Forbes recently released its 2014 Corporate Learning Factbook delivering some of today’s most striking research, chief among them is the fact that companies that spend more on training perform better. In essence, expenditure on corporate training in the United States grew by 15 percent last year after seeing similar growth rates of ten percent in 2011 and 12 percent in 2012. Beyond the figures, however, the key insight suggests a new era of clear economic recovery where skills are becoming increasingly important.
Valued at over $70 billion in the United States and over $130 billion worldwide, these figures are some of the biggest ever recorded in corporate history. According to the report, “Corporate training is always a very good indicator of economic activity: when companies slow down they often cut training spending, and then as business grows they ramp back up to train new hires, sales people, and leaders. This is among the most discretionary of all corporate spending areas, so it is an excellent bell-weather for business confidence.”
Is corporate training necessary?
Organizations around the world continue to experience a “skills supply chain” challenge as more than 70 percent of such organizations list capability gaps as part of their top five challenges. Also, it may take as much as 3 to 5 years for an employee to become fully productive. Forbes revealed that the Oil and Gas industry needs 60,000 petrochemical engineers by 2016 yet only 1300 graduate from US schools each year; meaning that oil companies have to train, retrain, and jointly educate a lot of energy engineers to grow. These skill gaps represent a major driver of the increase in corporate training.
With some critical analysis of the components of the expenditure, three core insights emerged. First off, the bulk of the cash was deployed to facilitate leadership and management training; this accounts for about 35 percent of total expenditure and confirms that global leadership gaps continue to be the most pressing issues on the minds of business and HR leaders.
Secondly, companies categorized by Forbes as “high performing” spend significantly more on training than others, and they do this consistently. This establishes a direct link between Learning & Development (L&D) spending and organizational performance.
Lastly, the medium for facilitating these trainings has increasingly shifted towards technology tools as self-authored video, virtual learning, MOOCs (Massive Open Online Courses) and the like have practically disrupted the training industry with as much as 18 percent of all training done through mobile devices. Formal classroom education may still be required, but this now accounts for less than half of the total training hours around the world.
The bar continues to rise higher for African companies looking to make a global impact, and with these new findings, these firms must begin to focus more on refining their talent.
By Emmanuel Iruobe