3 Reasons That Corporate Training Is Booming
Bersin by Deloitte recently released their 2014 Corporate Learning Factbook, and revealed that corporate training is in huge demand right now, and it is only expected to climb. The research showed a steady growth rate from 10% in 2011, 12% in 2012 and 15% in 2014.
As an LMS provider, this is great news, but it’s even better news for the organizations jumping on the training bandwagon. Because training is considered one of the most discretionary spends in business, the significant return of training is a very strong indicator that the economy and business are in a positive state. Here are the three reasons that corporate training in the US has become a $70 Billion industry.
No Money, No Training
When belts tighten, training is among the first things to go. That being said, when the economy makes the upward swing, a strong emphasis on training becomes immediate. In 2008 and 2009, at the height of the US economic recession, we saw corporate training spending dip down to -11%. By 2011, spending had increased by 21%. Bersin said:
“This is among the most discretionary of all corporate spending areas, so it is an excellent bellweather for business confidence.”
So what happened during that 21% drop in training spend? While the entire skill gap or talent shortage (whatever you want to call it) can’t be fully attributed to this significant dip in training, it certainly didn’t help matters.
The Skill Gap Is Significant
The study also took a look at just how real the skill gap is in today’s US workforce. The research revealed that over 70% of organizations cite “capability gaps” as one of their top five challenges.
For instance, a recent report from the Community for Advancing Discovery Research in Education revealed that employment in professional, scientific and tech services is projected to grow by 29% by 2020. It is also projected that of the two million new jobs this increase will produce, the majority of the will have be filled with talent from outside of the US. CEO of Goodwill Industries, Jim Gibbons said:
“Unfortunately, there’s no quick fix. Closing the skills gap will take a concerted effort and commitment to retraining and educating our workforce. We can only close the gap by comprehensively investing in workers of all ages — from students to seniors.”
Employers Prefer Internal Hires/Promotions
A recent survey of 400 employers, conducted by the College for America revealed a strong preference for the learning and development of existing employees into management roles rather than hiring new employees. Employers want to be able to promote from within, but the lack of appropriate skills in their workforce doesn’t allow for it. So leaders are embracing the importance of training. Internal promotions save on sourcing, recruiting and hiring costs, which can add up quite quickly. Training has its own associated costs, but they tend to yield a very high return on investment, as training is also linked to increased productivity, engagement and retention.
The corporate training boom is not only a symbol of a current positive economic state, it is also a catalyst for a strong economy to come. As training is welcomed back into the corporate world it brings with it a lot of solutions to our current workforce problems, like employee engagement lows, high turnover rates, poor customer care and the significant skill gap. Training is one of the most important and effective investments that leaders can make to drive success that will last.
(About the Author: Sean Pomeroy, CEO of Visibility Software, has worked in the Human Resources industry since he graduated from Radford University with a Bachelors in Psychology and a Master of Arts in Industrial/Organizational Psychology. After working in HR as a generalist for a government contracting company, he moved to the HR Technology arena and began assisting companies in the selection and implementation of HR software.)
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