2O15 TRAINING INDUSTRY REPORT
Note: To see the full report with charts, click here.
ABOUT THIS STUDY
Now in its 34th year, the 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 2015, 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:
Small companies (100-999 employees): 30%
Midsize companies (1,000-9,999 employees): 41%
Large companies (10,000 or more employees): 29%
Total respondents: 777
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:
- 47% are managers or above in the organization
- 26% are developers or instructional designers
- 28% are mid- to low-level (based on title selection) associates
- 62% determine the need for purchasing products and services
- 25% set the budget
- 32% manage requests for proposals/bids
- 68% recommend the purchase
- 19% have the final purchase decision
Total 2015 U.S. training expenditures—including payroll and spending on external products and services—took an upward trajectory, soaring 14.2 percent to $70.6 billion. Spending on outside products and services skyrocketed 29 percent from $6.1 billion to $8 billion, while other training expenditures (i.e., travel, facilities, equipment) more than doubled to $28.7 billion. Meanwhile, training payroll plummeted 20 percent to 2011-2012 levels at $33.9 billion.
The training expenditure figures were calculated by projecting the average training budget to a weighted universe of 125,778 companies, using a Dun & Bradstreet database available through Hoovers of U.S. organizations with more than 100 employees.
Note: This year, there were significantly more large companies than accounted for in past Industry Reports, in part due to mergers and acquisitions. In addition, although small companies have the smallest annual budgets, there are so many of them (98,443), that they account for 35 percent of the total budget for training expenditures.
Average training expenditures for large companies decreased from $17.4 million in 2014 to $12.9 million in 2015, while the numbers for small companies ($350,301 in 2015 vs. $338,386 in 2014) and midsize companies ($1.4 million in 2015 vs. $1.5 million in 2014) remained basically flat.
Some 37 percent of organizations said they increased staff from the year before (up from 35 percent in 2014), while 50 percent said the level remained the same (down from 51 percent in 2014). Some 13 percent said it was lower vs. 14 percent in 2014. Large nonprofits and services organizations had the largest personnel costs. Across all organization types, larger companies spent about 17 times as much as midsize, and midsize companies spent about three times as much as small ones. The average payroll figure for large companies was $7.4 million; for midsize organizations, it was $437,631; for small companies, it was $162,317.
For those who reported an increase in their training staff, the average increase was nine people, five more than in 2014. For those who reported a decrease in their staff, the average decrease was 17 people—down from 18 last year.
Other training expenditures more than doubled this year to $28.7 billion from $13.3 billion in 2014. Such expenditures can includetravel, training facilities, and equipment. On average, organizations spent 5 percent of their budget or $602,306 (vs. $254,256 last year) on learningtools and technologies. Small and midsize education organizations spent the highest portion of their budgets on tools and technology (23 percent and 11 percent, respectively). Large education organizations and government/military organizations spent the smallest percentage of their training budgets on tools and technologies (1 percent or less). Looking ahead, the most frequently anticipated purchases are learning management systems (38 percent vs. 41 percent last year) and online learning tools and systems (37 percent vs. 44 percent last year). This is followed by content development (36 percent vs. 29 percent last year), authoring tools/systems (33 percent vs. 37 percent last year), classroom tools and systems (29 percent vs. 33 percent), and mobile learning (25 percent vs. 23 percent last year). Several items received 10 percent or less of hits, including Web 2.0, audience response systems, customer relationship management, translation and localization, and enterprise learning systems.
Overall, on average, companies spent $702 per learner this year compared with $976 per learner in 2014. Service organizations, overall, spent the most per learner this year ($871), followed by manufacturers ($653). Larger companies apparently are back to operating on an economy of scale as they spent less ($447) than midsize ($544) and small ($1,105) companies.
While they spent less per learner, companies provided more hours of training this year. On average, employees received 53.8 hours of training per year, 13 hours more than last year. Midsize companies provided the most hours of training this year at 67.4. Government/military organizations had the highest average number of hours overall (82.3).
Companies continued to devote the bulk of their training expenditures to training non-exempt employees (39 percent, down from 40 percent in 2014). Training for exempt nonmanagers increased from 26 percent to 29 percent in 2015.
Like last year, budget status was almost evenly split, with 42 percent saying their training budget increased and 43 percent saying it remained the same. Some 15 percent reported a decrease in budget. Last year, 43 percent said their budget went up; 41 percent said it remained the same; and 16 percent said it went down. Like last year, education and government/military organizations showed the greatest tendency for training budget cuts, while services companies, retailers/ wholesalers, and manufacturers/ distributors all showed large gains. Increases were not evenly distributed across organization sizes. Small companies showed fewer decreases (12 percent) and more increases (46 percent) than midsize (17 percent and 37 percent) and large companies (16 percent and 44 percent).
Most of the budget increases were modest— less than 16 percent. Some 40 percent saw increases in the 6 to 15 percent range, while 29 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 (63 percent vs. 65 percent last year)
- Added training staff (56 percent vs. 51 percent last year)
- Increased number of learners served (55 percent vs. 51 percent last year)
This year, more respondents (39 percent) reported budget decreases between 1 and 5 percent vs. 25 percent for 6 t o l 5 percent decreases and 36 percent for more than 16 percent decreases. The majority of respondents (33 percent this year vs. 40 percent last year) cited reduced training staff as the main reason for the budget decrease. This was followed by:
- Budget adjusted to reflect lower costs (31 percent vs.24 percent last year)
- Some 30 percent (vs. 44 percent last year) chose “other” as the reason for the decrease, citing “ increased virtual training offerings,” “corporate expense controls,” and “ new director/no emphasis on the Learning function,” among others.
- Decreased outside trainer/consultant investment (24 percent vs. 18 percent last year, moving up to the No. 4 reason)
- Decreased scope of training (decreasing from 22 percent last year to 19 percent this year)
Like the last three years, the highest percentage of organizations (29 percent) said management/supervisorytraining will receive more funding than the year before. On average, organizations plan to allocate the most funding to professional/industryspecific training at $2.1 million; onboarding at $1.7 million; sales training at $751,542; and management/supervisory training at $728,250.
The highest priorities for training in terms of allocating resources in 2015 are: increasing the effectiveness of training programs (29 percent, the same as last year), followed by reducing costs/improving efficiency (19 percent vs. 17 percent last year), and measuring the impact of training programs (16 percent vs. 10 percent last year). Like last year, learning infrastructure/technology initiatives and obtaining revenue through external training remain the lowest priorities.
Some 46 percent of training hours were delivered by a stand-and- deliver instructor in a classroom setting—down a bit from the 47 percent reported last year.
- 31.9 percent of hours were delivered with blended learning techniques, up a bit from 29.1 percent last year.
- 26.4 percent of hours were delivered via online or computer-based technologies, down from 28.5 percent last year. Virtual classroom/Webcast accounted for 16 percent of hours delivered, down slightly from 14 percent last year.
- 1.8 percent of training hours were delivered via mobile devices, virtually the same as in 2014, while social learning accounted for 5 percent of hours, up a bit from 4.2 percent last year. Some 25 percent of companies said they are using social learning to some extent.
Small (54.6 percent) and midsize (43.4 percent) companies continue to rely on instructor-led delivery methods more so than large companies (37.4 percent). Blended learning was fairly even across companies of all sizes, ranging between 28.4 percent for large companies and 35.6 percent for small ones. Large and midsize companies appeared to be focusing on online or computer-based methods (29 percent vs. 20.8 percent for small and midsize companies).
Mandatory or compliance training continued to be done mostly online, with 73 percent of organizations doing at least some of it online and 26 percent entirely online (up from 20 percent last year). Online training also often is used for desktop application training (70 percent vs. 56 percent last year) and IT/systems application training (67 percent, up from 54 percent last year). Online training was least used for onboarding (31 percent had no online training for it), executive development and interpersonal skills training (28 percent had no online training for either one), and customer service and sales training (27 percent had no online training for either one).
Technology use overall is higher than last year. Of the learning technologies presented, the most often used included:
- Learning management systems (LMS) at 73 percent, followed by virtual classroom/Webcasting/video broadcasting at 72 percent (both down just a bit from 74 percent last year)
- Rapid e-learning tool (51 percent, upfrom 48 percent last year)
- Application simulation tool (40 percent, up from 33 percent last year)
The delivery methods least often used for training remained the same as last year:
- Podcasting at 16 percent (up from 11 percent last year)
- Learning content management system (LCMS) at 20 percent (down from 25 percent)
- Online performance support (EPSS) or knowledge management system at 23 percent (up from 21 percent)
2015 saw only a slight increase in the average expenditure for training outsourcing: $306,683, upfrom $303,833 in 2014. Large companies on average spent $1.1 million vs. $195,144 for midsize companies and $34,181 for small ones. An average of 6 percent of the total training budget was spent on outsourcing in 2015, down from 8 percent in 2014. On average, 26 percent of companies completely outsourced LMS operations/hosting (vs. 29 percent last year), while learner support and LMS administration (83 percent) largely were handled in-house.
Instruction/facilitation was handled about equally in-house (47 percent) and outsourced (53 percent). Across all the topic areas, large companies outsourced more than midsize ones, and midsize organizations outsourced more than small companies. This effect was most striking for custom content development (60 percent some or completely outsourced for large companies; 43 percent for midsize ones; and 37 percent for small organizations).
The level of outsourcing is expected to stay relatively steady in 2016—some 84 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, more than 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 learner support outsourcing.
To see the full report with charts, click here.