Spending Time & Money To Create Value

  • Ezra
  • April 6th, 2021

Most organizations are surprisingly willing to spend time and money on CPD for employees, but many still struggle with attributing value to it. Ezra reviews the state of play by comparing pre and post COVID attitudes and approaches, and some of the ways that successful organizations measure the impact of their L&D initiatives.

Spending Time & Money To Create Value
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Free White Paper Spending Money & Time To Create Value (2021)

This white paper reviews how most organizations are surprisingly willing to spend time and money on CPD, but many still struggle with attributing value to it.

Finding time is still considered to be a barrier to learning, but as learning in the flow of work becomes more common practice this may well become less of an issue. The COVID-19 pandemic has spurred a rise in online and virtual training solutions as the C-suite seek to address skills gaps amongst their employees, but many organizations still struggle to evaluate the effectiveness of learning and development programs with regards to value.

79% of CEOs are “somewhat” or “extremely” concerned with the threat posed to their businesses by their employees’ lack of essential or key skills. In this case the term “key skills” was taken to include not just technology-based capability but also “soft” skills such as empathy, leadership, and creativity.

Of CEOs who expressed concerns, 96% said that the skills gap caused significant issues for them, such as missing growth targets, needing to delay or cancel key strategic initiatives, or being unable to pursue new market opportunities. Only 4% felt there was no real impact on their organization’s growth or profitability.

99% of L&D professionals believe that if these types of skills gaps are not closed in the next 3-5 years, their organizations will suffer as a result. 55% also said they were unable to effectively innovate due to the skills gap.

Recent talent reports show that just 18% of organizations look to hire from outside their industry, while 46% are looking at significant upskilling or reskilling of their current employees. Even better, a staggering 74% of workers said they were ready and willing to learn new skills or retrain in order to boost their current and future employability – so the appetite seems to be there on both sides of the equation.

Interestingly, L&D professionals tend to focus on these “soft” skills such as communication, management and leadership, or creative problem solving, rather than on more technical skillsets such as development or coding. This is because the “shelf life” of focused technical skills is seen as relatively short due to the speed of technological progress, whereas “soft skills” are perceived as being always in demand.

Both large (10k+ employees) and small (100-999 employees) organizations saw an average increase in training expenditures from 2019 to 2020; up $22M for large businesses and $500k for small. Medium businesses, however, saw a significant drop from £1.7M average spend in 2019 to just $810k in 2020, although for all sizes of organization there was significant variation in spend against average by industry or sector.

In all, 23% of organizations increased their training budgets in 2020, citing increased scope, more staff receiving input, adding new training-specific staff, or adding new technologies. The 28% of organizations who reported a decrease in training budgets mostly attributed this to challenges related to COVID-19; the two hardest-hit sectors were education and the retail industry.

Compare this with 2019, when a more substantial 42% of organizations increased their training budgets (citing largely the same reasons) while just 12% implemented decreases, reporting reductions in training staff and “other” reasons as the underlying cause, for example market pressures and downsizing. There is definitely an impact here from COVID-19.

Interestingly, small organizations seem to spend more on training per person than midsize or large companies, and 44% of this expenditure goes to non-managers and regular workers. However the average company spending on training per learner is down across all company sizes YoY. Post-COVID, 38% of organizations are decreasing instructor-led training budgets while 57% are increasing online learning budgets; another notable shift.

Around 40% of L&D time is currently spend on instructor-led training, with 29% being online or “computer based” and only 10% is currently delivered via mobile. Large organizations have seen by far the largest increase in average hours of training per employee, from under 40 in 2019 to over 100 in 2020.

Despite this, organizations still see attributing value as a big challenge. 16% evaluate the change in training participant skill in some manner, while 12% evaluate behavioural change. Only 30% of organizations measure training via any kind of data or metrics, and a mere 17% look to bring in any direct ROI figures.

L&D does seem to consistently lead to higher employee happiness. 42% of employees say that L&D access is their most important job perk. 22% of companies are more likely to have better employee satisfaction and retention when tying internal promotion to L&D activities. An impressive 54% of top management staff believe that company L&D gives a significant advantage over competitors.

Retention rates can also be notably impacted. 7% of companies retaining workers for under 6 months spent less than the average amount per employee per year on training for their sector, while 94% of employees said that they would stay at a company longer if it invested in their L&D.

42% of talent developers say that fostering a culture of learning is one of their biggest challenges, with 49% struggling to get managers to prioritize learning for their teams. Despite this, 54% say that their learning culture at work could be classes as “good” or “excellent.”

A significant 54% of employees said that they would spent more time learning if they had specific recommendations that were relevant and tailored to their career goals. As the people best placed to make these recommendations are generally line managers, this of course brings us back to the role of leadership in CPD, as well as the need to prioritize “soft skill” leadership development in L&D activity to ensure that managers are equipped to give this feedback to their teams.

Spending Time & Money To Create Value

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