2017 Training Industry Report
ABOUT THIS STUDY
Now in its 36th year, Training magazine's Training 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 2017, 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.
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:
- 52% are managers or above in the organization
- 25% are developers or instructional designers
- 20% are mid- to low-level (based on title selection) associates
- 70% determine the need for purchasing products and services
- 27% set the budget
- 35% manage requests for proposals/bids
- 75% recommend the purchase
- 28% have the final purchase decision
Total 2017 U.S. training expenditures—including payroll and spending on external products and services—rose significantly, increasing 32.5 percent to $90.6 billion. Spending on outside products and services remained the same at $7.5 billion, while other training expenditures (i.e., travel, facilities, equipment) increased to $44.5 billion from $26.1 billion. Meanwhile, training payroll increased 12.4 percent to $41.6 billion.
The training expenditure figures were calculated by projecting the average training budget to a weighted universe of 125,338 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 (110,810), that they account for one-third of the total budget for training expenditures.
Average training expenditures for large companies increased from $14.3 million in 2016 to $17 million in 2017. Likewise, the number for small companies rose to $1 million from $376,251 in 2016. But midsize companies remained mostly fiat at $1.5 million.
Some 28 percent of organizations said they increased staff from the year before (down from 33 percent in 2016), while 56 percent said the level remained the same (up from 51 percent in 2016). Some 16 percent said it was lower, the same as in 2016. Large and midsize retailers/wholesalers had the largest personnel costs. This year, midsize companies spent about as much as large companies, but small companies spent about one-third as much as the others. The average payroll figure for large companies was $1.1 million; for midsize organizations, it was $962,226; for small companies, it was $266,464.
For those who reported an increase in their training staff, the average increase was three people, nine less than in 2016. For those who reported a decrease in their staff, the average decrease was six people—down from nine last year.
Other training expenditures increased significantly this year to $44.5 billion from $26.1 billion in 2016. Such expenditures can include travel, training facilities, in-house training development, and equipment. On average, organizations spent 11 percent of their budget or $135,837 (down from $143,414 last year) on learning tools and technologies. Large services organizations had the largest budgets for learning tools ($740,222). Midsize government/military organizations had the largest tool budget in their size range ($267,478). Small government/military organizations spent the smallest percentage of their training budgets on tools and technologies (1 percent). Looking ahead, the most frequently anticipated purchases are online learning tools and systems (40 percent vs. 35 percent last year), learning management systems (39 percent vs. 40 percent last year), and certification (which leaped into No. 3 with 29 percent vs. 23 percent last year). This is followed by authoring tools/systems, content development, and classroom tools/systems (all at 28 percent vs. 31, 29, and 21 percent, respectively, last year) and mobile learning and consulting (both at 23 percent vs. 21 and 16 percent, respectively, last year). Several items received 10 percent or less of hits, including audience response systems, customer relationship management, enterprise learning systems, translation and localization, and Web 2.0 (which was at 34 percent last year).
Overall, on average, companies spent $1,075 per learner this year compared with $814 per learner in 2016. Manufacturers spent the most per learner this year ($1,217), followed by services organizations ($1,157). Larger companies continue to operate on an economy of scale as they spent less ($399) than midsize ($941) and small ($1,886) companies.
In addition to spending more on training, companies provided more hours of training this year. On average, employees received 47.6 hours of training per year, nearly 4 hours more than last year. Midsize companies provided the most hours of training this year at 54.3. Midsize service providers had the highest average number of hours overall (75.5).
Companies continued to devote the bulk of their training expenditures to training non-exempt employees (42 percent vs. 39 percent last year).
Budget status remained much the same as last year, with 36 percent saying their training budget increased and 49 percent saying it remained the same. Some 15 percent reported a decrease in budget. Last year, 37 percent said their budget went up; 50 percent said it remained the same; and 13 percent said it went down. Education showed the greatest tendency for budget cuts, while services companies and retailers showed a greater tendency for gains. Government/military was the most stable category. Increases were not evenly distributed across organization sizes. More small companies showed increases (45 percent) than decreases (6 percent) than midsize and large companies, where the numbers were more balanced (35 vs. 24 percent and 29 vs. 19 percent, respectively).
Most of the budget increases were modest— less than 16 percent. Some 30 percent saw increases in the 6 to 15 percent range, while 38 percent of organizations reported increases in the l 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 (67 percent vs. 57 percent last year)
- Added training staff (54 percent vs. 57 percent last year)
- Increased number of learners served (49 percent vs. 52 percent last year)
- Purchased new technologies/ equipment (38 percent vs. 41 percent last year)
This year, more respondents (39 percent) reported budget decreases between 6and 15 percent vs.29 percent for l to 5 percent decreases and 32 percent for more than 16 percent decreases. The majority of respondents (39 percent this year vs. 40 percent last year) cited budget adjusted to reflect lower costs as the main reason for the budget decrease. This was followed by:
- Some 36 percent (vs. 37 percent last year) chose “other” as the reason for the decrease, citing “eliminated LMS,” “ budget constraints from the state,” and “ business requirements.”
- Reduced training staff (25 percent vs. 29 percent last year)
- Attended fewer outside learning events, decreased scope of training, and decreased outside trainer/consultant investment each were at 18 percent vs. 23, 19, and 14 percent, respectively last year).
Like the last five years, the highest percentage of organizations (32 percent) said management/supervisory training will receive more funding than the year before. On average, organizations plan to allocate the most funding to professional/industry-specific training at $326,901; management/ supervisor training at $187,853; mandatory compliance training at $166,037; executive development at $124,735; and on boarding at $124,560.
The highest priorities for training in terms of allocating resources in 2017 are: increasing the effectiveness of training programs (37 percent vs. 33 percent last year), followed by measuring the impact of training programs (16 percent vs. 12 last year), reducing costs/ improving efficiency (13 percent vs. 17 percent last year), and increasing learner usage of training programs (12 percent vs. 13 percent last year). Learning infrastructure and obtaining revenue through external training are the lowest priorities at 4 and 3 percent, respectively.
Some 42 percent of training hours were delivered by a stand-and- deliver instructor in a classroom setting—up a tick from the 41 percent reported last year.
- 28.6 percent of hours were delivered via online or computer-based technologies, down from 30.4 percent last year. Virtual classroom/Webcast accounted for 14 percent of hours delivered, down a bit from 16.4 percent last year.
- 34.7 percent of hours were delivered with blended learning techniques, down slightly from 27.5 percent last year.
- 3.6 percent of training hours were delivered via mobile devices, up from 2.9 percent in 2016. None of the respondents used social learning only to delivery learning, down from 5 percent last year. However, some 25 percent said they are using social learning to some extent.
Instructor-led classroom training is used exclusively or mostly (90 to 100 percent of the time) by 13 percent of the organizations. More companies (35 percent) use it for 1 0to 29 percent (lessthan one-third) of their training. Small (42.9 percent) and midsize (43.2 percent) companies continue to rely on instructor-led delivery methods more so than large companies (39.5 percent). Some 36 percent of companies use virtual classrooms for less than 10 percent of their training.
Mandatory or compliance training continued to be done mostly online, with 84 percent of organizations doing at least some of it online and 27 percent entirely online (down from 31 percent last year). Online training also often is used for sales training (91 percent vs. 80 percent last year) and IT systems training (77 percent vs. 74 percent last year). Online delivery for desktop application training and profession/industry-specific application training was at 69 percent vs. 74 and 77 percent, respectively, last year. Online training was least used for executive development (39 percent), onboarding (48 percent), and management/supervisory training (54 percent).
Technology use overall is higher than last year. Of the learning technologies presented, the most often used included:
- Learning management systems (LMSs) at 86 percent, up from 74 percent last year, followed by virtual classroom/ Webcasting/video broadcasting at 73 percent, the same as last year
- Rapid e-learning tools (48 percent, up from 47 percent last year)
- Application simulation tools (38 percent, up from 34 percent last year)
The delivery methods least often used for training remained the same as last year:
- Podcasting at 13 percent (down from 19 percent last year)
- Online performance support (EPSS) or knowledge management system at 23 percent and mobile at 32 percent (down from 33 percent)
- Learning content management system (LCMS) at 35 percent (up from 34 percent)
2017 saw a slight decrease in the average expenditure for training outsourcing: $219,265, down from $284,547 in 2016. Large companies on average spent $1 million vs. $122,688 for midsize companies and $46,692 for small ones. An average of 7 percent of the total training budget was spent on outsourcing in 2017, up from 5 percent in 2016.
On average, 34 percent of companies mostly or completely outsourced LMS operations/hosting (up from 28 percent last year), while LMS administration and learner support largely were handled in-house (83 and 87 percent, respectively).
Instruction/facilitation was outsourced more (66 percent) than handled in-house (35 percent). Across all the topic areas, large companies outsourced only slightly more than midsize ones, and midsize organizations outsourced more than small companies. This effect was most striking for custom content development (56 percent some or completely outsourced for large companies; 48 percent for midsize ones; and 28 percent for small organizations).
The level of outsourcing is expected to stay relatively steady in 2017—some 81 percent of organizations said they expect to stay the same in the outsourcing area. The percentage of companies expecting to decrease use (7 percent) is slightly lower than those expecting to use outsourcing more (9 percent). There are exceptions for individual functions, though. In learner support, twice as many companies said they will be doing less than those that said they will be doing more.
While there aren’t many differences between the outsourcing changes by company size, large companies will outsource less custom content development, while midsize and small companies indicate they will increase LMS operations/hosting outsourcing.
To view the full report, including the charts, click HERE.