May 202011

ASTD 2010 State of the Industry Report Executive Summary

Despite the uncertain economic conditions that plagued both the private and public sectors in 2009, the year covered by this report, the 2010 State of the Industry Report reveals a continued dedication to workplace learning and development in a variety of organizations worldwide. This annual compendium provides data covering the strategic and operational activities against which organizations can benchmark their learning investments and practices. For 14 years, the State of the Industry Report has provided insightful, actionable information for learning executives and business leaders to use when making decisions about how to leverage and build their talent. The data in this edition includes responses from users of the WLP Scorecard, ASTD Forum organizations, and the 2010 ASTD BEST Award winners.

ASTD: Results from the 2010 State of the Industry Report demonstrate a continued financial commitment to workplace learning and development, despite the recent economic challenges. Although organizations made many changes in the past year to adapt to the economic environment, they continued to support learning and development for their employees at levels nearly equal to or greater than in past years.

Investing in Learning Stable Despite Recession
Although organizations grappled with some of the worst economic conditions in several decades, business leaders continued to dedicate substantial resources to employee learning in 2009. ASTD estimates that U.S. organizations spent $125.88 billion1 on employee learning and development in 2009. Nearly two-thirds of the total ($78.61 billion) was spent on the internal learning function, and the remainder ($47.27 billion) was allocated to external services. Direct learning expenditures, such as the learning function’s staff salaries, administrative costs, and non-salary delivery costs are included in this figure. The drop of 6.1 percent in overall spending from 2008 to 2009 is due to cuts by some organizations in these expenditures.

In the consolidated sample of organizations, there was a slight increase in spending on workplace learning and development in 2009. The average annual learning expenditure per employee for all companies surveyed increased from $1,068 in 2008 to $1,081 in 2009—an increase of 1.2 percent. Although overall spending on employee learning and development decreased slightly in 2009, on average, learning functions were serving a smaller workforce; therefore the annual learning expenditure per employee increased slightly. As in past years, Forum organizations and BEST Award winners spent more on learning and development per employee than the consolidated sample. However, they spent less overall per employee in 2009 than in 2008.

The amount of learning expenditure as a percentage of payroll decreased slightly from 2.24 percent in 2008 to 2.14 percent in 2009. Forum and BEST Award-winning organizations also had slight decreases in the average learning expenditure as a percentage of payroll. The Forum organizations’ average learning expenditures as a percentage of payroll decreased from 2.16 percent in 2008 to 1.91 percent in 2009, while the BEST Award winners’ decreased from 2.33 percent in 2008 to 2.15 percent in 2009.

Although the percentage of learning expenditure relative to an organization’s revenue and profit has been relatively constant in recent years, it increased in 2009. On average, direct learning expenditures increased  from 0.59 to 0.71 percent of revenue and from 8.75 to10.88 percent of profit in 2009. These percentages increased in 2009 because organizations’ financial commitment to learning and development held steady even while their revenue and profit decreased because of the recession.

While the financial commitment to learning and development remained relatively stable, there were changes in the way the money was spent. For the first time since 2004, organizations increased their spending on outsourcing as they increased reliance on external providers. The consolidated average spent on external services was 26.9 percent of the total learning expenditure, up from 22.0 percent in 2008. Outsourcing includes spending on consultants and outside providers of workshops and training sessions. Despite increased spending on outsourcing, the majority of learning investment was internal. This suggests that the economy has not seriously affected learning departments’ capacity to grow. Internal costs for the learning function, including learning staff salaries, administrative costs, and development costs, accounted for an average of 62.5 percent of learning expenditures in 2009.

By contrast, Forum and BEST organizations decreased spending on external services, while internal spending increased. On average, Forum organizations spent 63.9 percent of their learning expenditure on internal costs in 2009, compared to 56.3 percent in 2008. The average internal proportion of expenditure for BEST organizations was 71.6 percent in 2009, compared to 68.3 percent in 2008. Tuition reimbursement for courses taken at educational institutions decreased in all groups. The consolidated average for 2009 was 10.7 percent, down from 11.9 percent. Tuition reimbursement continues to be the smallest proportion of training budgets.

Learning Operations Still Efficient Despite Some Changes
In 2009, for the first time in four years, the ratio of employees to learning staff decreased, which indicates that the average learning department served a smaller constituency than in previous years. In 2009, each learning staff was responsible for an average of 240 employees, down from 253 in 2008. This is consistent with the fact that many organizations continued to downsize their workforces in 2009 which reduced the average number of employees each learning staff served.

The amount of learning content produced and consumed per learning staff also decreased in 2009, as did the average cost per learning hour made available, although the average cost per hour used went up. The average number of learning hours produced per learning staff decreased from 353 to 264 and the average number of hours used per learning staff decreased from 5,507 to 5,350. The average cost per learning hour made available decreased 8.5 percent, from $1,528 to $1,398, while the average cost per hour used rose from $52 to $63. The cost per hour used increased because the average workforce size and the number of learning hours used decreased in 2009, while the investment in learning remained the same.

Employees in the surveyed organizations accessed an average of 31.9 hours of formal learning content in 2009, down from 36.3 hours in 2008. Although the number of hours of learning decreased, the amount still demonstrates that organizations expect employees to allocate a meaningful amount of time to formal learning and development activities.

Emphasis on Content Areas Remains the Same
The breakdown of learning content by topic area changed only slightly from the trend in recent years, suggesting that companies were comfortable with the focus of their content offerings. The content area with the largest percentage—profession- or industry-specific content—accounted for 17.2 percent of formal learning hours. Managerial and supervisory training was the second-largest content area in 2009 at 10.4 percent. Delivery of content in the information technology (IT) and systems category (9.3 percent) saw a slight decline in 2009. Despite declines in 2009, processes, procedures, and business practices (9.2 percent) and mandatory and compliance training (7.8 percent) were content areas that organizations continued to emphasize.

Minor fluctuations occurred in some smaller content areas. After a decrease in 2008, customer service, executive development, and new employee orientation training increased slightly in 2009. These increases highlight some of the content areas that are receiving more attention due to the economy. Increased attention on executive development (4.4 percent in 2009, up from 3.7 percent in 2008) and new employee orientation (6.8 percent in 2009, up from 5.4 percent in 2008) is likely due to changes in personnel within the organization and the need to develop leaders for future success.

ELearning Resumes Steady Climb Due to Growth of Online Learning
After increasing steadily for five years, the average percentage of learning hours available through technology decreased slightly in 2008, but rebounded in 2009, reaching 36.5 percent, its highest level since ASTD began collecting data on the use of technology for this report 14 years ago.

An increasingly large proportion of elearning comprises online learning (self-paced and instructor-led online
learning). In 2009, 27.7 percent of all formal learning hours made available were online, an increase from 23.1 percent in 2008. Other elearning delivery methods did not display much variation from 2008. The growth of online learning supported the increase in technology-based delivery methods and now represents more than three-quarters of the technology-based learning available.

Elearning contributed to a sharp increase in the reuse ratio between 2003 and 2008. The average reuse ratio for 2008 was 59.5 (indicating that on average each hour of learning content was being used 59.5 times). Although the reuse ratio decreased slightly in 2009 to 56.3, it was much higher than the 2007 pre-recession average of 44.8. The overall rise in the reuse ratio shows that learning functions have been making significant strides in operational efficiencies with e-learning, and they are creating more widely applicable content. A tough economic climate tends to favor the use of elearning to improve efficiency. Technology-based learning content can be centralized and easily accessed by learners any time, regardless of schedule or geographic location.

Even in the midst of a very challenging economic climate, organizations sustained their investment in learning
demonstrating the increasing value to organizations of employee learning and development. This change  is noteworthy as learning and development expenditures are treated as key investments for organizations regardless of the economic climate. This is encouraging for the profession and emphasizes the value senior executives place on learning, especially during tough economic times. Although learning functions had to manage costs and adapt in many cases to smaller budgets, they continued to receive support in 2009, one of the most challenging years for organizations in over a decade. Executives and business leaders demonstrated through their learning investments that employee learning and development is key to survival, recovery, and future growth.

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