The latest industry report by Training magazine on the U.S. training industry reveals that training expenditures by U.S. companies has passed the $100 billion-mark for the first time.
The jump to $101.6 billion was fueled by a significant increase in large companies’ budgets, inflation, and organizations continuing to invest in virtual training technologies. The report also found that organizations are going back to in-person training, which typically requires a larger learning and development budget for expenditures such as travel, facilities, and equipment.
While payroll for in-house training decreased, the report found that spend on outside training products and services rose 1 percent to $8.2 billion.
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.
When it comes to the question on how much do companies spend on training per employee, across organizations of all sizes cost of employee training increased to $1,207 in 2022, compared to $1,071 in 2021.
When you break down the numbers by company size, the survey found that large companies with more than 10,000 employees spent much more on training in 2022 compared to 2021. Large companies spent an average of $1,689 per learner in 2022, compared to $722 per learner in 2022. That equates to a 134 percent increase.
On the other hand, small companies with 100 to 999 employees and midsize companies with 1,000 to 9,999 employees spent less in 2022 compared to 2021. Small companies spent $1,396 per employee in 2022 compared to $1,433 in in 2021 (2.7 percent decrease). Expenditures by midsize companies dropped to $826 in 2022, compared to $902 in 2021 (9.2 percent decrease).
Cost of employee training (per employee) 2020-2022. Source: Trainingmag.com
Hours of training per employee
While training budgets generally increased, the number of hours of training per employee decreased slightly on average.
Across all organizations, employees spent 62.4 hours in training in 2022, compared to 64 hours in 2021. The one organization size that bucked the trend was midsized companies. In 2022, companies with 1,000 to 9,999 employees spent 71 hours in training, compared to 53 hours in 2021. This represents a 34 percent increase in training hours.
Inversely, large companies substantially decreased the number of hours in training. They fell from 78 hours of training in 2021, to only 46 hours in training in 2022. Given the big jump in learning and development budgets, we speculate that the decrease in the number of hours is being driven by the move towards more in person instructor-led training and less online self-paced elearning.
Training hours per employee 2021-2022. Source: Trainingmag.com
Learning and development budgets by industry
When looking at overall employee learning and development budgets, more manufacturers, services organizations, retail/wholesale and associations increased allocated funds for training, retraining and upskilling. For the companies that did increase their budgets, the survey found that most of the companies increased their budgets between 6 and 15 percent. Only small companies had a substantial number of respondents who increased their budgets by more than 25 percent.
Source: Trainingmag.com
Source: Trainingmag.com
In terms of allocation of learning and development budgets, Training Magazine said the following:
- Increased scope of training programs – 70 percent (2022) vs. 59 percent (2021)
- Added training staff – 56 percent (2022) vs. 45 percent (2021)
- Increased number of learners served – 49 percent (2022) vs. 38 percent (2021)
- Purchased new technologies/equipment – 45 percent (2022) vs. 50 percent (2021)
Training delivery in the U.S.
With COVID restrictions no longer being a major factor, most of the respondents stated that they planned to return to some classroom training. But remote training is still here to stay.
According to the report, 25 percent said they would maintain the remote learning instituted during the pandemic. Another 16 percent indicated they would maintain their remote learning and create new classroom training.
Approximately one-third of all companies used blended learning in 2022. Thirty-two percent of hours were delivered with blended learning in 2022 and the following modalities were used:
- Virtual classroom/Webcasting accounted for 33 percent of hours delivered
- Stand-and-deliver instructor-led training accounted for 24 percent of training hours
- Only 4 percent of training hours were delivered via mobile devices
- Six percent of training hours were delivered via social learning
Source: Trainingmag.com
In terms of technology for training delivery, learning management systems (LMSs) were cited as the technology most often used (89 percent in 2022). Virtual classroom/Webcasting/video broadcasting was the next popular learning delivery technology at 86 percent. These findings were not surprising to us since essentially all large companies and 95 percent of midsize ones currently use LMSs. Also, 76 percent of small companies have an LMS, which is still significant.
Types of training
An interesting question asked in the survey is the online method use for types of training. The options provided by the survey were:
- Executive development
- Management/supervisory training
- Interpersonal skills
- IT/Systems training
- Desktop application training
- Customer service training
- Sales training
- Mandatory or compliance training
- Profession/industry-specific training
- Onboarding
The results show that 84 percent of mandatory or compliance training is all online or mostly online. IT/systems and desktop application training was also mostly or all online. Not surprising, executive development had the smallest online component.
Source: Trainingmag.com
Training outsourcing
2022 saw a 48 percent decrease in the average expenditure for training outsourcing: $197,519, down from $379,038 in 2021. Large companies spent on average $760,882 on outsourcing while midsize and small companies spent $163,333 and $31,367 respectively.
In terms of what is outsourced, across all companies, instruction/facilitation took the largest share of outsourcing. LMS operations/hosting and custom content development were the next most outsourced services.
Source: Trainingmag.com
Looking at the projected use of outsourcing for 2023, 15 percent of all companies said that they would increase outsourcing for custom content development. Inversely, 18 percent of all companies expect to decrease outsourced custom content development.
How much does it cost to train an employee in the UK
UK’s Chartered Institute of Personnel and Development (CIPD) also conducts an annual survey that examines current practices and trends within learning and development. The latest survey which was released in May 2021 found that 58 percent indicated that their learning and development (L&D) budget stayed the same while 31 percent said that their L&D budgets decreased in the last 12 months. Only 11 percent reported an increase in budgets.
In terms of headcount, 50 percent reported that their L&D headcount stayed the same; 32 percent reported a decline and 18 percent report an increase in number of L&D staff.
Learning delivery in UK
According to the survey, 70 percent reported that their use of digital learning solutions increased over the previous 12 months and 36 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.
In terms of modalities, 47 percent reported that they had arranged or funded webinars or virtual classrooms in the last 12 months; 41 percent were providing digital e-learning or online courses; 35 percent leveraged digital content; and 17 percent offered blended learning opportunities.
When looking at digital technologies organizations use to support content delivery and collaboration within their workforce, webinars/virtual classrooms by far saw the greatest growth in 2021, up to 51 percent in 2021 compared to 36 percent in 2022.
Other digital technologies that are currently being used to support content delivery and collaboration within the workforce include:
- Learning management system (28 percent)
- Social learning (28 percent)
- Online education programs (23 percent)
- Digital tools to support coaching and mentoring (21 percent)
- Open education resources (21 percent)
- Bitesize film/video (21 percent)
- Digital tools to support learning within the workflow (21 percent)
- Job aids (infographics, checklists) (17 percent)
- Podcasts/vlogs (16 percent)
- Learning experience platform (14 percent)
- Mobile apps (13 percent)
- Learner-generated content (11 percent)
Other employee learning statistics
According to a 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 in their benefits packages an annual personal learning stipend 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 authors of the study noted that the lack of relevant and tailored training can be explained partly by the time that it takes an average L&D team to produce one training course. In their survey of 2,310 HR decision-makers of those that 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!
