ABOUT THIS STUDY
Now in its 32nd year, The Industry Report is recognized as the training industry’s most trusted source of data on budgets, staffing, and programs. This year, the study was conducted by an outside research firm in May/June 2013, when members from the Training magazine database were e-mailed an invitation to participate in an online survey. Only U.S.-based corporations and educational institutions with 100 or more employees were included in the analysis. Agencies of the state, local, and federal government were not included in the analysis.
The data represents a cross-section of industries and company sizes.
Note that the figures in this report are weighted by company size and industry according to a Dun & Bradstreet database available through Hoovers of U.S. companies. Since small companies dominate the U.S. market, in terms of sheer numbers, these organizations receive a heavier weighting, so that the data accurately reflects the U.S. market.
TRAINING EXPENDITURES
In a year roiled by government sequester; deadly wildfires, floods, and tornadoes; and the continued economic toll from Superstorm Sandy, total 2013 U.S. training expenditures—including payroll and spending on external products and services—remained relatively flat at $55.4 billion (down just slightly from $55.8 billion last year). Training payroll increased substantially, from $36.4 billion to $39.9 billion, but spending on outside products and services decreased significantly from $7.4 billion to $5.7 billion.
The training budget figure was calculated by projecting the average training budget to a weighted universe of companies, using a Dun & Bradstreet database available through Hoovers of U.S. organizations with more than 100 employees. It is interesting to note that although small companies have the smallest annual budgets, there are so many of them that they account for 62 percent of the total budget for training expenditures.
DEFINITIONS
>Total training spending: All training-related expenditures for the year, including training budgets, technology spending, and staff salaries.
>Training staff payroll: The annual payroll for all staff personnel assigned to the training function.
>Outside products and services: Annual spending on external vendors and consultants, including all products, services, technologies, off-theshelf and custom content, and consulting services.
Average training expenditures for large companies increased from $11.3 million in 2012 to $17.6 million in 2013, while small companies remained basically flat ($301,082 in 2013 vs. $294,532 in 2012), and midsize companies saw a decrease from $2 million to $1.2 million.
Some 34 percent of organizations said they increased staff from the year before (up from 29 percent in 2012), while 48 percent said the level remained the same (down from 51 percent in 2012). Some 18 percent said it was lower vs. 20 percent in 2012. Large services organizations have the largest personnel costs at an average of $3.4 million. Across all organization types, large companies spend roughly three times as much as midsize ones, and midsize companies spend approximately four times as much as small ones. The average payroll figure for large companies was $2.1 million; for midsize organizations, it was $750,197; for small companies, it was $190,177.
For those who reported an increase in their training staff, the average increase was nine people, one more than in 2012. For those who reported a decrease in their staff, the average decrease was 13 people—down from 18 last year.
Other training expenditures continued to spiral downward to $9.7 billion from $12 billion in 2012. Such expenditures can include travel, training facilities, and equipment. On average, organizations spent 18 percent of their budget or $324,938 (vs. $556,719 last year) on learning tools and technologies. Manufacturers/distributors spent the highest portion of their budgets on tools and technology (an average of 30 percent). Large education organizations and midsize services organizations spent the smallest percentage of their training budget on tools and technology (2 and 12 percent, respectively). Looking ahead, 38 percent of organizations plan to purchase learning management systems (vs. 29 percent last year), while 37 percent said they will buy online learning tools and systems (vs. 38 percent last year), followed by content development (30 percent vs. 25 percent last year) and classroom tools/systems and authoring tools/ systems (both at 29 percent vs. 28 percent and 35 percent, respectively, last year).
Overall, on average, companies spent $881 per learner this year compared with $1,059 per learner in 2012. Manufacturers, service providers, and government/military organizations spent about equally, with retail/wholesale companies spending the least. Economy of scale is evident as larger organizations tend to spend less per learner than midsize or small companies.
On average, employees receive 37.5 hours of training per year, three-and-a-half hours less than last year. In general, midsize companies tend to have more hours of training this year at 38.8. Retail/wholesale and services organizations have the highest average number of hours overall (43.3 and 40.4 respectively). Large retailers provide the most number of average hours at 53.8.
Companies continue to devote the bulk of their training expenditures to training non-exempt employees (42 percent, down from 44 percent in 2012). Training for exempt non-managers inched up a bit from 27 percent to 30 percent in 2013.
TRAINING BUDGETS
Budget status was almost evenly split, with 41 percent saying their training budget increased and 40 percent saying it remained the same. Some 19 percent reported a decrease in budget. Last year, 35 percent said their budget went up, 43 percent said it remained the same, and 22 percent said it went down. Government/military organizations showed the greatest tendency for training budget cuts, while retailers/wholesalers and manufacturers/ distributors showed the largest gains. While large companies showed a similar percentage of decreases and increases (30 percent vs. 37 percent), small and midsize companies showed a higher proportion with increased budgets. The effect is more strongly seen in the small organizations, where almost 4.5 times as many showed an increase than showed a decrease.
Some 37.8 percent saw increases in the 6 to 15 percent range, while 26.9 percent of organizations reported increases in the 1 to 5 percent range. Most respondents who reported an increase in their training budgets attributed it to the following reasons:
• Increase in the scope of their training programs (61 percent vs. 56 percent last year)
• Added training staff (49 percent, same as last year but jumped from the No. 3 to No. 2 reason)
• More learners served (40 percent vs. 52 percent last year)
Like last year, the majority (31 percent) of respondents reported budget decreases between 6 and 15 percent. Some 56 percent chose “other” as the reason for the decrease, citing “Congressional mandate/sequester,” “budget cuts for training tools,” “decreased funding” (nonprofit), and “impending merger,” among others. This was followed by:
• Staff reductions (52 percent; up from 45 percent)
• Attended fewer outside learning events (50 percent; up from 40 percent and jumping from the No. 4 to No. 3 reason)
• Budget adjustments to reflect lower costs (47 percent; up from 46 percent last year)
Like the last two years, the highest percentage of organizations (29 percent) said management/supervisory training will receive more funding than the year before. On average, organizations plan to allocate the most funding to management/supervisory training at $345,051, on boarding ($316,983), and mandatory/compliance training ($228,711).
The most important priorities for training in terms of allocating resources in 2013 are: increasing the effectiveness of training programs (32 percent vs. 26 percent last year) followed by reducing costs/improving efficiency (20 percent vs. 26 percent last year), and increasing learner usage of training programs (14 percent vs. 15 percent last year). Like last year, learning infrastructure/ technology initiatives and obtaining revenue through external training remain the lowest priorities.
TRAINING DELIVERY
Technology usage for training delivery crept up in 2013. Nearly 44 percent of training hours were delivered by a stand-and-deliver instructor in a classroom setting—down a bit from the 45.2 percent reported last year.
• 28.3 percent of hours are delivered with blended learning techniques, up a bit from 27 percent last year.
• 25.9 percent of hours are delivered via online or computer based technologies, up slightly from 24.7 percent last year. Virtual classroom/Webcast accounted for nearly 16 percent of hours delivered, up from 13 percent last year.
• 1.9 percent of training hours are delivered via mobile devices, up from 1 percent in 2012, while social learning accounted for 3.3 percent of hours, up from 1.1 percent last year.
Small (48.6 percent) and midsize (41.8 percent) companies continue to rely on instructor-led delivery methods more so than large companies (37.7 percent). Blended learning is fairly even across companies of all sizes, ranging between 20.7 percent for large companies and 35.1 percent for small ones. Like last year, large companies appear to be focusing on online or computer-based methods (28.1 percent vs. an average of 25.3 percent for small and midsize companies).
Mandatory or compliance training continues to be done mostly online, with 72 percent of organizations doing at least some of it online and 21 percent entirely online (down from 23 percent last year). Online training also often is used for desktop application training (56 percent, down from 58 percent last year) and IT/systems application training (58 percent, the same as last year). Online training is least used for executive development (34 percent, up from 28 percent last year), sales training (30 percent), and on boarding (29 percent).
Of the learning technologies presented, the most often used include:
• Virtual classroom/Webcasting/video broadcasting (78 percent, up from 70 percent last year). This replaced learning management systems as the technology used most often.
• Learning management system (LMS) (74 percent, up from 73 percent)
• Rapid e-learning tool (49 percent, down from 56 percent last year).
The delivery methods least often used for training remain the same as last year:
• Podcasting at 19 percent (up from 17 percent last year)
• Learning content management system (LCMS) at 26 percent (up from 22 percent last year)
• Online performance support (EPSS) or knowledge management system at 25 percent (up from 23 percent in 2012)
TRAINING OUTSOURCING
2013 saw a sizeable decrease in the average expenditure for training outsourcing: $140,345, down from $592,679 in 2012. Large companies on average spent $476,667 vs. $140,918 for midsize companies and $36,905 for small ones. An average of 8 percent of the total training budget was spent on outsourcing in 2013 vs. 23 percent in 2012.
On average, 27 percent of companies completely outsource LMS operations/hosting (vs. 23 percent last year). LMS administration and learner support, however, continue to be mostly handled in-house, with only a small amount (7 percent and 2 percent, respectively) mostly or completely outsourced.
• Outsourcing LMS operations/hosting decreased to 48 percent from 55 percent in 2012.
• Instruction/facilitation again is the most often considered for some degree of outsourcing, up from 49 percent last year to 56 percent this year.
The level of outsourcing is expected to stay relatively steady in 2014—some 81 percent of organizations said they expect to stay the same in the outsourcing area. And the percentage of companies expecting to increase use is almost exactly offset by those organizations expecting to decrease outsourcing for the same functions. In learner support, twice as many companies say they will be doing less than those that say theay will be doing more. LMS hosting is just the opposite, with twice as many saying they will increase outsourcing.
For LMS administration, large companies will be doing less, and midsize companies will be doing more. Midsize companies also show an imbalance in instruction/facilitation, with more saying they anticipate less outsourcing next year.
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