The latest industry report by Training magazine on the U.S. training industry reveals how much U.S. companies spend training employees, which increased to $101.8 billion in 2023.
Digging into the numbers, payroll for in-house training decreased a second time from $65.1 billion in 2022 to $63 billion in 2023. The report found that spending on outside training products and services rose more than 20 percent from $8.2 billion in 2022 to $10.1 billion in 2023.
Average training expenditures for large companies (10,000 or more employees) decreased from $19.2 million in 2022 to $16.1 million in 2023. Expenditure by midsize companies (1,000 to 9,999 employees) remained the same at $1.5 million, while small companies (100 to 999 employees) increased their training budgets from $368,891 to $459,177 in 2023.
How much does it cost to train an employee in U.S.
Hours of training per employee
Learning and development budgets by industry
Training delivery in the U.S.
Types of training
Training outsourcing
How much does it cost to train an employee in the UK
Learning delivery in UK
Tackling L&D challenges
Our perspective on course creation challenges
How much does it cost to train an employee in U.S.
Regarding the amount companies spend training employees across organizations of all sizes, employee training decreased by 21 percent to $954 in 2023, compared to $1,207 in 2022.
When you break down the numbers by company size, the survey found that large companies spent significantly less on training in 2023 – $481 per learner in 2023 compared to $1,689 per learner in 2022. That equates to a 71.5 percent decrease.
On the other hand, small companies spent a bit more in 2023, while midsize companies spent a bit less in 2023. Small companies spent $1,420 per employee in 2023 compared to $1,396 per employee (1.7 percent increase). Expenditures by midsize companies dropped to $751 per learner in 2023 compared to $826 in 2022 (9.1 percent decrease).
Looking at expenditures on tools and technologies, the most frequently anticipated purchases are online learning tools and systems (43 percent in 2023 compared to 34 percent in 2022); games and simulations (nearly double last year at 41 percent); courseware design (35 percent in 2023 compared to 19 percent in 2022); and classroom tools and systems (31 percent vs. 18 percent last year). Expenditures on learning management systems (LMS) dropped from 39 percent in 2022 to 17 percent in 2023.
Cost of employee training (per employee) 2021-2023. Source: Trainingmag.com
Hours of training per employee
While training budgets decreased dramatically in some cases, the number of hours of training per employee only decreased slightly on average.
Across all organizations, employees spent less time in training – 57 hours in training in 2023 compared to 62.4 hours in training in 2022. The one organization size that bucked the trend was large companies. In 2023, companies with 1,000 to 9,999 employees spent 48 hours in training, compared to 46 hours in 2022. This represents a 4.3 percent increase in training hours.
Inversely, small companies decreased the number of hours in corporate training – 59 hours of training per learner in 2023 compared to 61 hours in 2022. Midsize companies saw a substantial decrease in the number of hours of training per employee – 58 hours of training in 2023, compared to 71 hours of training in 2022 (18.3 percent decrease).
Training hours per employee 2022-2023. Source: Trainingmag.com
Learning and development budgets by industry
In 2023, the number of companies reporting that their budgets increased dropped to 40 percent. Most of the budget increases were less than 16 percent. Around 44 percent of training budgets saw increases in the 6 to 15 percent range, while 30 percent of organizations reported increases in the 1 to 5 percent range compared with 28 percent in 2022. Most respondents who reported an increase in their training budgets attributed it to the following reasons:
- Increased scope of training programs
- Added training staff
- Increased number of learners served
- Purchased new technologies or equipment.
Those indicating their budgets decreased fell to 11 percent in 2023, and more than half of the respondents cited a drop of more than 16 percent. Some 33 percent reported budget decreases between 6 and 15 percent, and 9 percent cited 1 to 5 percent decreases. Over 90 percent cited cuts in training budgets due to economic uncertainty. The following reasons are how organizations reduced the amount spent on training programs:
- Attended fewer outside learning events
- Decreased outside trainer/consultant investment
- Decreased scope of training
- Decreased number of learners served
- Other – Replacing people with automated processes and reducing the cost of other needed services and supplies outside of learning
The survey showed that most manufacturers/distributors, retailers/wholesalers, government/military, and education said their budget remained unchanged.
Budget change by industry in 2023. Source: Trainingmag.com
Training delivery in the U.S.
For the most part, companies plan to keep the same ratio of remote to in-person training that they had in 2022. The most notable increase in in-person training (from remote training) was for management/supervisory training, employee onboarding and interpersonal skills training.
In 2023, about 32 percent of training hours were delivered with blended learning techniques, the same as in 2022. Virtual classroom/Webcasting accounted for 28 percent of hours delivered, while 33 percent of hours were delivered via online or computer-based technologies (e.g., e-learning, etc.). Some 30 percent of training hours were delivered by instructor-led training in a classroom setting.
In terms of technology for training delivery, the top five most often used included:
- Learning management systems (LMSs) at 89 percent
- Virtual classroom/ Webcasting/video broadcasting at 85 percent
- Rapid eLearning tools at 44 percent
- Mobile applications at 31 percent
- Application simulation tools at 26 percent.
Types of training for online learning
An interesting question asked in the survey is the extent to which certain training types relied on online training. The results show that 78 percent of mandatory or compliance training is all online or mostly online. IT/systems and desktop application training was also mostly or all online (53 percent). Not surprising, executive development had the smallest online component (24 percent).
Online method use for types of training (2023). Source: Trainingmag.com
Training outsourcing
Unlike 2022 which saw a 48 percent decrease in the average expenditure for training outsourcing, 2023 saw an increase in the average expenditure for training outsourcing – $322,376 in 2023 compared to $197,519 in 2022. An average of 5 percent of the total training budget was spent on outsourcing in 2023 compared to 4 percent in 2022.
Regarding what is outsourced, across all companies, instruction/facilitation took the largest share of outsourcing (59 percent). The next most outsourced services were LMS operations/hosting and custom content development, 48 percent and 40 percent, respectively.
Extent of Outsourcing. Source: Trainingmag.com
Outsourcing is expected to stay steady in 2024—85 percent of organizations expect it to stay the same. The percentage of companies expecting to increase outsourcing (7 percent) is slightly lower than those expecting to reduce outsourcing levels (8 percent).
How much does it cost to train an employee in the UK
According to a UK Department of Education research report, the amount UK companies spent training employees was on average, £1,530 per employee training a new employee in 2019. Training spending per trainee per annum was higher in England (£2,570) than in Northern Ireland (£2,190) and Wales (£2,130).
The most common type of training provided was job-specific training. Most employers also provided health and safety (or first aid) training and basic induction (onboarding) training for new staff.
Overall, 56% of training employers funded or arranged online training or e-learning for staff. At least three-quarters of the employers in the Education, Financial Services, Public Administration, Health and Social Work sectors offered online training. In contrast, online training was only offered by a quarter of training employers in the Primary Sector and Utilities and a minority of those who trained in the Manufacturing, Transport and Storage and Construction sectors.
UK L&D budgets and programs
UK’s Chartered Institute of Personnel and Development (CIPD) also conducts an annual survey that examines current practices and trends within learning and development (L&D). The latest survey which was released in June 2023 found that 45 percent indicated that how much companies spend training employees stayed the same, while 24 percent said that their L&D budgets increased in the last 12 months. Approximately 20 percent reported a net decrease in L&D budgets.
Regarding headcount, 57 percent reported that their L&D headcount stayed the same; 10 percent reported a decline (compared to 32 percent in 2021), and 23 percent reported an increase in number of L&D staff (compared to 18 percent in 2021).
The top 5 most cited L&D priorities in 2023 were:
- Addressing skills gaps (29 percent)
- Linking L&D with organizational development (17 percent)
- Linking L&D with performance management (17 percent)
- Improving the induction/onboarding process (16 percent)
- Identifying changing skills requirements (15 percent)
Learning delivery in UK
According to the 2023 CIPD survey, 48 percent reported that their use of digital learning solutions increased over the previous 12 months and 27 percent reported an increase in investment in learning technologies. Most organizations agreed or strongly agreed that they were successfully using learning technologies and are innovating in their use of learning technologies.
More respondents reported a decrease than an increase in the use of face-to-face learning, and more reported an increase in the use of digital learning than a decrease.
There has been a renewed focus in 2023 on more formal and traditional forms of learning in the UK. When asked what L&D methods they used in the past two years, 43 percent said in-house development programs, 42 percent said mentoring, formal qualifications or accredited programs and self-directed learning, 41 percent said external conferences, workshops and events, and 40 percent said coaching.
When looking at digital technologies organizations use to support content delivery and collaboration within their workforce, webinars/virtual classrooms were in use or planned to be used by 49 percent of respondents, 47 percent used of planned to use e-learning or online courses developed in house, and 43 percent used collaboration with peers (through face-to-face interactions, communities or online networks).
Other employee learning statistics
According to a 2022 report by the Society for Human Resource Management (SHRM), employees (57%) are pursuing learning opportunities outside of the workplace. The reasons include:
- They enjoy learning new things and developing skills (57%).
- They want to enhance their opportunities for career development (54%).
- They want to stay competitive in the job market (44%).
- They want to learn a new in-demand skill (37%).
- They want to acquire certifications (36%).
- They are looking to make a career change (27%).
- They want to learn skills other than those required for work (24%)
SRHM suggests that employers consider offering an annual personal learning stipend in their benefits packages for employees to use as they like. This would help to cultivate a development mindset and encourage learning outside of work, further supporting a learning culture. It also signals to employees that the organization values them as an individual.
Tackling L&D challenges
What the above surveys did not tackle in detail was the challenges faced by employees and L&D departments with their learning programs. A recent survey by Oracle where they interviewed 600 people in the United States found that the main training hurdles included not enough time for training, not enough training, and training that isn’t relevant.
The study’s authors noted that the lack of relevant and tailored training can partly be explained by the time an average L&D team takes to produce one training course. In their survey of 2,310 HR decision-makers of those who use a learning platform, most said it took a day or more to create one course and many said it took about a month or more!
A surprising 51 percent did not use any learning platforms for course creation which is both a detriment and an opportunity for L&D programs, regardless of their industry and L&D team size.
The authors also noted that employers weren’t providing enough training in an ‘on the go’ format, like a mobile app or a video that can be watched on a smartphone. Providing bite-sized training chunks (i.e., microlearning) makes it easier for employees to find the time to take courses or go back to content that they would like to review again.
Our perspective on course creation challenges
Our experience at LearnExperts has been that slow course creation can be attributed to many reasons, but the number one reason is that the process today is still linear and traditional where people are primarily interviewing subject matter experts (SMEs) and then translating their knowledge into course content using word processing tools (like Word or PowerPoint). This is a long and manual process that requires expertise.
Other reasons why course creation is slow includes company and team size, complexity of the course content, length of course, schedules of SMEs, availability of reference materials and the adoption of technology for course creation.
Since the process to create course content is still very traditional and manual and that’s what we encounter all of the time in our client engagements, we decided to create LEAi, our digital course developer. This AI-enabled tool allows companies to use the material they already have to create well-structured knowledge-sharing and training programs.
With LEAi you can now create instructor-led training, eLearning, knowledge base articles, virtual class content, presentations, webinars, videos and more in minutes, rather than days, weeks or months.
If you are in the market for a course creation tool that will help to grow the number of hours of training per employee you provide while reduce training costs per employee or would like some advice on how to accelerate your L&D program, give us a call!
Last Updated : September 10, 2024
