overall costs for learning delivery.
Nonetheless, creating a robust e-learning program requires commitment and investment in development costs. As organizations deploy more e-learning platforms and capabilities, the use of live instructor-led delivery methods will correspondingly decrease, but not entirely. Ultimately, in the coming years we expect to see a more balanced distribution between instructor-led and technology-based delivery methods, and a broader adoption of mobile and social learning technologies.
As the economy continues to challenge all industries, there is no more important time than now to examine how organizations respond by building the skills of their workforce. We hope these data are used by executives and managers to better understand how learning directly affects employee and organizational performance, and to help learning professionals support and defend the learning functions importance and value to improving the bottom line.
Download or purchase the 2011 State of the Industry Report.