STATE OF THE INDUSTRY

Transcription

1 2013 STATE OF THE INDUSTRY PROJECT DESCRIPTION ASTD Research: Connecting Research to Performance 2012 SPENDING $164.2 BILLION PARTICIPATING ORGANIZATIONS 475 AVERAGE SPENT PER EMPLOYEE $1,195 GLOBAL BENCHMARKING TRENDS Sponsored By:

2 2013 State of the Industry ASTD Research: State of the Industry, 2013 Sponsored By:

3 2013 by the American Society for Training & Development. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to ASTD Research, 1640 King Street, Box 1443, Alexandria, VA ORDERING INFORMATION Research reports published by ASTD can be purchased by visiting ASTD s website at store.astd.org or by calling or ASTD Product Code: (print) (digital) ISBN-10: (print only) ISBN-13: (print only) e-isbn: (digital only) Publication Date: December 2013 ASTD EDITORIAL STAFF Director, ASTD Research: Laurie Miller Manager, ASTD Press: Ashley McDonald Research Analyst: Christina Mandzuk Research Specialist: David Frankel Interior Design and Production: Bey Bello Cover Design: Lon Levy Template Design: Lon Levy Production Specialist: Dara Friel

4 CONTENTS 02 A NOTE FROM OUR SPONSORS 04 DATA SOURCES 07 EXECUTIVE SUMMARY 10 SECTION 1: Efficiencies and Expenditures 28 SECTION 2: Content Distribution and Delivery Methods 41 SECTION 3: Research Topics and Trends, ABOUT THE AUTHORS AND CONTRIBUTORS 48 ABOUT ASTD CONTENTS 01

5 A NOTE FROM OUR SPONSORS learning departments and pride ourselves on our ability to help our customers respond effectively. A Note From Skillsoft ASTD s annual State of the Industry report provides valuable insight into the ways that learning has evolved in recent years. The report also provides insight into best practices data that prove to be especially relevant for organizations that consider how the learning and development choices of ASTD BEST Award winners and the Fortune Global 500 companies differ from those in other organizations and what we can learn from them as we develop our plans for next year. Many organizations have developed a greater appreciation for the crucial role learning plays in becoming more competitive, effective, efficient, and agile. Appreciation for the benefits of technology-based learning has also grown, with e-learning accounting for more than one-third of formal learning hours available last year. This is not surprising as training departments look to extend learning s reach, serve more geographically dispersed workforces, and quickly help learners develop new skills to accommodate changing demands all at an affordable cost. As organizations demand learning more closely aligned to both business goals and individual learners needs, training strategies must become more innovative, more flexible, and more resourceful. Skillsoft strives to provide content, service, and experience that enable learning and development professionals to successfully meet those demands. We recognize the many challenges facing Skillsoft is pleased to support ASTD, another organization with a long history of helping training professionals succeed. ASTD models best practices in learning by providing development programs, critical analysis, and opportunities for collaboration for training professionals. Skillsoft appreciates ASTD s contributions to innovation within our industry. About Skillsoft Skillsoft is a pioneer in the field of learning with a long history of innovation. Skillsoft provides cloudbased learning solutions for our customers worldwide, who range from global enterprises, government, and education customers to midsized and small businesses. Our courses, books, and videos have been developed by industry-leading learning experts to ensure that they build talent and develop a more knowledgeable, productive, and valuable workforce. Our customer support teams draw on a wealth of in-house experience and a comprehensive learning e-library to develop both packaged and custom learning programs tailored to our customers needs. We currently serve more than 5,000 customers and more than 13 million learners around the world and provide continuing, hands-on support to assist them in maximizing their ongoing success. 02 ASTD 2013 STATE OF THE INDUSTRY

6 A Note From the CARA Group, Inc. For 70 years, ASTD has been dedicated to the profession by raising awareness of our industry through high-quality research, tools, and publications, as well as providing opportunities for professional and career development. For these reasons, CARA is proud to help sponsor this year s State of the Industry report. CARA continues to adapt to these global trends by recruiting top talent to support our clients requirements. Flexible, highly skilled learning and change management professionals are needed to develop or manage projects aligned with the organization s key initiatives and to help ensure workforce adoption and achievement of their business goals. The ASTD State of the Industry report helps us all better plan, prepare, and implement successful learning strategies within our organizations to ultimately prepare our teams for the continuous change that the market demands. In the field of learning and performance, 2013 has been one of the most exciting in recent history. We see corporations continue to show commitment to learning through increased expenditures to attract, retain, and develop their top talent. In addition, companies are now able to reach greater populations within their workforce through more innovative learning applications, such as the onset of new mobile and cloud-based technologies, social and informal learning tools, and contemporary human performance approaches. With effective measurement tools, companies can support a broader set of learning needs, more cost effectively. Organizations can address unique and changing development needs for their individual employees and global teams. Finally, our associates, managers, and leaders need new skills and competencies to be successful in emerging disciplines, such as change leadership, innovation, global mindset, agility, and flawless execution. Managers and supervisors need to be equipped to develop their team members through effective career development tools and coaching support. About the CARA Group CARA is a recognized human performance solutions leader. Our quality engagements directly contribute to client and consultant productivity and growth. As a consulting firm specializing in custom learning, change management, and technical communication services, CARA helps people do their jobs better. We ensure effective learning, improve performance, and align solutions to business goals and objectives. For the third consecutive year, CARA has been named to Inc. magazine s 2013 Inc. 5,000 list of fastest growing private companies in America. CARA was also named to TrainingIndustry.com s 2013 Top Workforce Development Providers List. We invite you to learn more about CARA s human performance solutions at A NOTE FROM OUR SPONSORS 03

7 DATA SOURCES Data Presentation This report presents data in three groupings against which learning professionals can benchmark learning investments and best practices in their organizations. The three groupings (or comparative categories) are consolidated responses, ASTD BEST Award winners (BEST), and Fortune Global 500 companies (G500). ASTD s State of the Industry report is produced annually by ASTD Research. Information presented in the report reflects organizational data that were reported for the previous year. The 2013 report presents organizational data submitted for calendar or fiscal year Consolidated Responses The consolidated responses include all of the organizations that submitted data for a particular year. Consolidated data were not available for 2005 because of the transition of data collection from the BMS 1 to the ASTD Workplace Learning and Performance (WLP) Scorecard. Respondents have an option to submit their data as part of their BEST application, through the WLP Scorecard, or an online survey. 1 BMS is ASTD s former annual training data collection system. 04 ASTD 2013 STATE OF THE INDUSTRY

8 BEST Award Winners Started in 2003, the ASTD BEST Awards program recognizes organizations that demonstrate a clear link between learning and performance across the enterprise. The BEST Award-winning organizations change each year and, therefore, the organizational demographics of the winners do too. BEST organizations compete annually for the award, and they cover the spectrum of size, sector, and industry. Competitors are judged and selected blindly, and therefore each year s winning group is different. Historical BEST data are provided for comparative purposes only. Due to the unique composition of each year s BEST winners sample, aggregates and averages can vary from year to year. As in previous years, the 2013 BEST winners submitted quantitative and qualitative information, and were selected according to the following criteria: Learning has an enterprisewide role: There is involvement at the executive level in creating solutions to business issues and in setting organizational strategy. Learning has value in the organization s culture: This is demonstrated with learning opportunities for employees, the involvement of C-level leaders, the use of learning for growth of the organization, and the fostering of innovation. Learning links to individual and organizational performance: This includes alignment with the business, efficiency, measurement of its effectiveness, and demonstrating success with non-training solutions for business needs. Investment is made in learning and development initiatives. BEST Award applicants completed the same quantitative survey questions as other participants, permitting direct comparison of the same indicators among them for each year. The ASTD BEST Award applicants also completed a separate qualitative survey. Fortune Global 500 Fortune s Global 500 list is a ranking of the top 500 corporations worldwide by revenue. The list is compiled and published annually by Fortune magazine. This is the third year data from the G500 are included in the report for comparative and benchmarking purposes. DATA SOURCES 05

9 TABLE 1: DATA SOURCES Data Source Consolidated Organizations that submitted their annual data as part of ASTD s ongoing benchmarking programs. From 1999 to 2003, this combined set of responses included data from the ASTD Forum (Forum) and ASTD s Benchmarking Service (BMS). In 2004, data from the ASTD BEST Award-winning organizations were also included in the consolidated set. In 2005, the BMS was phased into ASTD s new WLP Scorecard, so consolidated data are not available for that year. The consolidated responses include data from the WLP Scorecard users, the Forum organizations, and the BEST organizations. ASTD BEST Award Winners (BEST) Organizations that were recognized by ASTD for their exceptional efforts to foster, support, and leverage enterprisewide learning for business results. BEST organizations compete annually for the BEST designation, and they cover the spectrum of size, sector, and industry. Competitors are judged and selected blindly and, therefore, each year s winning sample is unique from the previous year s sample. Historical BEST data are provided for comparative purposes only. Because of the unique composition of each year s BEST winners group, aggregates and averages can, and in many cases should, vary significantly from year to year. Fortune Global 500 (G500) Fortune s Global 500 list is a ranking of the top 500 corporations worldwide as measured by revenue. The list is compiled and published annually by Fortune magazine. Starting in 2011, data from the participating G500 are reported for comparative and benchmarking purposes. Samples Average Number of Employees Consolidated Average Payroll $M 2012 (n = 475) 20,612 $ (n = 461) 15,695 $2, (n = 412) 28,167 $ (n = 304) 13,728 $ (n = 301) 15,849 $1, (n = 316) 17,825 $1, (n = 221) 27,549 $1, (n = 246) 14,699 $3,960 BEST 2012 (n = 28) 48,314 $2, (n = 30) 33,678 $2, (n = 32) 24,875 $1, (n = 31) 31, (n = 39) 21, (n = 40) 28, (n = 42) 28, (n = 39) 60,386 G (n = 32) 208,634 $7, (n = 27) 106,902 $9, (n = 22) 128,406 $8, ASTD 2013 STATE OF THE INDUSTRY

10 EXECUTIVE SUMMARY In a continuously changing economic environment, organizations remain committed to organizational learning and development. In the 2013 State of the Industry report, sponsored by Skillsoft and Cara, 475 organizations representing a diverse sample of industries, sizes, and locations report on training metrics in their organizations. ASTD estimates that in 2012, organizations spent approximately $164.2 billion on employee training. Of this total direct learning expenditure, 61 percent ($100.2 billion) was spent internally. The remainder was spent on external services, which accounted for 28 percent ($46 billion); and tuition reimbursement, which accounted for 11 percent ($18 billion). In 2012, the U.S. Bureau of Labor Statistics estimates that on average, 181,000 jobs were added per month and the unemployment rate fell one percentage point. Despite the increasing number of employees, organizations managed to keep the average direct learning expenditure per employee stable at $1,195 in 2012, which is $13 higher than the average in This means they needed larger direct learning budgets to maintain the same spending level per employee as the previous year when the number of employees was decreasing. Efficiencies and Expenditures Spending per employee is affected by several factors. One major factor is the size of the organization. Smaller organizations, particularly those with fewer than 500 employees (which account for 36 percent of responses in this Study), typically spend more per employee than larger organizations. They rely more on external services, tuition reimbursement plans, and have a smaller L&D staff. Due to smaller staff size, they typically spend more per employee because they are not able to distribute training costs (including development and implementation) among as many employees as a larger organization. In 2012, for small organizations with fewer than 500 employees the direct expenditure per employee was on average $1,800, midsize organizations with 500 to 9,999 employees on average spent $964, and large organizations with more than 10,000 employees spent on average $700. In line with spending per employee remaining constant, the number of training hours used by employees also remained stable in 2012 at 30.3 compared with 30.5 in During the past four years there has been little movement in the number of training hours used by employees. It is also noteworthy that organizations are not just increasing the reuse of content to keep costs down. The reuse ratio in 2012 actually fell slightly from 52.8 to The reuse ratio is the number EXECUTIVE SUMMARY 07

11 of learning hours used compared with the number of learning hours available. The reuse ratio typically remains around 50, which is a healthy ratio. A reuse ratio around 50 shows that organizations are producing new content and it is being utilized. A low reuse ratio would mean new content is being created but it is not being distributed, and a high reuse ratio would indicate programs are being heavily used by many employees but there may be fewer new offerings. ASTD estimates that in 2012, organizations spent approximately $164.2 billion on employee training. Content Distribution The question that remains is: How are organizations continuing to offer new training and maintain spending levels, yet the number of training hours used by employees has remained relatively flat during the past four years? There are a few reasons why this may be happening. One might be the increasing role of technology usage for training and the shift toward e-learning (online learning). Another might be increased usage of informal and social learning, which includes learning methods such as coaching, mentoring, online social networking, and accessing information through the Internet. For the past three years, the percentage of training used by employees in traditional instructor-led classrooms has been making a slow decline, accounting for 55 percent of training hours used in 2012, which is a six percentage point decline from 2010 when instructor-led classroom accounted for 61 percent of hours used. At the same time, there has been an increase in the use of technology-based methods, such as instructor-led online (accounting for 10 percent in 2012 compared with 8 percent in 2010), instructor-led remote, and mobile learning. What all three of these methods have in common is their use by employees can be difficult to measure in time increments, and often they don t easily align with an organization s learning management system (LMS). Mobile learning is a good example of this. In the past three years we have seen organizations percentage of mobile technology learning hours available increase from 0.74 percent in 2010 to 1.6 percent in However, the percentage of mobile technology learning hours used has remained unchanged at approximately 1.5 percent. The 2013 ASTD/i4cp study, Going Mobile: Creating Practices That Transform Learning, found one of the major challenges of implementing mobile learning is measuring its use and effectiveness. Forty-one percent of respondents in that study who use mobile learning admit that their organizations do not have metrics in place to assess the program s effectiveness. Over half of survey respondents say their organizations use mobile learning for just-in-time learning (65 percent), job aids (63 percent), and on-the-job support (52 percent). How much time an employee spends in an app, accessing this valuable information, may prove to be elusive as organizations are challenged to measure it. Another method in which employees are learning but not necessarily recording the hours doing so is through informal learning. In the 2013 ASTD study, Informal Learning: The Social Evolution, 27 percent of respondents reported that informal learning represented more than half of the total learning taking place in their companies. However, it is difficult to pinpoint and record the exact number of hours an employee participates in informal learning, such as online social networking, accessing knowledge through Internet or intranet searches, and peer-to-peer coaching. The study also 08 ASTD 2013 STATE OF THE INDUSTRY

12 reveals that informal learning does not necessarily decrease an organization s training budget, but may in fact increase the budget as it invests in technology. Eight percent of survey respondents report that in the past four years their organization s informal learning program caused their training budget to increase and 82 percent said it stayed the same. Only 10 percent report informal learning caused their training budgets to decrease. Impact of Technology in Training Examining these shifts in training methods and the role technology is playing helps to explain how training budgets are changing. These factors may also help explain the increasing cost of learning hours available and learning hours used. The 2013 State of the Industry report shows the average cost per learning hour used is $89 and the cost per learning hour available is $1,772. Both of these metrics increased over the previous year and have been on an upward trend since The cost per learning hour used increased by 4 percent in 2012 compared with 2011 and the cost per learning hour available increased by 20 percent in the same time period. Without examining organizations budgets, a definitive answer to the question, why is the cost per learning hour increasing? is not available. However, some possible influencers could be the up-front costs of implementing technology (as discussed previously), inflation, a decrease in the ratio of employees to L&D staff members, and the challenge of accurately recording all the training hours employees use. L&D staff members are critical to the success of an organization s training program. Knowing how many staff members it takes to implement an organization s learning strategy is an important question. The answer is as unique as the organization s learning strategy. To provide some guidance and benchmarking statistics, the State of the Industry report tracks the number of employees per L&D staff member and the number of hours used and available per staff member. Organizations looking to compare their own data with these numbers will not find value in matching their numbers to the averages since factors such as organization size and industry play a significant role in these data. What will provide value is to examine how the data align with the other reported metrics. In 2012 the average number of employees per L&D staff member was 299 when adjusted for outsourcing. When not adjusted, the number increases to 400 employees per L&D staff member. Both of these ratios decreased 5 percent from The decrease in the ratio of staff members to L&D staff could help explain the rise in the cost of learning hours used and learning hours available. Similar rationale can be applied to learning hours used and available per L&D staff member, adjusted for outsourcing. In 2012 the number of hours used per L&D staff member decreased to 3,452 from 4,807 in 2011, and the number of hours available per L&D employee increased to 553 from 470. This is another example of the trend we have seen in the past four years where the hours used has decreased while the hours available increased. Conclusion Organizations continue to invest in their employees by offering training and development opportunities delivered in person or online. They are implementing new training methods and technologies to stay relevant and control costs in economic conditions where they are being challenged to develop more employees with the same or fewer learning resources. They are meeting this challenge by finding ways to stretch learning budgets and still meet the training needs of the organizations whether using technology, instructor-led training, or a blended method. EXECUTIVE SUMMARY 09

13 Section 1 Efficiencies and Expenditures Overview This section covers the 13 key indicators of efficiencies and expenditures as reported by the 2013 State of the Industry participating organizations. This section is organized to parallel the supporting table, Key Indicators (Table 2). Main headers for this section replicate the column headers on the table to make cross-referencing easy and clear. Using the definitions and explanations in this section, readers can better understand the data in Table 2 and use it to benchmark their organization. When making comparisons and benchmarking organizational data, it is critical that the reader keep in mind that this report covers a wide variety of organizations that vary in size, industry, location, and cultures. Each organization is unique and in many cases it may not be as important to match the data points as reported in this report, but to monitor company data over time to ensure that patterns remain constant and there are not sudden changes or swings, which could be red flags. To help make meaningful comparisons, data are provided by organization size and industry when available in Table Direct Expenditure per Employee The most popular question is often the hardest to answer, and how much should we spend on T&D per employee? is no exception. There is no simple answer to this question. All employees are not the same and do not require the same amount or type of training. However, looking at the average direct expenditure per employee is the best way to compare T&D budgets across organizations of different sizes. The average direct expenditure per employee is the ratio of how much an organization spends on T&D compared with the number of employees. Items included in this figure are T&D staff salaries (including taxes and benefits), travel costs for T&D staff, administrative costs, non-salary development costs, delivery costs (i.e., classroom facilities, online learning technology infrastructure), outsourced activities, and tuition reimbursement. It does not include the cost of the learner s travel and lost work time while engaging in learning activities. 10 ASTD 2013 STATE OF THE INDUSTRY

14 The average direct expenditure per employee was $1,195 in 2012, which is only a $13 increase from the average of $1,182 in Spending per employee is affected by several factors. One major factor is the size of the organization. Smaller organizations, particularly those with fewer than 500 employees (which account for 36 percent of responses in this study), typically spend more per employee than larger organizations. They rely more on external services, tuition reimbursement plans, and have a smaller L&D staff. Due to smaller staff size, they typically spend more per employee because they are not able to distribute training costs (including development and implementation) among as many employees as a larger organization. In 2012, for small organizations with fewer than 500 employees the direct expenditure per employee was on average $1,800, midsize organizations with 500 to 9,999 employees on average spent $964, and large organizations with more than 10,000 employees on average spent $700. Companies recognized in Fortune magazine s Global 500 (G500) that submitted data for this report on average spent $802 per employee on T&D, down from $1,034 in The G500 is a small sample of organizations that changes from year to year, so swings in data are expected often without explanation. What these data do exemplify is insight into how large multinational organizations are performing in relation to training and development. The spending of $802 per employee on T&D in 2012 is in line with what we would expect a large industry leader to spend on training. It is lower than the consolidated average of $1,195, but higher than the average for large organizations spending of $700 per employee (see Table 2). $1,195 Industry also plays a significant role in the amount an organization spends on L&D. For example, healthcare typically has a high spend per employee due to the required training, changing requirements, and job-specific nature of the training. BEST Award-winning organizations on average spent $1,172 per employee. BEST winners are organizations recognized by ASTD for their efforts to nurture, support, and leverage enterprisewide learning for business results. The sample is comprised of different organizations each year of various sizes and industries. The changing winner list each year accounts for the fluctuation in their spending year over year. Despite this factor, historical data show that BEST winners tend to invest more in T&D than most organizations, and spending is one of several characteristics that set apart these organizations from their peers (see Figure 1-1).ure 1-1: Average direct expenditure per employee (consolidated) SECTION 1: Efficiencies and Expenditures 11

15 FIGURE 1-1: AVERAGE DIRECT EXPENDITURE PER EMPLOYEE (U.S. DOLLARS) $1,554 $1,616 $1,531 $1,451 $1,303 $1,268 $1,228 $1,272 $1,195 $1,022 $1,040 $1,110 $1,068 $1,081 $1,073 $1,067 $1,182 $1,034 $1,172 $ Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. 02. Learning Hours Used per Employee Employees participated in the same number of training hours in 2012 as they did in On average employees participated in 30.3 hours of training in During the past four years we have seen the number of training hours used remain rather flat. There are numerous possible explanations for this stall in hours. One being the increased usage of non-traditional instructor-led training, such as e-learning, mobile technology, and informal learning, which are extremely valuable training tools, but can prove challenging when trying to record the number of hours employees are using them Annual learning hours used per employee (consolidated) BEST organizations continue to lead the pack in the number of hours used per employee, averaging 57.7 hours per employee, which is an all-time high. This is almost 1.5 weeks of training per employee (see Figure 1-2). Figure 1-2: 12 ASTD 2013 STATE OF THE INDUSTRY

16 FIGURE 1-2: LEARNING HOURS USED PER EMPLOYEE Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. 03. Direct Expenditure as a Percentage of Payroll Direct expenditure as a percentage of payroll examines the ratio of spending on T&D to spending on employee salaries. It is a helpful metric to compare spending across industries with varying payrolls. 3.6% Direct expenditure as a percentage of payroll (consolidated) The consolidated group s direct expenditure as a percentage of payroll continues to remain strong, rising slightly to 3.6 percent in 2012 from 3.2 percent in 2011, and from 2.7 percent in After spiking in 2011 at 2.8 percent, the G500 dropped back down to 1.7 percent, similar to 2010 when they reported 1.4 percent (see Figure 1-3). Figure 1-3: SECTION 1: Efficiencies and Expenditures 13

17 FIGURE 1-3: DIRECT EXPENDITURE AS A PERCENTAGE OF PAYROLL (INCLUDING TAXES AND BENEFITS) 3.63% 3.35% 3.23% 2.86% 2.72% 2.97% 2.83% 2.19% 2.33% 2.18% 2.66% 2.32% 2.33% 2.15% 2.24% 2.15% 2.14% 1.75% 1.70% 1.43% Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. 04. Direct Expenditure as a Percentage of Revenue and 05. Direct Expenditure as a Percentage of Profit Direct learning expenditure as a percentage of revenue and as a percentage of profit together help us to understand how learning is driving growth for organizations. Comparing these two measures can reveal the degree to which learning facilitates sustainable growth. 14 ASTD 2013 STATE OF THE INDUSTRY

18 The consolidated and BEST groups continue to see an increase in direct expenditure as a percentage of revenue. The consolidated direct expenditure as a percent of revenue in 2012 was 1.3 percent. BEST Award-winning companies report on average 0.7 percent direct expenditure as a percentage of revenue. The G500 typically report a smaller percentage of revenue spent on direct learning expenditures. In 2012 the G500 s direct learning expenditure accounted for 0.3 percent of their revenue (see Figure 1-4).Figure 1-4: 1.3% Direct expenditure as a percentage of revenue (consolidated) FIGURE 1-4: DIRECT EXPENDITURE AS A PERCENTAGE OF REVENUE 1.32% 1.16% 1.06% 0.73% 0.72% 0.64% 0.56% 0.61% 0.71% 0.58% 0.65% 0.63% 0.52% 0.55% 0.59% 0.63% 0.62% 0.65% 0.32% 0.30% Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. SECTION 1: Efficiencies and Expenditures 15

19 The consolidated group s direct learning expenditure was 5.9 percent, about five times the percentage of revenue, which was 1.3 percent. BEST organizations reported on average 6 percent direct expenditure as a percentage of profit compared with 0.7 as a percentage of revenue. The G500 do not follow the typical pattern that we see in the consolidated sample and BEST Award winners; they report 0.3 percent for direct expenditure as a percentage of revenue and 4 percent for direct expenditure as a percentage of profit (see Figure 1-5). This is not a surprise given these organizations inclusion in Fortune s G500 list; meaning, they have reported a large profit increase in % Direct expenditure as a percentage of profit (consolidated) FIGURE 1-5: DIRECT EXPENDITURE AS A PERCENTAGE OF PROFIT 11.31% 8.30% 7.59% 7.54% 8.90% 8.75% 10.88% 7.48% 6.61% 6.88% 6.74% 4.20% 5.30% 6.49% 5.73% 6.04% 5.92% 3.98% 2.84% 3.96% Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. 16 ASTD 2013 STATE OF THE INDUSTRY

20 Direct Expenditure Distribution: 06. Percentage of Expenditure for Tuition Reimbursement and 07. Percentage of Expenditure for External Services 11.1% Average tuition reimbursement as a percentage of direct expenditures (consolidated) The reported direct learning expenditure is comprised of three subcategories: internal costs, external services (also called outsourced activities), and tuition reimbursement. In 2012 on average, organizations spent 11.1 percent of their budget on tuition reimbursement, 27.5 percent on external services, and the remaining 61.5 percent on internal costs (see Figure 1-6).Figure 1-6: FIGURE 1-6: EXPENDITURE DISTRIBUTION (CONSOLIDATED) 11.08% Tuition Reimbursement 27.46% External Services 61.46% Internal Costs SECTION 1: Efficiencies and Expenditures 17

21 The direct expenditure distribution has remained stable during the past several years, and this year is no exception. Internal costs accounted for 61.5 percent of direct learning expenditure, which is consistent with 55.8 percent reported in 2011, 60.5 percent in 2010, and 62.4 percent in External services and tuition reimbursement are also comparable to prior years (see Figure 1-7a). Figure 1-7a: 61.5% Average internal costs as a percentage of direct expenditures (consolidated) FIGURE 1-7a: AVERAGE DIRECT EXPENDITURE DISTRIBUTION (CONSOLIDATED) 61.29% 62.22% 66.08% 62.45% 60.50% 55.80% 61.46% 28.07% 25.18% 21.99% 26.88% 26.60% 29.88% 27.46% % % % % % % % Internal Costs External Services Tuition Reimbursement The data show that company size or industry does not have a significant impact on external services spending. For example, the G500 and BEST organizations typically spend the same on external services as the consolidated group (27.8 percent, 28.5 percent, and 27.5 percent respectively; see Figure 1-7b). 18 ASTD 2013 STATE OF THE INDUSTRY

22 FIGURE 1-7b: AVERAGE DIRECT EXPENDITURE DISTRIBUTION 58.33% 62.46% 65.01% 61.46% 62.75% 61.54% <500 Employees 29.23% 12.44% 500 9,999 Employees 27.30% 10.24% 10,000+ Employees 24.68% 10.31% Consolidated 27.46% 28.48% 27.79% 11.08% BEST 8.77% G % Internal Costs External Services Tuition Reimbursement 08. Employees per L&D Staff Member L&D staff members are critical to the success of an organization s training program. Knowing how many staff members it takes to implement an organization s learning strategy is an important question. The answer is as unique as the organization s learning strategy. Organizations looking to compare their own data with these numbers will not find value in matching their numbers to the averages, since factors such as organization size play a significant role in these data. What will provide value is to examine how the data align with the other reported metrics. In 2012 the average number of employees per L&D staff member was 299 employees to one L&D staff employee when adjusted for outsourcing (see Figure 1-8a). When not adjusted the number increases to 400 employees to 299:1 one L&D staff member (see Figure 1-8b). Both of these ratios decreased 5 percent from The decrease in the ratio of staff members to L&D staff could help explain the rise in the cost of learning hour used and learning hour available.figure 1-8a: Average ratio of employees to L&D staff members (adjusted) SECTION 1: Efficiencies and Expenditures 19

23 FIGURE 1-8a: AVERAGE EMPLOYEES PER L&D STAFF MEMBER (ADJUSTED FOR OUTSOURCING) Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. As mentioned above, the number of L&D staff members when not adjusted for outsourcing also decreased, from 423:1 in 2011 to 400:1 in Figure 1-8b: FIGURE 1-8b: AVERAGE EMPLOYEES PER L&D STAFF MEMBER (NOT ADJUSTED FOR OUTSOURCING) Consolidated BEST G ASTD 2013 STATE OF THE INDUSTRY Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard.

24 09. Learning Hours Used per L&D Staff Member Examining the number of learning hours used per L&D staff member also helps an organization monitor the efficacy of its L&D function. Taking into consideration the amount of learning being outsourced allows organizations to track the ratio of hours to staff over time, since their reliance on external services may fluctuate. In 2012 the number of hours used per L&D staff member decreased to 3,452 from 4,807 in 2011 (see Figure 1-9). Again, this metric is dependent on organization size. Organizations should monitor the trend over time to compare with their changes from year to year. Figure 1-9: 3,452:1 Learning hours used per L&D staff member (consolidated) FIGURE 1-9: AVERAGE LEARNING HOURS USED PER L&D STAFF MEMBER (ADJUSTED FOR OUTSOURCING) 8,115 6,481 6,241 6,625 6,793 6,799 7,065 7,787 5,824 5,733 6,190 5,559 5,497 5,507 5,350 4,606 4,270 4,807 3, Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. SECTION 1: Efficiencies and Expenditures 21

25 10. Learning Hours Available per L&D Staff Member The number of learning hours available per L&D employee increased to 553 from 470 (see Figure 1-10). This ratio has increased for the past two years after decreasing the two years prior. Taking into account the decrease in the number of employees per L&D staff member and the increase in hours available per L&D staff member, it might be concluded that organizations are adding L&D staff or purchasing external services to add to their learning portfolio. 553:1 Learning hours available per L&D staff member (consolidated) FIGURE 1-10: AVERAGE LEARNING HOURS AVAILABLE PER L&D STAFF MEMBER (ADJUSTED FOR OUTSOURCING) 1, Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. 22 ASTD 2013 STATE OF THE INDUSTRY

26 11. Cost per Learning Hour Used The cost per learning hour used represents the cost of providing one hour of learning to an employee. This cost continues to increase in 2012, rising by $4 to $89, after increasing by approximately $10 a year during the previous three years (see Figure 1-11). Without looking at organizations individual budgets we can t definitively say why the cost per learning hour used has rapidly increased during the past four years, but a couple of reasons might be an increase in labor costs or the cost of implementing new technology. For example, up-front technology costs to implement new training programs such as mobile learning, which might require building apps or purchasing tablets, could be a factor. In addition to the up-front costs, the number of learning hours used via the latest technology training methods may not be recorded precisely. For example if employees are using an app on $89 Cost per learning hour used (consolidated) a tablet for just-in-time training, the time spent learning may not be recorded but the cost of developing the app and providing the tablet would be in the budget. This would inflate the cost per learning hour used because the hour the employee spent learning was not accounted for, but the cost of creating the training was recorded. FIGURE 1-11: AVERAGE COST PER LEARNING HOUR USED (U.S. DOLLARS) $85 $89 $63 $72 $69 $58 $48 $54 $56 $52 $50 $47 $48 $39 $46 $38 $43 $34 $35 $ Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. SECTION 1: Efficiencies and Expenditures 23

27 12. Cost per Learning Hour Available The cost per learning hour available is how much organizations are spending to create one hour of learning. How often the training is used has no effect on this metric. It is based solely on the direct expenditure on learning and the number of training hours an organization has available. The cost per learning hour available has increased by 20 percent during the past four years to $1,772 from $1,398 in 2009 (see Figure 1-12). Without examining organizations budgets a definitive answer to the question, why is the cost per learning hour increasing? is not available. However, some possible influencers could be the up-front costs of implementing technology, inflation, and a decrease in the ratio of employees to L&D staff members.igure 1-12: $1,772 Cost per learning hour available (consolidated) FIGURE 1-12: AVERAGE COST PER LEARNING HOUR AVAILABLE (U.S. DOLLARS) $2,247 $2,241 $2,118 $1,968 $1,706 $1,861 $1,543 $1,660 $1,528 $1,633 $1,398 $1,756 $1,415 $1,471 $1,772 $1,598 $1,140 $1,206 $1,166 $ Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. 24 ASTD 2013 STATE OF THE INDUSTRY

28 13. Reuse Ratio The reuse ratio in 2012 fell slightly from 52.8 in 2011 to 47.5 (see Figure 1-13). The reuse ratio is the number of learning hours used compared with the number of learning hours available. The reuse ratio typically remains around 50, which is a healthy ratio. A reuse ratio around 50 shows that organizations are producing new content and it is being utilized. A low reuse ratio would mean new content is being created but it is not being distributed, and a high reuse ratio would indicate programs are being heavily used by many employees but there may be fewer new offerings. However, an organization with very specific learning requirements for each functional area may have a low reuse ratio because it needs to produce specific training that 48:1 Reuse ratio of learning content (consolidated) cannot be reused. BEST organizations typically have a higher reuse ratio than the consolidated group because they have established a strong learning environment and are efficient at distributing training to all employees. re 1-13: FIGURE 1-13: AVERAGE REUSE RATIO (RATIO OF LEARNING HOURS USED TO LEARNING HOURS AVAILABLE) Consolidated BEST G500 Note: Consolidated data for 2005 are not available due to transition to WLP Scorecard. SECTION 1: Efficiencies and Expenditures 25

29 TABLE 2: KEY INDICATORS 1. Direct Expenditure per Employee (FTE) 2. Learning Hours Used per Employee 3. Direct Expenditure as % of Payroll 4. Direct Expenditure as % of Revenue 5. Direct Expenditure as % of Profit 6. % of Expenditure for Tuition Reimbursement 7. % of Expenditure for External Services Consolidated*** BEST Award Winners Fortune Global 500 Consolidated by Industry Consolidated by Organization Size 2012 (n = 475) $1, % 1.32% 5.92% 11.08% 27.46% 2011 (n = 461) $1, % 1.16% 6.49% 14.32% 29.88% 2010 (n = 412) $1, % 1.06% 5.30% 12.89% 26.60% 2009 (n = 304) $1, % 0.71% 10.88% 10.67% 26.88% 2008 (n = 301) $1, % 0.59% 8.75% 11.93% 21.99% 2007 (n = 316) $1, % 0.56% 7.54% 12.60% 25.18% 2006 (n = 221) $1, % 0.52% 6.88% 10.64% 28.07% 2004 (n = 246) $1, % 0.63% 7.48% 10.86% 28.87% 2012 (n = 28) $1, % 0.65% 6.04% 8.77% 28.48% 2011 (n = 30) $1, % 0.62% 5.73% 7.35% 23.37% 2010 (n = 32) $1, % 0.58% 3.98% 11.26% 22.23% 2009 (n = 31) $1, % 0.63% 11.31% 7.30% 21.14% 2008 (n = 39) $1, % 0.61% 8.90% 9.10% 22.60% 2007 (n = 40) $1, % 0.55% 6.74% 10.66% 22.31% 2006 (n = 42) $1, % 0.72% 7.59% 8.18% 23.47% 2005 (n = 39) $1, % 0.73% 6.61% 11.81% 23.93% 2012 (n = 32) $ % 0.30% 3.96% 10.67% 27.79% 2011 (n = 27) $1, % 0.65% 2.84% 9.76% 29.03% 2010 (n = 22) $1, % 0.32% 4.20% 16.60% 28.06% Education (n = 54) $1, % 2.03% 10.69% 19.17% 29.21% FIRE (n = 74) $1, % 6.93% 3.06% 10.85% 31.43% Healthcare/Pharmaceutical (n = 41) $ % 1.22% 9.04% 14.23% 25.48% Manufacturing (n = 38) $ % 0.46% 2.63% 17.19% 34.29% Professional, Scientific, and Technical Services (n = 40) $1, % 1.88% 10.91% 15.34% 33.74% TPU (n = 24) $ % 0.49% 1.78% 13.00% 18.49% (n = 173) $1, % 2.32% 8.62% 12.44% 29.23% 500 9,999 (n = 205) $ % 0.91% 4.95% 10.24% 27.30% 10,000+ (n = 97) $ % 0.41% 3.97% 10.31% 24.68% Consolidated averages are based on organizations that provided relevant data for the appropriate calculations. * Multiply by 1-(% of Expenditure for External Services/100). Key to Industry Abbreviations ** Reuse Ratio = Ratio of Learning Hours Received to Learning Hours Provided. TPU = Transportation, Pipelines, and Utilities *** Consolidated data not available for 2005 because of transition to WLP Scorecard. FIRE = Finance, Insurance, and Real Estate Some historical data have been revised. 26 ASTD 2013 STATE OF THE INDUSTRY

30 Adjusted for Outsourcing* 8. Employees per L&D Staff Member Not Adjusted for Outsourcing 9. Learning Hours Used per L&D Staff Member (Adjusted for Outsourcing*) 10. Learning Hours Available per L&D Staff Member (Adjusted for Outsourcing*) 11. Cost per Learning Hour Used 12. Cost per Learning Hour Available 13. Reuse Ratio** , $89.02 $1, , $85.27 $1, , $71.71 $1, , $62.78 $1, , $51.68 $1, , $55.62 $1, , $54.25 $1, , $49.99 $ , $34.06 $2, , $38.02 $1, , $39.38 $1, , $48.46 $1, , $42.59 $1, , $45.92 $2, , $47.47 $1, , $48.03 $2, , , $68.65 $1, , $24.05 $1, Not available $34.81 $1, , $ $1, , $97.02 $1, , $99.33 $2, , , $91.50 $1, Consolidated*** BEST Award Winners Fortune Global 500 Consolidated by Industry , $66.92 $1, , $43.86 $ , $ $1, , $92.22 $2, , $34.60 $1, Consolidated by Organization Size SECTION 1: Efficiencies and Expenditures 27

31 Section 2: Content Distribution and Delivery Methods Content Distribution To understand the types of learning employees are being offered, organizations were asked to report the percentage of their learning portfolio devoted to 12 common content areas. The top three L&D content areas for the consolidated group in 2012 were managerial and supervisory; mandatory compliance; and processes, procedures, and business practices. Together these three content areas account for one-third of the learning content available. The bottom three content areas, accounting for 17 percent of the total, are executive development, customer service, and basic skills. The G500 put slightly more focus on profession- or industry-specific training and sales training, compared with the consolidated group. They focus less on the three categories the consolidated group rated the highest, only accounting for 20 percent compared with 34 percent for the consolidated group (see Figure 2-1). Managerial and supervisory was the top content area for the consolidated group. Figure 2-1: The table on the following page displays the top three and bottom three content areas for the consolidated group and the G500. Profession- or industry-specific training is more popular with the G500 than the consolidated group, but it is only slightly less than processes, procedures, business practices. This table displays what content areas are most often offered. It is crucial to understand that the popularity corresponds to the number of people within the organization that qualify for the training. For example, executive development is usually in the bottom three because there are few executives compared with the total number of employees. 28 ASTD 2013 STATE OF THE INDUSTRY

32 FIGURE 2-1: Managerial and supervisory Mandatory and compliance Processes, procedures, business practices Profession- or industry-specific Sales IT and systems New employee orientation Interpersonal skills Executive development Customer service Basic skills AVERAGE PERCENTAGE OF LEARNING CONTENT BY CONTENT AREA Other (quality, product knowledge) 3.6% 4.7% 4.8% 7.1% 6.4% 6.4% 6.3% 4.3% 4.6% 3.7% 6.1% 7.9% 7.4% 7.3% 9.9% 9.5% 9.1% 8.6% 8.9% 10.8% 13.5% 15.4% 15.8% 17.7% Consolidated G500 Top 3 Content Areas Bottom 3 Content Areas Content Area Comparison Consolidated Managerial and supervisory Mandatory and compliance Processes, procedures, business practices Executive development Customer service Basic skills G500 Profession- or industry-specific Sales Customer service Executive development Basic skills New employee orientation SECTION 2: Content Distribution and Delivery Methods 29