With talk of tightening belts and cut backs, you would be forgiven for thinking that the training industry was on its last legs, not so, says Josh Bersin as he reveals the results of the TrainingZone and Bersin & Associates first ever training study.
The global economic recession has impacted training organisations on both sides of the Atlantic. Our research shows that UK companies cut their training & development budgets by 4% in 2009, with median spending falling to £621 per learner. These findings are based on our November study with TrainingZone members covering learning spending, staffing and delivery methods.
Participants represented a wide range of organisation sizes and industries. About a quarter of UK training organisations also shed jobs in 2009, with midsize and large businesses taking the hardest hits. Overall, staffing was down 5%, to an average of 7.1 training staff for every 1,000 learners. UK training organisations can take solace from their U.S. counterparts, which have suffered even steeper budget cuts.
One UK financial services firm reported that its disparate training groups have been combined into a centralised operation, resulting in the loss of one-quarter of its total training staff. On the positive side, the new centralised structure has helped to eliminate redundancies in learning programmes and technologies and has provided a corporate-wide view of training activities. A federated or “shared services” structure can be particularly effective in large companies with multiple business units and/or geographies.
In this structure, a central training group sets the strategy and standards, manages the learning infrastructure, and provides support to business units in training delivery and implementation. In addition to ensuring alignment with corporate priorities, this organisational model supports the training needs of different business units – typically with fewer overall resources. The challenge with a federated structure, however, is that it requires different skill sets for training personnel.
Capabilities for training delivery and fulfillment are no longer paramount; what’s needed are consulting skills and a strong business acumen. Hence, a new breed of training professional is emerging, and training organisations must evaluate the skills and capabilities of their current staff to fill these roles. Unfortunately, many lifelong training professionals are finding that their roles are becoming obsolete.
Training Expenditures per Learner 2009: UK Total and by Company Size (Small=30-499 employees; Midsize=500-4,999 employee; Large=5,000+ employee)
ILT Dominates, but E-Learning Set to Rise
Delivery methods are also poised to change as a result of financial pressures. A typical learner in the UK spent approximately 16 hours in formal training in 2009, and most of that time was spent in the classroom. E-learning and virtual classroom training accounted for just 14% of all training hours consumed. U.S. companies, by comparison, delivered twice as much training through online methods.
Classroom training carries an enormous amount of overhead, leading many organisations to embrace technology-based training in an effort to reduce costs. Some subject matter lends itself particularly well to online delivery, such as desktop application training. One company reported that it used to spend £100 per learner for external Microsoft training classes. Today, it offers e-learning courses on Microsoft applications at one-fifth the cost. These types of changes will drive up the online delivery figure in the UK in the years to come.
% of training hours consumed via each method
A movement toward informal and social learning will also change the learning landscape in the next decade. Today, these approaches are still in their infancy in the UK, but organisations are realizing that most learning takes place outside of the classroom or online course. These companies are putting in place coaching, experiential and social learning environments. BT’s Dare2Share initiative is an excellent example of how a company with a traditional, top-down approach to learning can embrace social learning. BT created the Dare2Share social learning platform to allow employees to collaborate and share knowledge and content in engaging ways. The initiative has had a positive impact on how employees find information and solve problems.
There are some cultural issues that must be overcome in the transition to different learning methods. For the training organisation, it means modifying traditional approaches and giving up some control over the learning environment. For learners, it means adopting a more self-directed approach. Many learners are accustomed to sitting in a classroom and being taught. The new paradigm will require learners to become more independent and collaborative. These shifts have already started in the UK and will continue to grow in the coming years.
What’s in store for 2010? It’s likely that UK training groups will be under continued scrutiny and financial pressure. This is a good time for training leaders to carefully assess their programmes and processes. One UK training manager noted that his team has been under extreme pressure to prove the value of training to the company. This has required a change in mindset for all training personnel, who must now consider how they are positively affecting the business. For example, has their training reduced call handling time, decreased errors, or improved customer satisfaction? The training staff now have business metrics included in their performance reviews, which ensures they keep a close eye on how they are impacting the business.
Cutting costs is difficult, but it is the reality in today’s business environment. The good news is that it is forcing training groups to become more efficient and to run themselves like a business - by vigilantly tracking and controlling spending, assessing the value of programmes, and becoming better aligned with corporate goals. If training organisations do these things well, they can come through this recession in even better shape than before the downturn.
A webcast covering the key findings from the study will be presented on February 23. Click here for more details on that event.
Josh Bersin is principal of Bersin & Associates (www.bersin.com), a research and advisory services firm based in Oakland, California. Follow Josh's blog on the ever-changing landscape of business-driven learning and talent management at http://blogs.bersin.com/joshbersin.