Corporate training is a huge industry in this country, and in many ways corporations are embracing employee development like never before. According to the most recent numbers from the American Society for Training and Development (ASTD), American companies spent over $150 billion on training in 2011 alone. With a national workforce that hovers somewhere around 150 million people, that means American companies are shelling out more than $1000 to provide developmental training for every employee – and they do it year after year.
To put it frankly, that’s an immense amount of money to spend on training. It also seems like a safe bet that if companies are spending so much money on professional development, they must be getting pretty good returns. But the sad truth is much of that money is squandered due to failure to engender a corporate culture that supports and encourages learning every day of the year.
This year, driven by the tremendous need for workforce skills, spending has exploded. As the chart below indicates, U.S. spending on corporate training grew by 12% in 2012, the highest growth rate since we started our research. (Source: The Corporate Learning Factbook®, Bersin by Deloitte).
This increase likely reflects three major forces shaping the US workforce:
1. The need for specialized skills is increasing. Today, the top sought-after positions require extensive preparation and education to achieve company goals, reflecting the tremendous need for skills. Many high-value jobs (IT, manufacturing, sales, marketing, finance, etc.) require deeper and deeper levels of skills, and more than 60% of U.S. business value now comes from “intangible assets” – intellectual value.
2. Workforce education and skills have atrophied. Employers tell us that despite the high level of unemployment in the U.S., nearly one-third of young candidates do not have the core reading, writing, and problem solving skills they need to be productive on day one. Many new hires need skills development in order to achieve their goals.
3. Leadership development and succession management have become critical business needs. When we ask top HR executives to rank their top challenges, the #1 cited problem is “gaps in the global leadership pipeline.” Businesses have watched their workforce shift from baby boomers to younger workers and now should rebuild their leadership capacity. Such effort takes formal and informal training.
The New Era of Global Skills Imbalances
Today’s business climate is one of global skills gaps. New technology, shifting markets, and changing demographics mean that manufacturers, service providers, telecommunications companies, technology companies, healthcare providers, and many other industries live and die by their skills. As companies globalize their businesses, the ability to build skills has become a deep competitive advantage.
The global economy may not be in full recovery, but the world of corporate training is. We believe this dramatic increase in spending demonstrates improved business confidence and the clear gaps in the workforce. Now is the time to revamp your Learning & Development program, and we are here to help you.