To view the full report with the charts, visit: https://pubs.royle.com/publication/?m=20617&i=678873&p=24
ABOUT THIS STUDY
Now in its 39th 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 May-July 2020, 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.
The data represents a cross-section of industries and company sizes.
SURVEY RESPONDENTS
Small companies (100-999 employees): 40%
Midsize companies (1,000-9,999 employees)” 34%
Large companies (10,000 or more employees): 26%
Total respondents: 202
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
COVID-19 started to take a toll on total U.S. training expenditures in 2020 as they declined more than half a percent to $82.5 billion. Training payroll dropped nearly 18 percent to $42.4 billion as employees were laid off or furloughed. But spending on outside products and services bounced back from $7.5 billion to $10.7 billion, while other training expenditures (i.e., travel, facilities, equipment) increased to $29.4 billion from $23.8 billion.
The training expenditure figures were calculated by projecting the average training budget to a weighted universe of 130,281 companies, using a Dun & Bradstreet database available through Hoovers of U.S. organizations with more than 100 employees.
Note: Although small companies have the smallest annual budgets, there are so many of them (101,258) that they account for one-third of the total budget for training expenditures.
Average training expenditures for large companies increased from $17.7 million in 2019 to $22 million in 2020. The number for midsize companies dipped nearly $900,000 to $808,355 in 2020. Small companies increased from $367,490 to $506,819.
Some 22 percent of organizations said they increased staff from the year before, while 55 percent said the level remained the same. Some 23 percent said it was lower, up from 14 percent in 2019. Large manufacturers and midsize services organizations had the largest personnel costs. This year, midsize companies spent only one-fifth as much as large companies, while small companies spent about one-quarter as much as midsize ones. The average payroll figure for large companies was $4.9 million; for midsize organizations, it was $987,713; for small companies, it was $246,125.
For those who reported an increase in their training staff, the average increase was 10 people, double the 2019 figure. For those who reported a decrease in their staff, the average decrease was 11 people—down from 16 last year.
Other training expenditures increased this year to $29.4 billion from $23.8 billion in 2019. Such expenditures can include travel, training facilities, in-house training development, and equipment. On average, organizations spent 16 percent of their budget or $708,255 (up from $445,434 last year) on learning tools and technologies. Large retailers/wholesalers had the largest budgets for learning tools ($5 million). Midsize manufacturers had the largest tool budget in their size range ($1.1 million). Midsize retailers spent the smallest percentage of their training budgets on tools and technologies (1 percent).
Looking ahead, the most frequently anticipated purchases are learning management systems and online learning tools and systems (41 and 40 percent, respectively, vs. 31 percent and 44 percent, respectively last year); authoring tools/systems at 37 percent vs. 34 percent last year; and content development (34 percent in 2019 and 2020). This is followed by audio and Web conferencing products and systems (31 percent in vs. 21 percent in 2019); classroom tools and systems (26 percent vs. 25 percent last year); and mobile learning, certification, and courseware design (all at 23 percent vs. 23, 26, and 18 percent, respectively, in 2019). Several items received 10 percent or less of hits, including audience response systems, customer relationship management, training management administration, translation and localization, and Web 2.0.
Overall, on average, companies spent $1,111 per learner this year compared with $1,286 per learner in 2019. Education organizations spent the most per learner this year ($1,875), followed by services organizations ($1,295). Midsize companies spent less ($581) than large ($924) and small ($1,678) companies.
While spending less per learner, companies provided more hours of training than last year. On average, employees received 55.4 hours of training per year, compared to 42.1 hours last year. Large companies provided the most hours of training this year (102.6). Large retailers/wholesalers had the highest average number of hours overall (220).
Companies continued to devote the bulk of their training expenditures to training non-exempt employees (45 percent in 2020 vs. 39 percent in 2019).
TRAINING BUDGET
This year, likely resulting from the pandemic, the number of companies reporting their budgets decreased more than doubled to 28 percent. Some 23 percent of respondents said their training budget increased, while 49 percent said it remained the same. Last year, 42 percent said their budget went up; 46 percent said it remained the same; and 12 percent said it went down. Services companies and associations showed a greater tendency for gains; retailers/wholesalers saw more decreases. Increases were not evenly distributed across organization sizes. Large companies showed the greatest number of decreased budgets (42 percent vs. 15 percent for midsize companies and 31 percent for small ones).
Most of the budget increases were modest—less than 16 percent. Some 36 percent saw increases in the 1 to 5 percent range, while 29 percent of organizations reported increases in the 6 to 15 percent range and 24 percent in the 25-plus percent range. Most respondents who reported an increase in their training budgets attributed it to the following reasons:
- Increased scope of training programs (64 percent vs. 67 percent last year)
- Added training staff (47 percent vs. 53 percent last year)
- Purchased new technologies/ equipment (47 percent vs. 46 percent last year)
- Increased number of learners served (42 percent vs. 43 percent last year)
This year, half of the respondents reported budget decreases of more than 16 percent. Some 36 percent reported budget decreases between 6 and 15 percent and 14 percent cited 1 to 5 percent decreases. Some 67 percent cited budget cuts due to COVID-19 for the decrease. Some 24 percent noted reduced training staff for the decrease (vs. 33 percent last year). And 22 percent (vs. none last year) chose budget adjusted to reflect lower costs. This was followed by:
- Attended fewer outside learning events (at 16 percent vs. 15 percent last year)
- Other reasons such as learning management system implementation, merger/acquisition, and bankruptcy (13 percent vs. 30 percent in 2019.
- Decreased number of learners served, decreased scope of training, and decreased outside trainer/consultant investment (all at 11 percent vs. 11, 15, and 7 percent, respectively, last year)
Like the last eight years, the highest percentage of organizations (17 percent) said management/supervisory training will receive more funding than the year before, but all the other categories followed closely behind, including: customer service training and onboarding (15 percent); and executive development, IT/systems training, mandatory or compliance training, and profession/ industry-specific training (13 percent). On average, organizations plan to allocate the most funding to customer service training at $1.4 million; profession/industry-specific training at $890,335; IT/systems training at $743,083; and mandatory compliance training at $675,985.
The highest priorities for training in terms of allocating resources in 2020 are: increasing the effectiveness of training programs (30 percent vs. 37 percent last year), reducing costs/improving efficiency (19 percent vs. 14 percent in 2019), increasing learner usage of training programs (17 percent this year vs. 12 percent last year), and measuring the impact of training programs (12 percent vs. 18 percent last year). Learning infrastructure and obtaining revenue through external training remain low priorities at 5 and 2 percent, respectively.
TRAINING DELIVERY
This year’s survey included three new questions to help understand the effects of COVID-19 on training delivery. In terms of how much organizational training has been put on hold during the pandemic, the breakdown of responses was fairly equal for each set of percentages. The highest percentage of responses (20 percent) was at 26 to 50 percent of training being put on hold, followed closely by 11 to 25 percent of training (19 percent) and 1 to 10 percent of training (18 percent). Some 16 percent of respondents indicated more than 75 percent of training was put on hold, while another 14 percent said none was.
In terms of the biggest training challenges during the pandemic, the top choice was technology/ramping up remote training at 28 percent, followed by getting people engaged in remote training (19 percent) and converting content to digital format (18 percent). Organizations did not seem as concerned about assessments/evaluation (4 percent) or data security (3 percent).
Some 15 percent of respondents chose “Other,” with answers such as:
- Agile development
- Competing priorities—training does not float to the top when we are talking life and death; our priority is keeping people safe.
- Executive support and engagement
- Facility space to accommodate social distancing mandates
- Health and safety issues
- Inability to have physical contact
- Launching new initiatives
- Reduced hours and workforce
Looking ahead at organizations’ plans regarding training delivery post-pandemic, the majority (54 percent) indicated they plan to return to some classroom training while maintaining some of the remote learning instituted during the crisis. Some 12 percent said they plan to return to classroom training as usual, while 11 percent said they would maintain the remote learning instituted during the pandemic and create new classroom training. Another 14 percent indicated they would stay the current course and maintain the remote learning instituted during the pandemic.
For the 9 percent who chose “Other,” answers included:
- Reduce training
- Plans will be determined by the ability to travel, if COVID-19 resurges, and global conditions.
- Determine ways to expand virtual classroom training as needed and/or create new virtual training
- We already used remote learning for most of our training. In-person training only makes up about 10 percent of our corporate training initiatives, so we will keep that ratio going forward.
- We’re online through December at this point, but we’re being fluid and following the guidance of the governor and medical leaders.
Some 33 percent of hours were delivered with blended learning techniques, up from 28 percent last year.
- 40 percent of training hours were delivered by a stand-and-deliver instructor in a classroom setting—the same as last year.
- 29 percent of hours were delivered via online or computer-based technologies, also the same as last year. Virtual classroom/Webcast accounted for 23 percent of hours delivered, up from 15 percent in 2019.
- 10 percent of training hours were delivered via mobile devices, doubling the number from 2019. This year, 3.5 percent of training hours were delivered via social learning (vs. 5.5 percent last year). New technologies such as augmented reality (.1 percent), virtual reality (.5 percent), and artificial intelligence (.5 percent) were not widely used.
Blended learning is used exclusively or mostly (90 to 100 percent of the time) by 11 percent of the organizations. More companies (40 percent) use it for 10 to 29 percent of their training. Most organizations are using a mixture of blended learning, instructor-led, virtual classroom, and online methods.
Mandatory or compliance training continued to be done mostly online, with 92 percent of organizations doing at least some of it online and 42 percent entirely online (up from 29 percent last year). Online training also often is used for interpersonal skills training (62 percent), IT/systems training (60 percent), management/supervisory training (58 percent), desktop application training (56 percent), profession/industry-specific training and onboarding (both at 53 percent), and customer service training (47 percent). Online training was least used for sales training (36 percent) and executive development (29 percent).
In terms of technology usage, of the nine learning technologies presented, the most often used included:
Learning management systems (LMSs) at 84 percent, up from 82 percent last year, followed by virtual classroom/ Webcasting/video broadcasting at 83 percent (up from 75 percent last year). Some 95 percent of large companies and 86 percent of midsize ones currently use LMSs vs. 75 percent of small companies.
- Rapid e-learning tools (46 percent, down from 48 percent last year)
- Mobile applications at 43 percent (up from 34 percent in 2019)
- Application simulation tools (30 percent, down from 39 percent last year)
- Learning content management systems (LCMSs) at 31 percent (up from 27 percent last year)
- Online performance support (EPSS) or knowledge management systems at 27 percent (down 1 percent from last year)
- Podcasting at 24 percent (up from 21 percent last year)
The delivery methods least often used for training remained the same as last year:
- Virtual reality at 9 percent (same as last year)
- Augmented reality at 4 percent (down from 6 percent in 2019)
- Artificial intelligence at 6 percent (up from 4 percent last year)
Large companies appear more inclined to experiment with these new technologies than small or midsize organizations: Some 17 percent of large companies currently are using virtual reality and artificial intelligence and 6 percent are using augmented reality, while 10 percent or less of small and midsize companies are using virtual reality and 5 percent or less are using the other two technologies.
TRAINING OUTSOURCING
2020 saw an increase in the average expenditure for training outsourcing: $417,375, up from $378,490 in 2019. Large companies on average spent $1.6 million vs. $77,213 for midsize companies and $96,640 for small ones. An average of 11 percent of the total training budget was spent on outsourcing in 2020 vs. 8 percent in 2019.
On average, 26 percent of companies mostly or completely outsourced LMS operations/hosting (down from 28 percent last year), while learner support and LMS administration largely were handled in-house (83 percent and 81 percent, respectively).
More instruction/facilitation was outsourced than handled inhouse (61 percent vs. 39 percent). Across all the topic areas, small and midsize companies outsourced about the same, and large companies somewhat more. In the areas of custom content development and learner support, the larger the company, the greater the outsourcing.
The level of outsourcing is expected to stay relatively steady in 2021—some 84 percent of organizations said they expect to stay the same in the outsourcing area. The percentage of companies expecting to increase outsourcing (7 percent) is slightly lower than those expecting to use outsourcing less (9 percent). More than half of respondents said they don’t plan to outsource learner support or LMS administration in the next 12 months.
With respect to company size, large companies expect a bigger increase in outsourcing than either small or midsize companies. Midsize companies are more likely to report that they don’t and won’t outsource.
