Organizational spending on learning and development is on the rise to meet the needs of an aging workforce and develop a younger generation of employees. While the spending increase has yet to reach pre-recession levels, the reported figures signal a growth in the learning and development industry.
About half of the organizations surveyed by Chief Learning Officer magazine reported an increase in their learning and development spending this year while also projecting a further spending increase in 2014, a roughly 4 percent increase from the year-earlier period.
When asked how their organization’s spending on learning and development has changed compared with 2012, 50.5 percent of the 152 survey respondents said they increased spending, 20.3 percent said spending did not change, and 27.1 percent said spending declined.
In addition, when asked to project how their organization's spending on learning and development will change in 2014, 58.4 percent of respondents said it will increase, 19.2 percent said it will not change and 16.1 percent said it will decrease.
The survey's findings underscore the continued rise in learning budgets as organizations recover from the recession, said Kieran King, the global director of loyalty strategy for Skillsoft. “Budgets are, on the whole, rising, no matter what kind of analyst you are using to benchmark,” King said, adding that organizations have recently increased their use of elearning within leadership and managerment development.
The most significant spending increase, however, has been in learning technology and performance consulting, according to the survey, with about half of respondents projecting an increase in these areas.
Many companies are investing more money in mobile technology and social-based gaming to develop new talent in a collaborative, social context, said Keith Meyerson, vice president of talent management and organizational strategies at Bluewater Learning Inc., a learning and talent development firm.
“Organizations are catching up in getting into learning management systems to deploy and track training,” Meyerson said. “But even more importantly, they are spreading out into other areas of talent management. We see a focus on succession planning and performance management technologies. We're seeing more of a move from just learning to now managing the data within the employee lifecycle.”
Still, the current rise in budgets is still below pre-recession levels, King said. “Organizations are still struggling with doing more with less,” she said.
As businesses emerged from the economic crisis, many leadership roles were underdeveloped, in turn shrinking the succession pool. Across the board, organizations were “shockingly unprepared” for the talent and leadership shortage, King said.
Moreover, as the baby boomer generation starts to retire, much of the learning and development spending has been used to address the “major exodus of knowledge from the workforce,” Meyerson said.
“From a succession planning and leadership development standpoint, organizations are trying to figure out what they're going to do with all of the holes of knowledge within the organization,” Meyerson said.
Millennials are also driving the increase in learning technology spending. As emerging companies run by millennials do away with traditional, vertical management hierarchies and establish a more flat, horizontal leadership approach, they are are investing in mobile technology to develop a collaborative leadership team, Meyerson said.
And while organizations and talent leaders try to optimize their learning and development budget, more businesses are seeing merit in re-evaluating spending and investing in developing talent.
“The only way you are going to compete, develop and deliver on sustainable growth is through people development,” Meyerson said. “If you look at the metrics from organizations that have been awarded top learning honors, the more they invest in their people, the better the actual results and profitability are.”
Jessica DuBois-Maahs is an editorial intern at Chief Learning Officer magazine. She can be reached at editor@CLOmedia.com.