ABOUT THIS STUDY
Now in its 41st 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 April-July 2022, 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 36% (100-999 employees)
Midsize 43% (1,000-9,999 employees)
Large 21% (10,000 or more employees)
Total respondents 260
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.
About Survey Respondents:
- 57% are managers or above in the organization
- 20% are developers or instructional designers
- 20% are mid- to low-level (based on title selection) associates
- 64% determine the need for purchasing products and services
- 23% set the budget
- 33% manage requests for proposals/bids
- 69% recommend the purchase
- 21% have the final purchase decision
TRAINING EXPENDITURES
U.S. training expenditures passed the $100 billion-mark for the first time in 2021-2022. Rising 10 percent to $101.6 billion, the jump was fueled, in part, by a significant increase in large companies’ budgets, inflation, and organizations continuing to invest in virtual training technologies amid the ongoing COVID-19 pandemic but also starting to go back to some in-person training and allowing travel. Payroll decreased, but spending on outside products and services rose 1 percent to $8.2 billion. And other training expenditures (i.e., travel, facilities, equipment) rebounded to nearly 2020 levels at $28.3 billion from $15.5 billion in 2021.
The training expenditure figures were calculated by projecting the average training budget to a weighted universe of 142,283 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 (123,495) that they account for almost one-third 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-the-shelf and custom content, and consulting services.
Average training expenditures for large companies increased from $17.5 million in 2021 to $19.2 million in 2022. The number for midsize companies increased from $1.3 million in 2021 to $1.5 million in 2022. Small companies rose from $341,505 to $368,891 in 2022.
Some 38 percent of organizations said they increased staff from the year before (up from 23 percent), while 45 percent said the level remained the same (vs. 59 percent last year). Some 17 percent said it was lower. Large services and government/ military organizations had the biggest personnel costs ($5 million-plus). This year, midsize companies spent less than half as much as large companies, while small companies spent about one-third as much as midsize ones. The average payroll figure for large companies was $3.5 million; for midsize organizations, it was $1.4 million; for small companies, it was $443,731.
For those who reported an increase in their training staff, the average increase was 6 people, down from 15 in 2021. For those who reported a decrease in their staff, the average decrease was 8 people—down from 43 last year.
Other training expenditures increased this year to $28.3 billion from $15.5 billion in 2021. Such expenditures can include travel, training facilities, in-house training development, and equipment. On average, organizations spent 16 percent of their budget or $382,729 (up from $337,190 last year) on learning tools and technologies. Large government/military organizations had the largest budgets for learning tools ($7 million). Midsize education organizations had the largest tool budget in their size range ($550,500).
Looking ahead, the most frequently anticipated purchases are learning management systems (39 percent vs. 35 percent last year); authoring tools/systems at 36 percent vs. 39 percent last year; online learning tools and systems at 34 percent both years; and content development (30 percent in 2022 and 33 percent in 2021). This is followed by certification at 23 percent both years; presentation software and tools (22 percent vs. 25 percent last year); games and simulations at 21 percent both years; consulting (20 percent this year vs. 21 percent last year); and courseware design (19 percent vs. 20 percent last year). Augmented/virtual reality tech comes in at 16 percent. Categories receiving less than 10 percent of hits include audience response systems, customer relationship management, enterprise learning systems, training management administration, and Web 2.0.
Overall, on average, companies spent $1,207 per learner this year compared with $1,071 per learner in 2021. Services organizations spent the most per learner this year ($1,512), followed by retailers/wholesalers ($1,299). Large companies spent more ($1,689) than midsize ($826) and small ($1,396) companies.
While spending a bit more per learner, companies provided slightly fewer hours of training than last year. On average, employees received 62.4 hours of training per year, compared to nearly 64 hours last year. Midsize companies provided the most hours of training this year (71). Small education organizations had the highest average number of hours overall (nearly 360), followed by midsize government military organizations (nearly 210).
Companies continued to devote the bulk of their training expenditures to training non-exempt employees (41 percent in 2021 and 2022).
The average training budget for large companies was $19.2 million, while midsize companies allocated an average of $1.5 million, and small companies dedicated an average of $368,891.
TRAINING BUDGET
This year, the number of companies reporting that their budgets increased rose 12 percent to 44 percent. Those indicating their budgets decreased fell to 13 percent from 21 percent in 2021. Some 43 percent said their budget remained the same vs. 47 percent in 2021. Associations showed the greatest tendency for budget cuts, while retailers/ wholesalers showed a greater tendency for gains. Increases were not evenly distributed across organization sizes. Small companies showed the greatest number of increased budgets (49 percent vs. 44 percent for midsize companies and 35 percent for large ones).
Most of the budget increases were modest—less than 16 percent. Some 35 percent saw increases in the 6 to 15 percent range (vs. 51 percent last year), while 28 percent of organizations reported increases in the 1 to 5 percent range compared with 21 percent last year. Some 37 percent reported increases in the 16-plus percent range (vs. 29 percent in 2021). Most respondents who reported an increase in their training budgets attributed it to the following reasons:
- Increased scope of training programs (70 percent vs. 59 percent last year)
- Added training staff (56 percent vs. 45 percent last year)
- Increased number of learners served (49 percent vs. 38 percent last year)
- Purchased new technologies/equipment (45 percent vs. 50 percent in 2021)
This year, a quarter of the respondents who reported budget decreases cited a drop of more than 16 percent. Some 40 percent reported budget decreases between 6 and 15 percent (vs. 28 percent last year), and 35 percent cited 1 to 5 percent decreases vs. 23 percent in 2021. Some 50 percent cited budget cuts due to COVID-19 for the decrease compared with 76 percent last year. Some 35 percent noted reduced training staff vs. 18 percent last year. This was followed by:
- Attended fewer outside learning events or decreased number of learners served (25 percent for both vs. 39 percent and 18 percent, respectively, last year)
- Decreased outside trainer/consultant investment or decreased scope of training (both at 10 percent vs. 22 percent and 10 percent, respectively, last year)
- Other reasons such as market conditions reducing profit, reduced business need, and budget cuts as part of corporate support reduction due to Congressional action or from state/federal levels (18 percent vs. 16 percent in 2021)
Like the last 10 years, the highest percentage of organizations (32 percent) said management/supervisory training will receive more funding than the year before, but all the other categories followed closely behind, including: onboarding (29 percent); interpersonal skills (25 percent); profession/ industry-specific training (20 percent); executive development, IT/systems training, and customer service training (all at 19 percent). On average, organizations plan to allocate the most funding to profession/industry-specific training ($1.4 million); mandatory compliance training ($846,207); and management/supervisory training ($591,992).
The highest priorities for training in terms of allocating resources in 2023 are: increasing the effectiveness of training programs (32 percent vs. 31 percent last year); increasing learner usage of training programs (21 percent vs. 19 percent); and measuring the impact of training programs (21 percent vs. 17 percent).
In terms of training delivery post-pandemic, the majority of respondents (47 percent) indicated they plan to return to some classroom training while maintaining some of the remote learning instituted during the crisis.
This year’s survey once again included three questions to help understand the effects of the COVID-19 pandemic on training delivery. The highest percentage—40 percent—said no training was put on hold due to the pandemic vs. 33 percent last year. Some 24 percent said 1 to 10 percent of training was put on hold vs. 25 percent last year. This was followed closely by 11 to 25 percent of training (21 percent vs. 23 percent last year). Some 11 percent said 51 to 75 percent was put on hold (vs. 13 percent last year), while 4 percent of respondents indicated more than 75 percent of training was put on hold (vs. 6 percent in 2021).
In terms of the biggest training challenges during the pandemic, the top choice was getting people engaged in remote training at 47 percent (up from 31 percent last year), and lack of resources/personnel at 33 percent (compared to 24 percent in 2021). This was followed by converting content to digital format (12 percent, down a bit from 16 percent last year). Technology/ramping up remote training was no longer a factor at all (it was noted by 15 percent last year), nor was data security (vs. 2 percent last year). Like last year, organizations did not seem very concerned about assessments/evaluation (2 percent vs. 5 percent last year).
Some 6 percent of respondents chose “Other” in answer to the challenge question, with answers such as:
- Not completing instructor-mandated training.
- Reducing Zoom fatigue.
Looking ahead at organizations’ plans regarding training delivery as the pandemic evolves into an endemic, the majority (47 percent, down from 56 percent last year) indicated they plan to return to some classroom training while maintaining some of the remote learning instituted during the crisis. Some 8 percent said they plan to return to classroom training as usual (same as last year), while 25 percent said they would maintain the remote learning instituted during the pandemic (up from 15 percent in 2021). Another 16 percent indicated they would stay the current course and maintain the remote learning instituted during the pandemic and create new classroom training (down slightly from 17 percent last year). Four percent indicated “other” answers, including:
- We will define and execute a blended learning strategy.
- We will generate higher-quality and engaging content.
- Nothing is changing.
- We will continue doing what we have always done. We’ve been 100 percent remote since 2017.
- Aside from having smaller class sizes, we did not change anything due to the pandemic.
TRAINING DELIVERY
Some 32 percent of hours were delivered with blended learning techniques, down from 43 percent last year.
- Virtual classroom/Webcasting accounted for 33 percent of hours delivered, down from 37 percent in 2021. Some 35 percent of hours were delivered via online or computer-based technologies, up slightly from 34 percent last year.
- Some 24 percent of training hours were delivered by a stand-and-deliver instructor in a classroom setting—down from 30 percent last year as the pandemic continued.
- 4 percent of training hours were delivered via mobile devices, the same as in 2021. This year, 6 percent of training hours were delivered via social learning (vs. 9 percent last year). New technologies such as augmented reality (1 percent), virtual reality (1 percent), and artificial intelligence (1 percent) were not widely used and stayed roughly the same in terms of usage from 2021.
Blended learning is used exclusively or mostly (90 to 100 percent of the time) by 11 percent of the organizations. More companies (39 percent) use it for 10 to 29 percent of their training. There was a jump in usage of social learning methods this year, with 28 percent of organizations using it for 10 to 29 percent of their training.
Mandatory or compliance training continued to be done mostly online, with 93 percent of organizations doing at least some of it online and 56 percent entirely online (up from 50 percent last year). Online training also often is used for IT/ systems training (82 percent), desktop application training (77 percent), profession/industry-specific training (72 percent), management/supervisory training (71 percent), customer service and interpersonal skills training (both at 70 percent), and onboarding and sales training (both at 69 percent). Online training was least used for executive development (52 percent).
In terms of technology usage, of the 12 learning technologies presented, the most often used included:
- Learning management systems (LMSs) at 89 percent, down just a bit from 90 percent last year, followed by virtual classroom/Webcasting/video broadcasting at 86 percent (down from 88 percent last year). One hundred percent of large companies and 95 percent of midsize ones currently use LMSs vs. 76 percent of small companies.
- Rapid e-learning tools (40 percent, down from 43 percent last year)
- Mobile applications at 36 percent (up from 30 percent in 2021)
- Application simulation tools (28 percent, up from 25 percent last year)
- Learning content management systems (LCMSs) at 28 percent (up from 20 percent last year)
- Online performance support (EPSS) or knowledge management systems at 19 percent (down slightly from 20 percent last year)
- Podcasting at 16 percent (down from 22 percent last year)
- The delivery methods least often used for training remained the same as last year:
- Virtual reality at 7 percent (up a bit from 6 percent last year)
- Augmented reality at 6 percent (up from 5 percent in 2021)
- Artificial intelligence at 8 percent (up from 6 percent last year)
Large companies appear more inclined to experiment with some of the newer technologies than small or midsize organizations: Some 14 percent of large companies currently are using artificial intelligence vs. 7 percent of midsize companies and 6 percent of small ones. However, 11 percent of midsize companies are incorporating augmented and virtual reality into their training compared to roughly 5 percent of large and small companies.
TRAINING OUTSOURCING
2022 saw a significant decrease in the average expenditure for training outsourcing: $197,519, down from $379,038 in 2021. Large companies on average spent $760,882 vs. $163,333 for midsize companies and $31,367 for small ones. An average of 4 percent of the total training budget was spent on outsourcing in 2022 vs. 7 percent in 2021.
On average, 30 percent of companies mostly or completely outsourced LMS operations/hosting (up from 23 percent last year), while learner support and LMS administration largely were handled in-house (84 percent and 81 percent, respectively).
More instruction/facilitation is outsourced than handled in-house (63 percent vs. 37 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 LMS operations/hosting, the larger the company, the greater the outsourcing.
The level of outsourcing is expected to stay relatively steady in 2023—some 85 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). Just about half of respondents said they don’t plan to outsource learner support (51 percent) or LMS administration (49 percent) in the next 12 months.
With respect to company size, large companies expect a bigger decrease in outsourcing than either small or midsize companies. Midsize and small companies are more likely to report that they don’t and won’t outsource.
For 2023, large companies expect a bigger decrease in outsourcing than either small or midsize companies. But small and midsize companies are more likely to report that they don’t and won’t outsource.
