2018 State of the Industry

Transcription

1

2

3 2018 State of the Industry

4 2018 by ASTD DBA Association for Talent Development (ATD) All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to ATD Research, 1640 King Street, Alexandria, VA ORDERING INFORMATION Research reports published by ATD can be purchased by visiting ATD s website at or by calling or ATD Product Code: ISBN-10: ISBN-13: e-isbn: Publication Date: December 2018 ATD Editorial Staff Manager, ATD Research: Maria Ho Manager, ATD Press: Melissa Jones Research Analyst: Megan Cole Junior Research Analyst: Shauna Robinson Interior Design: Shirley E.M. Raybuck Figure Design: Darrin Raaum Cover Design: Shirley E.M. Raybuck Production Manager: Dirk Cassard

5 Contents 03 A Note From Our Sponsors 04 Data Sources 08 Executive Summary 13 Section 1: Efficiencies and Expenditures 34 Section 2: Content Distribution and Delivery Methods 46 Section 3: On-the-Job Learning 52 Conclusion 53 References 54 Research Topics and Trends, About the ATD Research Center 56 About ATD 2018 State of the Industry Report 01

6

7 A Note From Our Sponsors A Note From American Management Association International The never-ending search for best-in-class talent is driving organizations to rethink their culture, structure, and talent development strategy. At American Management Association International (AMA), we are seeing a renewed emphasis on agility and resilience, strategic thinking and planning, and innovation and design thinking. Learning and development initiatives need to interweave a combination of these skills into their professional development programs and offer ongoing, lifelong learning opportunities to foster an agile learning culture. True agility requires highly collaborative cross-functional groups with strong communication and interpersonal skills. Employees need to master these skills to uncover unmet customer needs and develop and launch new products and services. Investing in people and their interpersonal skills remains the best way to create a meaningful corporate culture. With our client partners, we embark on a talent development journey to position their employees and the organization to achieve improved performance. Building up a culture is not a single or independent event, but a learning journey where each piece builds on the last. Cultivating strong collaborative skills requires an immersive, experiential learning environment where employees can practice new skills and receive feedback that will position them and the organization to achieve improved performance. Only then, through this learning journey, do organizations see a transformative evolution in behaviors that translates into sustainable growth and value. At AMA, we are focused on developing and implementing best practices to shape and define the future of corporate learning and are a proud sponsor of the 2018 State of the Industry report State of the Industry Report 03

8 About American Management Association International AMA s mission continues to remain the same since its founding almost a century ago: Provide leaders and their organizations with the knowledge, skills, and tools needed to improve business performance, adapt to a changing workplace, and prosper in a complex and competitive business world. Serve as a forum for the exchange of the most current information, ideas, and insights on management practices and trends. Disseminate content and information to a worldwide audience through multiple distribution channels and our strategic partners. AMA provides learning experiences in multiple modalities, including classroom instructor-led training, virtual instructor-led training, webinars, and on-demand solutions, offering a fully integrated learning technology ecosystem to manage the learner experience. All AMA modalities can be delivered on both the public (open enrollment) and corporate delivery platforms, with a seamless and consistent learning experience. AMA is unparalleled at providing clients with the individualized attention to implement learning solutions for their business, leveraging the breadth and depth of AMA s content, best practices, and learning experience for all levels of solutions, and at any desired scale of delivery and continuity. AMA s approach to developing and delivering learning journeys is rooted in proven techniques and guided by instructional design anchors to enable participants to practice, adopt, and put their learning to work on the job where it counts most. For more information, visit State of the Industry Report

9 A Note From LinkedIn Learning The short shelf life of skills and a tightening labor market are giving rise to a multitude of skill gaps. Businesses are fighting to stay ahead of the curve, trying to hold onto their best talent and struggling to fill key positions. Individuals are conscious of staying relevant in the age of automation. As a talent development leader, you re in the unique position to help your organization navigate these challenges and guide them to success in tomorrow s labor market all while delivering exactly what your employees are increasingly demanding: professional development. But the modern learner is complicated. They want a personalized, relevant, real-time, and flexible learning solution to help them take control and stay ahead in their career. There s no one-size-fitsall solution. So, while talent development becomes increasingly critical to your company s success, the demands on L&D are increasing at the same rate. And with limited time and resources, it s nearly impossible to rise to the challenge on your own. You need a partner who can complement your existing learning programs and help you meet the demands of the modern learner. LinkedIn Learning is uniquely positioned to help you by providing online learning programs your employees will use, love, and apply. No other provider has information about more than 550 million professionals across industries, functions, and seniorities to help guide companies and individuals on what skills to learn, now and for tomorrow. Combine this with industry-leading content from Lynda.com and expert instructors from the business, technology, and creative fields and you have the most effective learning solution available. We at LinkedIn Learning are inspired by what you do every day and are excited to work together to help the world s learners shorten the path from learning to succeeding. We hope you enjoy the insights featured in ATD s 2018 State of the Industry report State of the Industry Report 05

10 About LinkedIn Learning LinkedIn Learning is the only learning platform designed to meet the needs of modern learners and the demands of modern business. Combining Lynda.com s industry-leading library of more than 13,000 expert-led courses with unique LinkedIn insights from more than 550 million professionals, LinkedIn Learning makes it easier to get the right content to the right learners at the right time, and help your people engage, learn, and succeed within your organization. For more information, visit learning.linkedin.com State of the Industry Report

11 Data Sources Data Presentation This report presents data in several groupings against which learning professionals can benchmark learning investments and best practices in their organizations. The two major groupings (or comparative categories) are consolidated responses and ATD BEST Award winners (BEST). The State of the Industry report (SOIR) is produced annually by ATD s researchers. The information presented reflects the organizational data reported for the previous year. In this report, the 2018 SOIR presents organizational data submitted for calendar or fiscal year Consolidated Responses The consolidated responses include all the organizations that submitted data for a particular year. Respondents submitted their data through an online survey administered by ATD. The consolidated group comprises every grouping mentioned in this report (including BEST winners, workforce size groupings, and industry groupings). BEST Award Winners The BEST Awards recognize organizations that demonstrate enterprise-wide success as a result of employee talent development. These organizations use talent development as a strategic business tool to get results. Established in 2003, the BEST Awards Winner s Circle includes small and large private, public, and not-for-profit organizations from around the world. BEST organizations covering the spectrum of size, sector, and industry compete annually for the award. Competitors are judged and selected blindly, resulting in different winners each year, which consequently affects the organizational demographics of the winners. Historical BEST data are provided for comparative purposes only. Because of the unique composition of each year s BEST winners sample, aggregates and averages can vary significantly from year to year (Table 1). BEST Award winners completed the same quantitative survey key indicator questions as other participants, which permits direct comparison of those indicators for each year State of the Industry Report 07

12 TABLE 1 Data Sources Data Source Samples Average Number of Employees Average Payroll $M Consolidated The consolidated responses include all the organizations that submitted data for a particular year. Respondents submitted their data via an online survey administered by ATD. The consolidated group comprises all the other groupings mentioned in this report (including BEST winners, workforce size groupings, and industry groupings.) Consolidated 2017 (n = 399) 12,422 $1, (n = 299) 16,850 $1, (n = 310) 15,946 $1, (n = 336) 18,926 $1, (n = 340) 16,719 $1, (n = 475) 20,612 $ (n = 461) 15,695 $2, (n = 412) 28,167 $982 BEST = ATD BEST Award Winners Organizations that were recognized by ATD for their exceptional efforts to foster, support, and leverage enterprisewide learning for business results. BEST organizations compete annually for the BEST designation, and they cover the spectrum of size, sectors, and industries. Competitors are judged and selected blindly and therefore each year s winning sample is unique from the previous year s sample. Historical BEST data are provided for comparative purposes only. Because of the unique composition of each year s BEST winners group, aggregates and averages can, and in many cases should, vary significantly from year to year. BEST 2017 (n = 45) 42,244 $2, (n = 40) 57,252 $2, (n = 36) 84,764 $3, (n = 30) 86,386 $4, (n = 33) 51,809 $2, (n = 28) 48,314 $2, (n = 30) 33,678 $2, (n = 32) 24,875 $1, State of the Industry Report

13 Executive Summary Spending on employee learning continued to be strong in 2017, according to the Association for Talent Development s 2018 State of the Industry report, which is sponsored by American Management Association International and LinkedIn Learning. A diverse group of 399 organizations provided data on their learning programs. This is the sixth year in a row that has seen an increase in direct learning expenditure. Organizations spent $1,296 per employee on learning in This represents a 1.7 percent increase from 2016, when the average spend per employee was $1,273. Note that in 2017 inflation in advanced economies (as defined by the International Monetary Fund; IMF) was 1.7 percent, the same as the growth in direct learning expenditure. As with previous years, more than 80 percent of participants in the 2018 State of the Industry were headquartered in advanced economies. World growth strengthened in 2017, driven by strong investment recovery in advanced economies. In emerging markets and developing economies, the inflation rate was 4.0 percent (IMF 2018). The labor market in developed countries (as defined by the International Labour Organization; ILO), a grouping very similar to the IMF s advanced economies, saw strong performance in In developed countries, the share of the labor force working in manufacturing continued to decline, while the share working in the broadly defined service sector (which includes financial services, insurance, healthcare, and retail, among other industries) continued to grow (ILO 2018). The number of learning hours per employee remained healthy as well; it was 34.1 hours (slightly more than four eight-hour workdays) in 2017, which was the same as Between 2012 and 2016, this number increased steadily. The traditional instructor-led live classroom format accounted for more than half of all learning hours used at the average organization. However, the use of selfpaced online learning, or e-learning, continued to grow. When it comes to learning content, organizations continue to emphasize the following areas: managerial and supervisory, mandatory and compliance, and processes, procedures, and business practices State of the Industry Report 09

14 Efficiencies and Expenditures The average direct learning expenditure per employee was $1,296 in This figure is based on self-reported data from 399 organizations across a broad range of industries, workforce sizes, and locations. Direct learning expenditure can be divided into three categories: internal services, external (outsourced) services, and tuition reimbursement. Internal services include in-house development, delivery and administration expenses, and staff salaries. External services include consulting services, external content development and licenses, and workshops and training programs delivered by outside providers. Tuition reimbursement expenses include programs and courses at colleges and universities, as well as continuing professional education and certification. In 2017, nearly two-thirds (65 percent) of direct learning expenditure was directed toward internal services; just over a quarter (26 percent) went to external services. Only 8 percent went to tuition reimbursement. According to research from the International Foundation of Employee Benefit Plans (IFEBP), more than 80 percent of organizations offer tuition assistance or educational benefits; however, the utilization rate is 5 percent (or one in 20 employees) or lower at the majority of organizations that offer them (IFEBP 2015). ATD notes that organizations should consider their workforce size and industry grouping when benchmarking learning spending and activities. Larger employers can provide the same offerings at a lower cost per person because they can spread out the development and delivery costs over more employees ( economies of scale ). For example, a large company may be able to onboard hundreds of new workers at once while a smaller one may only have a few employees attending an onboarding session. Indeed, large companies (at least 10,000 employees) had an average direct learning expenditure of $509, compared with $850 for midsize companies (500 to 9,999 employees) and $2,236 for small companies (fewer than 500 employees). Although they spent the least per employee, large companies saw their workers use, on average, more hours of learning than those at midsize and small companies. It s also important to remember that employees in some industries require more costly or extensive training. Management consulting firms spent an average of $2,136 per employee on direct learning expenditure, with an average of 38.9 learning hours used (the average across all companies was 34.1 hours). Their employees may require specialized knowledge, and these firms are often small or midsize. By contrast, the average direct learning expenditure for manufacturers was $614, with an average of 30.2 learning hours used. Manufacturers are often large, and content may not need to be specialized or updated frequently; they are also more likely to be headquartered in or have operations in emerging markets and developing economies (where the costs of goods and services and salaries are lower). Finance, insurance, and real estate (FIRE) companies spent, on average, $1,147 per employee on direct learning expenditure (less than the consolidated average), but saw their employees use 36.3 hours of learning (more than the consolidated average). The presence of heavy regulation and a desire to manage risk, particularly after the subprime mortgage crisis, has put upward pressure on the number of learning hours for FIRE firms, according to a TD magazine article (Ho and Torres 2018) State of the Industry Report

15 The average cost per learning hour available across all organizations was $1,896 in 2017, which is higher than previous years. New content, or content recently adapted for a new delivery method, often carries a high cost per hour available because of up-front development expenditures. Frequent updates to existing content may also put upward pressure on the cost per hour available. However, at $77, the cost per learning hour used was slightly down from the previous three years, indicating that learning content was being distributed efficiently. Supporting this, the number of learning hours used per L&D staff member was higher than the past several years, but the number of learning hours available per L&D staff stayed quite stable. It follows that the reuse ratio (or the ratio of learning hours used to learning hours available) reached the highest level it has seen in several years. Content Distribution The three content areas with the largest share of the learning portfolio remained unchanged from 2016 and They were managerial and supervisory (13 percent), mandatory and compliance (12 percent), and processes, procedures, and business practices (11 percent). Although managerial and supervisory content has made up more than 10 percent of the learning portfolio for over a decade, the nature of what should be covered in managerial training has evolved. According to research from Gallup, today s managers require training to specifically deal with issues arising from the growing number of flexible or remote work arrangements and matrixed teams (cross-functional teams where the employees report to more than one manager; Gallup 2018). Interpersonal skills (such as communication and teamwork) ranked fourth with 10 percent, a higher figure than in previous years. This is positive news given that the ATD report Bridging the Skills Gap: Workforce Development and the Future of Work found that the top missing skill set in the workforce was communication and interpersonal skills; managerial skills were also found to be highly lacking (ATD 2018). Delivery Methods The traditional, instructor-led face-to-face classroom was the delivery mechanism for the majority of learning hours used in 2017 (54 percent). This number is slightly higher than those seen in 2016, 2015, and 2014, but lower than those seen in 2013 and earlier. Consider the emphasis in the learning portfolio on managerial and supervisory skills and interpersonal skills. ATD s research has found that managerial training is far more likely to be carried out in the traditional classroom, and the face-to-face environment is favored for providing communication training (ATD 2016). Self-paced online delivery (e-learning) accounted for 23.3 percent of hours used in 2017, up from 22.2 percent in 2016 and 18.9 percent in By contrast, only 12.0 percent of hours used in 2010 were delivered via e-learning. ATD s research has found that e-learning use is expected to continue 2018 State of the Industry Report 11

16 to grow, with the percentage of companies offering the majority of their learning assets as e-learning expected to double between 2017 and 2022 (ATD 2017). Not surprising, 2017 saw declines in the percentage of hours used that are delivered through outdated technologies that are becoming obsolete, including noncomputer technology (such as DVDs and audio CDs) and self-paced non-networked computer programs (including CD-ROM). On-the-Job Learning The formal learning hours described in this report only account for standalone learning that occurred separately from on-the-job activities. However, at many organizations, learning experiences that happen during work are critical to employee development, so it is important to capture an accurate picture of on-the-job learning. Two years ago, ATD began asking respondents to assess their organizations on-the-job learning activities (defined as any learning that is not a standalone activity and is intertwined with work activities). Because this type of learning is inherently difficult to measure in hours, the State of the Industry measures levels of commitment to on-the-job learning. In 2017, 59 percent of organizations emphasized on-the-job learning to a high or very high extent, with another 27 percent emphasizing it to a moderate extent. Conversely, 14 percent emphasized it to a low extent or did not emphasize it at all. Some forms of on-the-job learning are used by a minority of organizations. For example, 70 percent of organizations don t use rotational training programs (which allow employees to rotate through different parts of a company or different job roles), and 58 percent do not use stretch assignments (on-the-job assignments that are beyond an employee s current skill level and intended as development tools). Recommendations The data presented in this report will aid readers in benchmarking their own organizations learning expenditures and activities against those of other organizations. To make benchmarking comparisons more meaningful, readers should review the data by industry and workforce size groupings when possible. However, readers should be aware that all figures reported here are averages across groups, and the circumstances faced by their own organizations may be vastly different from those facing the average participating organization, or even the average organization in their industry. Therefore, organizations should not aim to replicate the numbers provided in this report, but rather use the data as a benchmark so they can better understand their own learning expenditures and activities, as well as those of their peers State of the Industry Report

17 SECTION 1 Efficiencies and Expenditures Overview This section analyzes 13 efficiencies and expenditures indicators. The main headers in this section match the column headers in Table 2, which presents statistics for all years from 2010 to As the analyses in this section show, these indicators cannot be looked at individually, because a change in one indicator may be directly related to a shift in another. The statistics presented in the 2018 SOIR are based on data reported by 399 organizations representing a diverse range of industries and locations. Among the participating organizations, 16.0 percent were large with 10,000 or more employees, 49.9 percent were midsize with 500 to 9,999 employees, and the remaining 34.1 percent were small with fewer than 500 employees. The industry grouping with the highest representation was finance, insurance, and real estate (FIRE), with 21.8 percent of all participating organizations. Healthcare and pharmaceutical was the second largest industry grouping, accounting for 10.8 percent of all organizations. The third largest grouping was manufacturing (9.5 percent), and management consulting was fourth (7.8 percent). 1. Direct Expenditure per Employee In 2017, the average direct learning expenditure per employee was $1,296 across all participating organizations (Figure 1-1). This is a 1.7 percent increase from 2016, when the average spend per employee was $1,273. Of the participating organizations, more than 80 percent were headquartered in advanced economies. Note that the IMF reported an inflation rate of 1.7 percent for advanced economies in 2017, which was the same as the direct learning expenditure increase. The inflation rate for emerging markets and developing economies was 4.0 percent (IMF 2018; Figure 1-1a). $1,296 Average direct learning expenditure per employee (consolidated) State of the Industry Report 13

18 BEST Award winning organizations spent an average of $1,057 per employee. The average direct learning expenditure for BEST winners has fluctuated over the years between being higher than the consolidated group (such as in 2011, 2013, and 2014) and lower (such as in 2010, 2012, 2015, 2016, and 2017). Because different organizations win BEST awards each year, the data from that group vary considerably from year to year. In addition, the organizations in this year s BEST category had an average of 44,244 employees, compared with 12,422 for the consolidated group. Larger organizations tend to spend less per employee due to economies of scale, meaning that a large organization can offer the same learning program as a smaller organization at a lower cost per employee, because the cost of developing and disseminating the program is spread out across more people. The average direct expenditure per employee is an organization s total direct learning expenditure divided by the number of employees. This figure is composed of learning and development (L&D) staff salaries (including taxes and benefits), travel costs for L&D staff, administrative costs, nonsalary development costs, delivery costs (such as classroom facilities or online learning technology infrastructure), outsourced activities, and tuition reimbursement. It does not include the cost of the learner s travel or lost work time while engaging in learning activities. FIGURE 1-1: Average Direct Expenditure per Employee $1,376 $1,228 $1,272 $1,182 $1,195 $1,172 $1,296 $1,208 $1,229 $1,252 $1,273 $1,176 $1,182 $1,296 $1,073 $1, Consolidated BEST State of the Industry Report

19 FIGURE 1-1A: Growth in Direct Learning Expenditure (Consolidated) Versus Inflation 13.55% 1.54% 2.71% 1.08% 2.00% 1.09% 1.38% 1.74% 1.37% 1.86% 0.27% 1.75% 0.77% 1.74% 1.70% -3.73% Growth in Direct Learning Expenditure (Consolidated) Inflation, Average Consumer Prices, Advanced Economies (IMF) Economies of scale were at work in the market for learning. In 2017, small organizations (fewer than 500 workers) spent an average of $2,236 per employee. By contrast, midsize organizations (500 to 9,999 employees) spent $850, and large organizations (at least 10,000 workers) spent $509 (Figure 1-1b). Despite having the lowest average per-employee expenditure, large organizations saw their employees using the most learning hours in 2017, averaging 37.1 hours. These organizations can take advantage of economies of scale for both in-person, face-to-face learning (they have more employees to attend a class with a single facilitator, for example) and learning delivered using technology (they have more employees to use an e-learning or mobile learning offering, for example). Small organizations had the second most learning hours per employee at 34.2, but note that they also had the highest per-employee spend by far. Midsize organizations had the lowest average number of learning hours per employee in 2017 (32.9, which is half a day less than the average for large organizations). FIGURE 1-1B: Average Direct Expenditure per Employee by Organization Size $2,236 $850 $509 <500 Employees (n = 136) 500-9,999 Employees (n = 199) 10,000+ Employees (n = 64) 2018 State of the Industry Report 15

20 Differences in direct learning expenditure per employee can also be seen across industry groupings. For example, manufacturing firms had an average expenditure of only $614 per employee, which could be due to several different circumstances. Manufacturing employees may need less specialized information than those in other industries, and content may not need to be updated as frequently. Manufacturers are also more likely to be headquartered in or have operations in emerging markets and developing economies, where the costs of designing and delivering training may be much lower than in advanced economies. Finally, many of the manufacturers in the sample had midsize or large workforces. Healthcare and pharmaceutical organizations spent an average of $850 per employee. Although these employers tend to be headquartered in the United States (likely due to the differences in healthcare systems between the United States and the rest of the world), they also tend to have midsize or large workforces. And FIRE organizations spent $1,147 per employee, which was slightly below the average for all organizations. At the high end of direct learning expenditure, management consulting companies had an average expenditure of $2,136 per employee. Employees at management consulting firms may require more specialized or costly training, and the client or industry knowledge they need can change rapidly, meaning content needs to be updated frequently. Additionally, management consulting firms are more likely to be small. FIGURE 1-1C: Average Direct Expenditure per Employee by Industry Grouping $2,136 $1,147 $850 $614 Finance, Insurance, and Real Estate (n = 87) Healthcare and Pharmaceutical (n = 43) Manufacturing (n = 38) Management Consulting (n = 31) 2. Learning Hours Used per Employee The average number of learning hours used per employee held steady at 34.1 (or slightly more than four eight-hour workdays) in 2017, which was the same as However, it increased every year from 2012 to Note that all learning hours discussed in this section refer to time spent on formal learning, which is learning that occurs as a standalone activity and not embedded in work activities. Section 3 discusses on-the-job learning State of the Industry Report

21 BEST Award winners, which are recognized for their commitment to learning, have consistently recorded a higher average number of hours used per employee than the average for the consolidated group. Employees at BEST winners averaged 47.9 hours used, which is 13.8 more hours than the consolidated group, but lower than in 2016 (53.8; Figure 1-2). The most average hours used recorded for BEST winners was 57.7 in BEST winners had a lower direct learning expenditure per employee, but economies of scale work to their advantage as they are generally much larger than the consolidated group members. Workers at large organizations used the most hours on average and employees at midsize organizations used the fewest. Looking at industries, healthcare and pharmaceutical companies had an average of 23.8 hours per employee, while manufacturing firms had an average of 30.2 hours used per employee and FIRE companies had 36.3 hours. High regulation and a desire to manage risk, particularly after the subprime mortgage crisis, has put upward pressure on the number of learning hours for FIRE firms, according to a TD magazine article (Ho and Torres 2018). Finally, management consulting firms averaged 38.9 hours per employee, which was the highest of the group. Recall that management consulting firms also had a higher-than-average direct learning expenditure per employee in 2017 (Table 2). FIGURE 1-2: Learning Hours Used per Employee Consolidated BEST 2018 State of the Industry Report 17

22 3. Direct Expenditure as a Percentage of Payroll Direct expenditure as a percentage of payroll measures the ratio of an organization s total direct learning expenditure to the total cost of all salaries in a given year (including benefits and taxes); this is another measure of investment in learning. In 2017, direct expenditure as a percentage of payroll averaged 3.3 percent, down from 3.6 percent in 2016 and 4.3 percent in However, note that the value for 2015 was very high, with the indicator ranging from 2.7 percent to 4.0 percent between 2010 and For BEST winners, direct learning expenditure equaled 2.5 percent of payroll, down from 3.5 percent in This was the seventh year in a row for which BEST winners had a lower ratio than the consolidated group, which may be explained by their larger workforce size (Figure 1-3). Supporting this, smaller organizations typically have higher ratios because of their increased peremployee spending. The average ratio for small organizations was 4.4 percent, compared with 2.5 percent for both midsize organizations and large organizations. Management consulting organizations, which spend more per person, had a ratio of 4.9 percent, which was higher than the ratios for the other industry groupings (Table 2). FIGURE 1-3: Direct Expenditure as a Percentage of Payroll (Including Benefits and Taxes) 3.35% 3.23% 3.63% 3.44% 3.96% 2.90% 4.25% 3.16% 3.62% 3.48% 3.33% 2.66% 2.14% 2.46% 1.75% 1.66% Consolidated BEST State of the Industry Report

23 4. Direct Expenditure as a Percentage of Revenue Another indicator of investment in learning is direct learning expenditure divided by total revenue. In 2017, this ratio was 1.2 percent. The ratio peaked in 2014 at 1.5 percent and has fallen steadily since. However, the ratio ranged from 1.1 to 1.3 percent from 2010 to 2013 (Figure 1-4). Not surprising given their low per-employee spending, large organizations had the lowest direct expenditure as a percentage of revenue. BEST winners, which tend to be larger, have historically also had a much lower ratio than the consolidated group, and this year was no exception. Small organizations had the highest direct expenditure as a percentage of revenue. When looking at industry groupings, FIRE and healthcare organizations had ratios that were lower than the consolidated average, while management consulting organizations had a ratio that was higher (Table 2). FIGURE 1-4: Direct Expenditure as a Percentage of Revenue 1.06% 1.16% 1.32% 1.17% 1.49% 1.43% 1.36% 1.16% 0.58% 0.62% 0.65% 0.67% 0.46% 0.52% 0.45% 0.27% Consolidated BEST 2018 State of the Industry Report 19

24 5. Direct Expenditure as a Percentage of Profit A related ratio is direct learning expenditure divided by profit (defined as total revenue minus total costs for the year). This indicator increased slightly from last year (8.40 to 8.44 percent), and has climbed considerably since 2012, when it stood at 5.9 percent. BEST winners, which are more likely to be large organizations, had a ratio of 3.0 percent (Figure 1-5). The direct-expenditure-to-profit ratio was by far the highest for small organizations (14.5 percent). Compared with the consolidated group, the ratio was also higher for management consulting and healthcare and pharmaceutical organizations, but lower for FIRE organizations (Table 2). According to a database created by researchers at New York University s Stern School of Business, banks and financial services companies have among the highest profit margins of all businesses, while hospitals have among the lowest (Damodaran 2018). FIGURE 1-5: Direct Expenditure as a Percentage of Profit 7.45% 7.95% 8.30% 8.40% 8.44% 5.30% 6.49% 5.73% 6.04% 5.92% 3.84% 4.99% 3.98% 3.58% 2.99% 2.10% Consolidated BEST State of the Industry Report

25 6. Percentage of Expenditure for Tuition Reimbursement As Figure 1-6 illustrates, direct learning expenditure is distributed among three types of costs: internal costs, external services (also called outsourced activities), and tuition reimbursement. Internal costs include talent development staff salaries (including taxes and benefits), travel costs for talent development staff, administrative costs, nonsalary development costs, and nonsalary delivery costs (such as classroom facilities or online infrastructure). Outsourced activities include consultants and services, content development and licenses, and workshops and training programs delivered by outside providers. Tuition reimbursement costs include programs and courses at community colleges, universities, and continuing professional education or certification. FIGURE 1-6: Expenditure Distribution (Consolidated) % 8.33% 65.28% Internal Costs External Services Tuition Reimbursement At the average participating organization, 8 percent of costs were directed toward tuition reimbursement in 2017, down from 13 percent in 2016 and 11 percent in BEST organizations spent 11 percent of their total learning expenditure in 2017 on tuition reimbursement (Figure 1-6a) State of the Industry Report 21

26 It is important to note that even when tuition reimbursement is offered, very few employees typically take advantage of it. According to research from the International Foundation of Employee Benefit Plans (IFEBP), 83 percent of organizations offer tuition assistance or educational benefits. However, for 53 percent of employers that offer them, the utilization rate is 5 percent or lower. In fact, at 31 percent of employers that offer tuition assistance or educational benefits, the utilization rate is 2 percent or lower (IFEBP 2015). Small organizations and midsize organizations put 7 and 8 percent, respectively, of their direct learning expenditure toward tuition reimbursement. Large organizations, however, directed an average of 12 percent of direct learning expenditure toward tuition reimbursement. These companies may have the resources to partner with vocational schools, colleges, and universities, and shape and influence curriculum while offering learning opportunities to employees. Tuition reimbursement may also be part of formalized career paths. The percentage spent on tuition reimbursement also varies across industries, reaching 14 percent for healthcare and pharmaceutical firms (Table 2). In some professions, including many healthcare professions, occupational licenses issued by the government (national or state) are required, and renewing licenses can require fulfilling continuing education requirements. This creates an incentive for employers to offer tuition reimbursement. In addition, Becker s Hospital Review found that shortages in some healthcare professions have resulted in employers offering tuition reimbursement as a way to retain and develop talent for roles that are hard to fill (Gooch 2016). FIGURE 1-6A: Average Percentage of Direct Learning Expenditure for Tuition Reimbursement 7.35% 8.03% 11.51% 8.33% 11.17% <500 Employees 500-9,999 Employees 10,000+ Employees Consolidated BEST State of the Industry Report

27 7. Percentage of Expenditure for External Services Although the percentage of total direct learning expenditure going to tuition reimbursement dropped in the past year, the percentage spent on external (supplier) services held steady at 26 percent. Small and large organizations both had averages of 28 percent, and midsize organizations had an average of 25 percent. Small organizations may choose to outsource certain activities because it is not practical for them to develop and deliver certain offerings using their internal staff and resources. They may also not have the necessary expertise on staff for certain projects. Large organizations may be able to engage in major partnerships with suppliers, similar to how they may have the resources to partner with educational providers. Finally, BEST winners spent 25 percent on average, which was lower than the average value for large organizations (Figure 1-7). Management consulting organizations spent 35 percent of direct learning expenditure on external services. Many management consultancies are small and in the business of providing services to other companies; therefore, they may be more open to using external learning services providers. By contrast, healthcare and pharmaceutical companies spent only 18 percent on external learning services (Table 2). FIGURE 1-7: Average Percentage of Direct Learning Expenditure for External Services 27.98% 24.97% 27.64% 26.39% 25.34% <500 Employees 500-9,999 Employees 10,000+ Employees Consolidated BEST 2018 State of the Industry Report 23

28 8. Employees per L&D Staff Member When adjusted for outsourcing, the average number of employees per L&D staff member in 2017 was 307, which is slightly higher than the value of 297 for The 2017 value is higher is also higher than 2015 and 2014 (260 and 248, respectively), but lower than 2013 s ratio of 311. When an organization invests in hiring L&D staff, the ratio drops. To calculate the number of employees per L&D staff member, divide the total workforce size by the number of L&D staff. If an organization has 5,000 workers and 20 L&D staff, the ratio is 250. When not adjusted for outsourcing, the ratio of employees per L&D staff member increased to 393, which is higher than the 2016 ratio of 378. Since outsourcing levels have remained fairly steady, it follows that the pattern of unadjusted ratios and the pattern of adjusted ratios over time are similar (Figures 1-8a and 1-8b). Adjusting for outsourcing reduces an organization s employee-to-l&d-staff ratio by the percentage that is spent on outsourced activities, because outsourcing reduces the workload of the L&D staff. BEST organizations recorded ratios of 308 and 366 when adjusted and unadjusted for outsourcing, respectively. BEST ratios have stayed close to or below consolidated ratios across the years, despite the fact that BEST organizations tend to be much larger (Figures 1-8a and 1-8b). The average number of employees per L&D staff (both adjusted for outsourcing and unadjusted) was lowest for small organizations and highest for large organizations, which makes the low ratios seen for BEST organizations particularly notable. The adjusted ratio for small organizations was 65 employees per L&D staff member, compared with the adjusted ratio for midsize organizations (349) and large organizations (767). Manufacturing firms had an adjusted ratio of 442 and healthcare and pharmaceutical organizations had a ratio of 394, while the ratio for management consulting was 100 (Table 2) State of the Industry Report

29 FIGURE 1-8A: Average Employees per L&D Staff Member (Adjusted for Outsourcing) Consolidated BEST FIGURE 1-8B: Average Employees per L&D Staff Member (Not Adjusted for Outsourcing) Consolidated BEST 2018 State of the Industry Report 25

30 9. Learning Hours Used per L&D Staff Member The number of learning hours used per L&D staff member is a measure of how effective organizations are at deploying learning offerings to employees, given the size of their L&D staff. As with the ratio of employees to L&D staff members, this number is more meaningful when adjusted for outsourcing, because outsourced activities reduce the burden on L&D staff. In 2017, the average number of hours used per L&D staff grew to 5,335 from 4,489 the previous year. However, as shown in Figure 1-9, this number has varied over the years, with 2015 s value reaching 5,327 and 2014 s value was falling to 4,280, which is more than 1,000 hours lower than the 2017 value. As with previous years, BEST organizations, which are typically larger, had a substantially higher value for this indicator (9,136). Once again, this ratio was lowest for small organizations and highest for large organizations as a result of economies of scale (more employees means more potential users of learning hours). Manufacturing organizations (which are more likely to be large) had a higher value than the other three industry groupings at 7,644 (Table 2). FIGURE 1-9: Average Learning Hours Used per L&D Staff Member (Adjusted for Outsourcing) 11,390 10,878 9,417 9,136 7,787 6,799 6,190 6,696 4,270 4,807 3,452 5,104 4,280 5,327 4,489 5, Consolidated BEST State of the Industry Report

31 10. Learning Hours Available per L&D Staff Member The State of the Industry also looks at the number of hours available per L&D staff member, which is a measure of the productivity of the L&D function. When adjusted for outsourcing, there were 341 learning hours available per L&D staff member in 2017, which is very close to the value of 338 from 2016 and identical to the value from 2015 (Figure 1-10). However, it is important to note that this ratio does not account for the quality of the learning content delivered. If L&D staff are spending more time developing new content, this could drive down the ratio. Developing content that utilizes new technologies, platforms, or tools can also drive down the ratio. BEST winners had an average of 658 hours available per L&D staff member; BEST ratios for this indicator fluctuate falling below the consolidated average in some years and above it in others (Figure 1-10). FIGURE 1-10: Average Learning Hours Available per L&D Staff Member (Adjusted for Outsourcing) Consolidated BEST 2018 State of the Industry Report 27

32 For small organizations, the ratio was slightly over 200, which was much lower than the average ratios for midsize and large organizations (442 and 411, respectively). In the case of small organizations, there may only be one or two L&D staff members, so individuals within the L&D team may not be able to specialize in or focus on specific subareas falling under L&D. Specialization can improve efficiency in the production of learning and help increase the number of hours available per staff member. FIRE and manufacturing employers had higher ratios than management consulting and healthcare organizations (Table 2). Learning hours available are measured as a one-time count that does not consider how many times a course or content was offered: An eight-hour workshop counts as eight hours, whether it was presented once, daily, weekly, or monthly. To calculate the number of hours used, multiply the number of hours available by the number of employees who took them. For example, if 100 employees took an eight-hour workshop on project management, the total hours used is 800, but the total hours available is eight. In most cases, the number of formal hours received or used by the workforce will be significantly larger than the number of hours provided. 11. Cost per Learning Hour Used The average across organizations for the cost per learning hour used in 2017 was $77, indicating that organizations are distributing learning programs with efficiency. The average cost per learning hour used ranged from $80 to $89 from 2011 to 2016, with the exception of 2013 ($74). BEST winners usually have a lower average cost per learning hour used, and in 2017 it was $32 (Figure 1-11). Because of economies of scale, the average cost per learning hour used was lower at large organizations ($41) than at small and midsize organizations ($121 and $55, respectively). At management consulting organizations the average cost was $154 per hour; this industry grouping also had a high per-person direct learning expenditure. Healthcare and pharmaceutical companies had an average of $109 (but employees used fewer hours of learning than the average for the consolidated group) and FIRE had an average of $75. However, manufacturing firms had an average of only $46 (Table 2) State of the Industry Report

33 FIGURE 1-11: Average Cost per Learning Hour Used (U.S. Dollars) $72 $85 $89 $74 $84 $82 $80 $77 $55 $39 $38 $34 $38 $38 $28 $ Consolidated BEST 12. Cost per Learning Hour Available The cost per learning hour available, an indicator of investment in learning activities, was $1,896 in 2017, up from $1,809 in 2016 and $1,803 in New content, or content recently adapted for a new delivery method, often carries higher costs per hour available because of the upfront development costs. Frequent updates to content may also drive up the cost per hour available. BEST organizations, on average, spent $1,548 per hour available; note that BEST spending per hour available was higher than the consolidated average in some years and lower in other years (Figure 1-12). The cost per hour available was lowest for large organizations at $1,343 but highest for midsize organizations at $2,275. Small organizations had an average of $1,655. Large organizations are able to spread out the costs of some investments over more programs and offerings; for example, a large organization may use a new course authoring tool for more courses. Small organizations may have pressure to keep the cost of each available hour down because each hour will be used by fewer employees (Table 2) State of the Industry Report 29

34 Industry differences are present as well. Healthcare and pharmaceutical organizations had a high cost per hour available at $2,381. They also had a cost per hour used of more than $100, but employees used less than 25 hours each, on average. It appears that each hour requires more resources to produce, perhaps because of the complicated nature of the content. This is supported by the lower-than-average number of hours available per L&D staff. By contrast, manufacturers had a cost per hour available of $787 (Table 2). FIGURE 1-12: Average Cost per Learning Hour Available (U.S. Dollars) $2,395 $2,413 $2,118 $1,756 $1,968 $1,798 $1,896 $1,772 $1,752 $1,803 $1,809 $1,548 $1,415 $1,471 $1,459 $1, Consolidated BEST 13. Reuse Ratio The reuse ratio is the number of learning hours used divided by the number of learning hours available. In 2017, the average reuse ratio was 54, up from 51 and 50 in 2016 and 2015, respectively. In fact, the reuse ratio has seen an upward climb every year since The group of BEST Award winners has typically had a much higher average reuse ratio than the consolidated group, and this year was no different. In 2017, the average ratio for the BEST group was 109 (Figure 1-13) State of the Industry Report

35 Large organizations, on average, had higher reuse ratios than small and midsize organizations. Because large organizations have more employees that can potentially use each available hour, the reuse ratio increases and, as discussed previously, brings the cost per employee and the cost per hour used down. In 2017, large organizations had an average reuse ratio of 98. By contrast, midsize organizations had an average reuse ratio of 68 and small organizations had a ratio of 22 (Table 2). It is important to keep in mind that rapid changes make knowledge outdated quickly, a geographically dispersed workforce, and the need for specialized training offerings for small groups of the workforce can all drive down the reuse ratio. Manufacturing companies had a reuse ratio of 64, compared with the reuse ratio of only 22 for management consulting firms. FIRE companies and healthcare and pharmaceutical companies fell in the middle, with reuse ratios of 56 and 47, respectively (Table 2). FIGURE 1-13: Average Reuse Ratio (Ratio of Learning Hours Used to Learning Hours Available) Consolidated BEST 2018 State of the Industry Report 31

36 TABLE 2: Key Indicators 1. Direct Expenditure per Employee (FTE) 2. Learning Hours Used per Employee 3. Direct Expenditure as Percentage of Payroll (Including Benefits and Taxes) 4. Direct Expenditure as Percentage of Revenue 5. Direct Expenditure as Percentage of Profit 6. Percentage of Expenditure for Tuition Reimbursement Consolidated 2017 (n = 399) $1, % 1.16% 8.44% 8.33% 2016 (n = 299) $1, % 1.36% 8.40% 12.75% 2015 (n = 310) $1, % 1.43% 8.30% 10.78% 2014 (n = 336) $1, % 1.49% 7.95% 12.58% 2013 (n = 340) $1, % 1.17% 7.45% 10.03% 2012 (n = 475) $1, % 1.32% 5.92% 11.08% 2011 (n = 461) $1, % 1.16% 6.49% 14.32% 2010 (n = 412) $1, % 1.06% 5.30% 12.89% BEST Award Winners 2017 (n = 45) $1, % 0.45% 2.99% 11.17% 2016 (n = 40) $1, % 0.52% 4.99% 13.00% 2015 (n = 36) $1, % 0.27% 3.84% 10.49% 2014 (n = 30) $1, % 0.46% 2.10% 9.66% 2013 (n = 33) $1, % 0.67% 3.58% 13.21% 2012 (n = 28) $1, % 0.65% 6.04% 8.77% 2011 (n = 30) $1, % 0.62% 5.73% 7.35% 2010 (n = 32) $1, % 0.58% 3.98% 11.26% Consolidated (2017) by Industry FIRE (n = 87) $1, % 0.53% 2.85% 10.21% Healthcare and Pharmaceutical (n = 43) $ % 0.79% 12.91% 13.85% Manufacturing (n = 38) $ % 1.21% 7.43% 9.64% Management Consulting (n = 31) Consolidated (2017) by Organization Size $2, % 2.55% 20.12% 7.26% (n = 136) $2, % 1.89% 14.51% 7.35% 500-9,999 (n = 199) $ % 0.50% 5.30% 8.03% 10,000+ (n = 64) $ % 0.43% 2.56% 11.51% Consolidated averages are based on organizations that provided relevant data for the appropriate calculations. *Multiply by 1 (% of Expenditure for External Services / 100) **Reuse Ratio = Ratio of learning hours used to learning hours available Some historical data have been revised State of the Industry Report

37 7. Percentage of Expenditure for External Services 8. Employees per L&D Staff Member Adjusted for Outsourcing* Not Adjusted for Outsourcing 9. Learning Hours Used per L&D Staff Member (Adjusted for Outsourcing*) 10. Learning Hours Available per L&D Staff Member (Adjusted for Outsourcing*) 11. Cost per Learning Hour Used 12. Cost per Learning Hour Available 13. Reuse Ratio** Consolidated 26.39% , $76.36 $1, % , $80.28 $1, % , $82.31 $1, % , $84.15 $1, % , $74.36 $1, % , $89.02 $1, % , $85.27 $1, % , $71.71 $1, BEST Award Winners 25.34% , $31.59 $1, % , $27.65 $1, % , $37.95 $2, % , $54.81 $2, % , $37.87 $1, % , $34.06 $2, % , $38.02 $1, % , $39.38 $1, Consolidated (2017) by Industry 30.00% , $75.04 $1, % , $ $2, % , $45.51 $ % , $ $1, Consolidated (2017) by Organization Size 27.98% , $ $1, % , $55.23 $2, % , $41.26 $1, Key to Industry Abbreviations FIRE = Finance, Insurance, and Real Estate 2018 State of the Industry Report 33

38 SECTION 2 Content Distribution and Delivery Methods Content Distribution Having explored efficiencies and expenditures, this report turns to the subjects covered by the learning portfolio and how learning is being delivered to employees. Respondents were asked to report the percentage of their organization s learning offerings dedicated to 12 common content areas. The three content areas with the largest share of the learning portfolio in 2017 were managerial and supervisory (13 percent); mandatory and compliance (12 percent); and processes, procedures, and business practices (11 percent). These were also the top three areas in 2016 and 2015 (Figure 2-1). Managerial and supervisory content has made up more than 10 percent of the learning portfolio in every year for the last decade. It is a critical area, with much of the variation in employee engagement being attributed to managers, according to Gallup. However, the nature of what needs to be covered in managerial and supervisory content has evolved, with more managers overseeing workers with remote or flexible work arrangements and matrixed teams (cross-functional teams where the employees report to more than one manager; Gallup 2018). Note that interpersonal skills (such as communication and teamwork) ranked fourth with 10 percent, a higher figure than in previous years. This is positive news given that the ATD report Bridging the Skills Gap: Workforce Development and the Future of Work found that the top missing skill sets in the workforce were communication and interpersonal skills and managerial skills (ATD 2018). However, when looking across industry groupings, the percentage of the portfolio devoted to content areas varies. For example, there are major differences in the percentage focused on mandatory and compliance material manufacturing, FIRE, and healthcare companies focused 21 percent, 15 percent, and 13 percent, respectively, on mandatory and compliance content. These industries are heavily regulated or must comply with occupational safety laws (Table 3) State of the Industry Report

39 FIGURE 2-1: Average Percentage of Learning Content by Content Area (Consolidated) Managerial and supervisory 12.9% Mandatory and compliance 12.2% Processes, procedures, and business practices 10.9% Interpersonal skills 10.0% Profession-specific or industry-specific 9.8% New employee orientation 9.1% Information technology and systems 8.2% Customer service 6.5% Sales (not including product knowledge) 6.3% Product knowledge 6.1% Executive development 4.9% Basic skills 0.9% Other 2.2% 2018 State of the Industry Report 35

40 Delivery Methods This report also looked at how organizations distribute learning to employees. Slightly more than half of the hours available at the average organization in 2017 were still delivered in an instructorled live face-to-face classroom (53 percent of learning hours available). This value is up from 51 percent of hours available in 2016 and 49 percent of hours available in 2015, but down from 55 percent in 2013 (Figure 2-2). Consider the emphasis in the learning portfolio on managerial and supervisory skills and interpersonal skills. ATD s research found that managerial training is far more likely to be carried out in the traditional classroom, and the face-to-face environment is favored by talent development professionals for providing training in areas such as communication (ATD 2016). Only 47 percent of hours available were delivered in the traditional classroom for large organizations, many of which have workers scattered across multiple locations and time zones who may be easier to reach using technology. Indeed, for these organizations, 31 percent of hours available were self-paced online. For small organizations, the percentage of hours available delivered in the traditional classroom was 53 percent, and it was 56 percent for midsize organizations. In FIRE organizations, 48 percent of hours available were delivered in the traditional classroom; that number rose to 64 percent for manufacturing organizations. Because of the nature of the jobs and the content covered, online or mobile delivery may often not be practical or the best fit for manufacturing (Table 4). FIGURE 2-2: Average Percentage of Formal Learning Hours Available via Instructor-Led Classroom (Consolidated) 59.11% 59.43% 54.28% 54.62% 50.63% 49.46% 51.16% 53.15% State of the Industry Report

41 Instructor-Led Methods Focusing on all instructor-led delivery methods (classroom, online, and remote video, satellite, or teleconference), 67 percent of learning hours available at the average organization were delivered by an instructor in 2017, which is very close to the 66 percent in The data show that 53 percent of all hours available are delivered in the traditional classroom, compared with 9 percent delivered using the instructor-led online method (virtual classrooms), and 5 percent delivered using instructor-led non-online remote classrooms (Figure 2-3). Self-paced methods accounted for 29 percent of hours available, up from 26 percent in This increase was driven by the growth of self-paced online learning (e-learning). Also, note that the growth in both instructor-led and self-paced methods from 2016 is accompanied by a decline in the percentage of hours available that were delivered using noncomputer technology (such as DVDs and audio CDs). This number stands at less than 1 percent in 2017, down from 5 percent in The current level is the lowest this indicator has been, likely because these technologies are becoming obsolete (Table 4). Instructor-led learning can be delivered through traditional face-to-face instructor-led classrooms, instructor-led online classrooms (virtual classrooms), or instructor-led nononline remote classrooms (such as satellite). FIGURE 2-3: Average Percentage of Formal Learning Hours Available via All Delivery Methods (Consolidated) % 2.13% 0.87% 0.89% 66.84% All instructor-led All self-paced Mobile technology Noncomputer technology Other 2018 State of the Industry Report 37

42 Technology and E-Learning When all technology-based methods were grouped together, they accounted for 43 percent of learning hours available and 41 percent of learning hours used in The number of hours available and used have remained close in most years, indicating that an hour of technology-based learning and an hour of nontechnology-based learning don t differ much in how likely they are to be used by a learner (Figure 2-4). Technology-based learning can be delivered through online and other remote instructorled classrooms, self-paced online and non-networked computer based methods, mobile devices, or noncomputer technology (such as DVDs). Online methods are a subset of this group and include instructor-led online classrooms and self-paced online learning. FIGURE 2-4: Average Percentage of Formal Learning Hours Available and Used via Technology-Based Methods (Consolidated) 33.3% 38.5% 37.3% 39.2% 38.7% 38.5% 38.4% 41.2% 41.1% 42.0% 41.4% 44.9% 41.2% 42.7% 41.3% 29.1% Available Used Taking a closer look at specific technology-based methods, self-paced online delivery (e-learning) continued to be the most heavily available and used technology-based method in 2017, accounting for 24 percent of hours available and 23 percent of hours used. E-learning availability and use is growing. In 2016, e-learning made up 22 percent of hours available and used. From 2010 to 2015, e-learning availability ranged from 16 to 19 percent and use ranged from 11 to 19 percent State of the Industry Report

43 Like hours delivered using noncomputer technology, the percentage of hours delivered using self-paced non-networked computer technology (such as CD-ROMs) was low, likely because the technology is outdated. Only 2 percent of hours available and used were delivered in 2017 using non-networked technology, compared with 3 percent of hours delivered and used in 2016 and 4 percent of hours delivered and used in Mobile learning which is the delivery of content specifically using mobile technology, such as smartphones and tablets accounted for 2 percent of hours available and used in It made up less than half of a percent of hours used and available in 2016 and 3 percent of hours available and used in 2015 (Tables 4 and 5). One thing to note when looking at these figures that many learning assets that would be considered self-paced online learning for the purposes of this report (because they are not designed specifically for mobile and can also be accessed from a desktop or laptop computer connected to the Internet) may be consumed by learners using an Internet browser on a mobile device. ATD has found that learners rely on smartphones to a high or very high extent to access e-learning at 9 percent of organizations; for tablets, this figure is 13 percent (ATD 2017). The use of technology in delivering training differs across workforce size groups and industry groupings. As the relatively low use of the instructor-led classroom implies, large organizations, which often need to reach sizable, geographically dispersed workforces, lead the way in using technology-based methods. At large organizations, 50 percent of hours available and 52 percent of hours used were delivered using technology; for e-learning, these figures were 31 and 33 percent, respectively. These percentages were lower for midsize and small organizations. For employees in FIRE, 49 percent of all hours available and 45 percent of all hours used were delivered using technology; the rates were 28 percent of hours available and 25 percent of hours used for e-learning. Using a technology-based delivery method, particularly e-learning, may make it easier to track the completion and passing of a mandatory or compliance course, and employees may be dispersed across many branches or field offices. Conversely, the average percentage of technology-based hours available and used for manufacturing firms was 33 and 34 percent, respectively (more than 60 percent of hours available and used at manufacturers were delivered in the live instructor-led classroom) State of the Industry Report 39

44 TABLE 3: Average Percentage of Learning Content by Content Area Executive Development Managerial and Supervisory Sales Customer Service Mandatory and Compliance Consolidated 2017 (n = 399) 4.90% 12.95% 6.25% 6.50% 12.25% 2016 (n = 299) 6.88% 13.72% 8.91% 6.72% 10.81% 2015 (n = 310) 7.12% 12.37% 6.71% 7.19% 11.10% 2014 (n = 336) 6.90% 12.95% 7.60% 6.51% 10.26% 2013 (n = 340) 6.84% 11.50% 7.12% 8.20% 11.54% 2012 (n = 475) 6.29% 13.46% 9.11% 6.08% 10.77% 2011 (n = 461) 5.95% 12.64% 6.64% 5.85% 10.63% 2010 (n = 412) 6.32% 12.83% 6.32% 7.35% 10.02% Consolidated (2017) by Industry FIRE (n = 87) 3.91% 9.41% 7.33% 8.33% 15.22% Healthcare and Pharmaceutical (n = 43) 2.90% 11.03% 8.65% 5.45% 13.20% Manufacturing (n = 38) 6.40% 12.75% 5.25% 3.30% 20.80% Management Consulting (n = 31) 7.50% 8.80% 6.58% 3.10% 5.95% Consolidated (2017) by Organization Size (n = 136) 6.40% 11.71% 7.28% 5.59% 8.57% 500-9,999 (n = 199) 4.11% 14.07% 5.50% 7.05% 14.22% 10,000+ (n = 64) 3.85% 12.33% 6.17% 6.95% 14.77% Consolidated averages are based on organizations that provided relevant data for the appropriate calculations. Some historical data have been revised State of the Industry Report

45 Processes, Procedures, and Business Practices IT and Systems Interpersonal Skills New Employee Orientation Basic Skills Professionor Industry- Specific Other (Including Product Knowledge) Consolidated 10.92% 8.18% 9.98% 9.06% 0.90% 9.80% 8.32% 10.40% 7.91% 7.78% 8.16% 2.94% 8.02% 7.80% 9.77% 7.56% 6.67% 7.72% 4.88% 9.43% 9.47% 9.41% 6.73% 7.26% 8.12% 5.50% 10.57% 8.19% 9.13% 6.99% 6.66% 7.57% 5.47% 10.75% 8.23% 9.95% 7.41% 6.37% 7.27% 4.60% 9.54% 8.87% 11.55% 6.80% 7.91% 6.26% 4.73% 11.63% 9.64% 9.83% 7.44% 7.49% 7.21% 4.11% 11.28% 9.80% Consolidated (2017) by Industry 14.04% 7.80% 7.99% 8.80% 0.64% 9.02% 7.50% 10.40% 6.58% 5.35% 12.30% 0.75% 11.05% 12.35% 11.40% 3.80% 11.30% 11.45% 1.55% 5.05% 6.95% 8.03% 9.85% 12.95% 8.30% 1.05% 14.80% 13.10% Consolidated (2017) by Organization Size 12.57% 9.04% 12.22% 7.79% 0.35% 9.61% 8.88% 9.59% 7.23% 9.12% 11.07% 1.24% 8.57% 8.25% 11.22% 9.13% 7.35% 5.66% 1.17% 14.24% 7.16% Key to Industry Abbreviations FIRE = Finance, Insurance, and Real Estate 2018 State of the Industry Report 41

46 TABLE 4: Average Percentage of Formal Learning Hours Available via Different Delivery Methods Live Instructor-Led Computer Self-Paced Print (a) Instructor-Led Classroom (b) Instructor-Led Online (c) Instructor-Led Remote (d) Self-Paced Online (e.g., networked) (e) Self-Paced Non-Networked Computer (e.g., CD ROM) (h) Self-Paced Print Consolidated 2017 (n = 399) 53.15% 8.98% 4.71% 23.76% 2.27% 3.24% 2016 (n = 299) 51.16% 10.02% 4.96% 21.62% 2.73% 1.83% 2015 (n = 310) 49.46% 9.52% 5.75% 18.08% 4.43% 4.93% 2014 (n = 336) 50.63% 9.75% 5.57% 19.19% 2.93% 4.13% 2013 (n = 340) 54.62% 9.33% 4.92% 17.89% 3.15% 4.74% 2012 (n = 475) 54.28% 10.33% 5.17% 16.96% 2.96% 4.48% 2011 (n = 461) 59.43% 8.75% 4.54% 16.43% 2.31% 1.33% 2010 (n = 412) 59.11% 6.69% 3.90% 18.08% 2.81% 4.61% Consolidated (2017) by Industry FIRE (n = 87) 48.44% 13.03% 3.86% 28.30% 1.27% 2.12% Healthcare and Pharmaceutical (n = 43) 53.04% 7.07% 3.89% 24.71% 3.93% 2.43% Manufacturing (n = 38) 63.97% 4.05% 2.92% 22.83% 1.67% 2.73% Management Consulting (n = 31) Consolidated (2017) by Organization Size 52.63% 8.83% 6.84% 19.65% 1.04% 4.32% (n = 136) 52.68% 8.63% 6.88% 19.70% 2.70% 4.51% 500-9,999 (n = 199) 55.73% 9.12% 3.61% 24.45% 1.30% 2.69% 10,000+ (n = 64) 46.94% 9.33% 3.02% 30.80% 4.05% 1.95% Consolidated averages are based on organizations that provided relevant data for the appropriate calculations. Some historical data have been revised State of the Industry Report

47 Consolidations (f) Mobile Technology (g) Noncomputer Technology (e.g., DVD, Audio CD) (i) Other All Instructor-Led All Technology- Based All Online (a+b+c) (b+c+d+e+f+g) (b+d) Consolidated 2.13% 0.87% 0.89% 66.84% 41.85% 32.73% 0.38% 5.43% 1.88% 66.14% 41.16% 31.64% 2.73% 1.48% 3.62% 64.73% 41.99% 27.60% 2.04% 1.75% 4.01% 65.95% 41.23% 28.93% 1.47% 1.75% 2.13% 68.87% 38.51% 27.22% 1.64% 2.13% 2.04% 69.79% 39.20% 27.29% 1.42% 3.84% 2.10% 72.72% 37.30% 25.18% 0.74% 1.08% 2.99% 69.70% 33.30% 24.77% Consolidated (2017) by Industry 1.98% 0.49% 0.51% 65.33% 48.45% 41.33% 1.18% 1.96% 1.79% 64.00% 40.79% 31.79% 1.04% 0.75% 0.04% 70.94% 32.50% 26.88% 3.76% 0.48% 2.45% 68.30% 40.12% 28.48% Consolidated (2017) by Organization Size 2.41% 0.99% 1.51% 68.19% 40.32% 28.33% 1.63% 0.98% 0.50% 68.45% 40.10% 33.56% 2.96% 0.31% 0.65% 59.29% 50.16% 40.13% Key to Industry Abbreviations FIRE = Finance, Insurance, and Real Estate 2018 State of the Industry Report 43

48 TABLE 5: Average Percentage of Formal Learning Hours Used via Different Delivery Methods Live Instructor-Led Computer Self-Paced Print (a) Instructor-Led Classroom (b) Instructor-Led Online (c) Instructor-Led Remote (d) Self-Paced Online (e.g., networked) (e) Self-Paced Non-Networked Computer (e.g., CD ROM) (h) Self-Paced Print Consolidated 2017 (n = 399) 54.28% 8.88% 4.33% 23.29% 1.76% 3.23% 2016 (n = 299) 48.78% 11.13% 5.35% 22.23% 3.33% 2.43% 2015 (n = 310) 51.21% 9.06% 5.35% 18.94% 3.87% 3.78% 2014 (n =336) 50.89% 9.61% 6.05% 18.78% 2.92% 4.34% 2013 (n = 340) 55.38% 9.38% 5.38% 15.55% 5.15% 4.12% 2012 (n = 475) 54.58% 9.98% 5.17% 13.32% 6.91% 4.86% 2011 (n = 461) 58.68% 9.19% 4.55% 11.19% 8.49% 1.07% 2010 (n = 412) 60.75% 7.66% 4.60% 11.98% 1.76% 5.67% Consolidated (2017) by Industry FIRE (n = 87) 50.98% 12.37% 4.54% 25.11% 1.48% 2.20% Healthcare and Pharmaceutical (n = 43) 51.88% 8.14% 3.60% 28.46% 1.40% 1.40% Manufacturing (n = 38) 61.87% 4.13% 5.96% 18.13% 1.65% 3.78% Management Consulting (n = 31) 54.65% 8.20% 5.45% 18.00% 0.23% 6.14% Consolidated (2017) by Organization Size (n = 136) 58.37% 8.19% 5.69% 17.07% 2.20% 4.71% 500-9,999 (n = 199) 54.54% 9.08% 4.09% 24.01% 1.24% 2.93% 10,000+ (n = 64) 45.89% 9.68% 2.39% 33.11% 2.27% 1.21% Consolidated averages are based on organizations that provided relevant data for the appropriate calculations. Some historical data have been revised State of the Industry Report

49 Consolidations (f) Mobile Technology (g) Noncomputer Technology (e.g., DVD, Audio CD) (i) Other All Instructor-Led All Technology- Based All Online (a+b+c) (b+c+d+e+f+g) (b+d) Consolidated* 1.98% 1.03% 1.22% 67.49% 41.27% 32.17% 0.39% 4.60% 1.77% 65.25% 44.85% 33.35% 2.72% 1.41% 3.67% 65.62% 41.35% 28.00% 2.19% 1.52% 3.69% 66.55% 41.08% 28.39% 1.24% 1.65% 2.15% 70.14% 38.36% 24.93% 1.51% 1.81% 1.86% 69.74% 38.70% 23.31% 1.39% 3.66% 1.76% 72.41% 38.46% 20.38% 1.49% 1.63% 4.48% 73.01% 29.12% 19.64% Consolidated (2017) by Industry 1.15% 0.56% 1.61% 67.89% 45.21% 37.48% 2.60% 1.60% 0.92% 63.62% 45.80% 36.60% 1.96% 2.00% 0.52% 71.96% 33.83% 22.26% 1.45% 2.18% 3.69% 68.31% 35.52% 26.20% Consolidated (2017) by Organization Size 1.55% 1.12% 1.08% 72.25% 35.84% 25.27% 1.79% 0.99% 1.33% 67.70% 41.21% 33.09% 3.30% 0.95% 1.21% 57.96% 51.70% 42.79% Key to Industry Abbreviations FIRE = Finance, Insurance, and Real Estate 2018 State of the Industry Report 45

50 SECTION 3 On-the-Job Learning All the learning hours discussed in the first two sections of this report were formal learning hours, which are standalone hours not embedded in work activities. Recognizing that these formal learning hours do not capture the valuable development experiences that happen on the job, two years ago ATD began compiling a comprehensive snapshot of learning that occurs during work. To collect the necessary data, ATD asked survey respondents to assess their organization s commitment to on-the-job learning during the year. On-the-job learning is defined as any learning that is not a standalone activity and is intertwined with work activities. There are many types of on-the-job learning: Coaching involves proactive listening, asking nondirective and prompting questions, and providing targeted and actionable feedback. Job shadowing gives an employee the opportunity to observe or shadow another employee s work. Rotational training programs allow employees to rotate through different parts of a company or different job roles. Stretch assignments are job assignments that are beyond the employee s current skill level and are intended to serve as development tools. Extent of On-the-Job Learning It is difficult to track, measure, and report the time employees spend learning while working. Therefore, survey participants were asked to indicate on a 1-5 scale the extent to which their organization emphasized on-the-job learning. Overall, 59 percent of organizations in the consolidated group emphasized on-the-job learning to a high or very high extent (ratings of 4 and 5 on the scale) in This number is down from the 65 percent reported in 2016 and the 67 percent reported in ATD will continue asking this question on future surveys to help better understand and establish trends in this area. On a positive note, only 3 percent of organizations did not emphasize on-the-job-learning at all in 2017, which is the same as in the previous two years (Figure 3-1) State of the Industry Report

51 FIGURE 3-1: Extent to Which Organizations Emphasize On-the-Job Learning 2.61% 11.44% (Consolidated) % Very high extent 27.12% High extent Moderate extent Low extent 38.56% Not at all Respondents indicated that 61 percent of small organizations emphasize on-the-job learning greatly, compared with 58 percent of midsize organizations and 57 percent of large organizations. On-the-job training may be a solution for cases where it does not make economic sense for a small organization to offer formal training in a specific skill area to a very limited number of employees (Table 6). Just over 75 percent of management consulting firms emphasized on-the-job learning to a high or very high extent. The FIRE, healthcare and pharmaceutical, and manufacturing industry groupings all had rates that ranged between 55 percent and 61 percent (Table 6). Types of On-the-Job Learning The survey also asked respondents the extent to which their organization used seven specific types of on-the-job learning. The use percentage for all seven fell from 2016, which is not surprising given the decreased emphasis on on-the-job learning seen in In-person employee knowledgesharing was heavily used by 49 percent of organizations in However, just 23 percent applied technological tools (such as social media or collaboration platforms) to a high or very extent for knowledge sharing. On-the-job coaching by peers and managers were used extensively in 44 and 42 percent of organizations, respectively State of the Industry Report 47

52 Job shadowing was used heavily in 29 percent of organizations, and 14 percent used stretch assignments extensively. The percentage using rotational training programs to a high or very high extent was 12 percent, while 70 percent did not use them at all. Note that this type of program requires buy-in from multiple departments within an organization. Employees and managers must also believe that they will benefit from rotations (Figure 3-2). FIGURE 3-2: Percentage of Organizations Using Types of On-the-Job Learning to a High or Very High Extent (Consolidated) Employee knowledge sharing on the job (in person) 48.5% On-the-job coaching by peers 43.6% On-the-job coaching by managers 42.0% Job shadowing 28.5% Employee knowledge sharing on the job with the aid of technology 22.5% Stretch assignments 14.4% Rotational training programs 11.8% State of the Industry Report

53 Sharp differences in use appear across organization size and industry groupings for some types of on-the-job learning. For example, at large organizations, the percentage using employee knowledge sharing in person to a high or very high extent was 49 percent, which mirrors the consolidated group. However, the percentage that said the same of employee knowledge sharing with the aid of technology was 34 percent, which is more than 10 points higher than the consolidated average. Large organizations may have the resources to launch and maintain internal social networks, for example, as well as have more employees to contribute content and interact with each other in these online spaces (Table 6). At management consulting firms, 76 percent relied on coaching by managers to a large extent, but the rate dropped to 48 percent for peer coaching. In addition, only 20 percent of management consulting organizations used job shadowing to a high or very high extent, which is lower than the consolidated group. By contrast, 40 percent of manufacturers and 35 percent of healthcare and pharmaceutical organizations used job shadowing heavily. When it comes to knowledge sharing in person, manufacturers led all four industry groups, with 61 percent using it to a high or very high extent. However, only 16 percent of manufacturers relied greatly on employee knowledge sharing with the aid of technology; manufacturers were also less likely than the consolidated group to use technology to deliver formal learning (Table 6) State of the Industry Report 49

54 TABLE 6: On-the-Job Learning (High and Very High Extent Responses) Emphasize on-the-job learning Use on-the-job coaching by managers Use on-the-job coaching by peers Consolidated 2017 (n = 399) 58.82% 41.97% 43.61% 2016 (n = 299) 65.11% 48.31% 45.72% 2015 (n = 310) 66.82% 48.13% 51.40% Consolidated (2017) by Industry FIRE (n = 87) 57.35% 39.71% 39.71% Healthcare and Pharmaceutical (n = 43) 55.88% 44.12% 39.39% Manufacturing (n = 38) 61.29% 35.48% 48.39% Management Consulting (n = 31) 76.00% 76.00% 48.00% Consolidated (2017) by Organization Size (n = 136) 60.58% 54.81% 46.15% 500-9,999 (n = 199) 58.39% 35.14% 40.27% 10,000+ (n = 64) 56.60% 35.85% 48.08% Consolidated averages are based on organizations that provided relevant data for the appropriate calculations. Some historical data have been revised State of the Industry Report

55 Use employee knowledge sharing on-the-job in person Use employee knowledge sharing on-the-job with the aid of technology Use job shadowing Use rotational training programs Use stretch assignments Consolidated 48.52% 22.55% 28.52% 11.76% 14.43% 55.60% 31.09% 30.57% 16.67% 26.25% 55.61% 32.71% 27.10% 16.82% 21.96% Consolidated (2017) by Industry 47.06% 27.94% 26.47% 8.82% 5.88% 41.18% 17.65% 35.29% 11.76% 14.71% 61.29% 16.13% 40.00% 12.90% 9.68% 56.00% 36.00% 20.00% 20.00% 40.00% Consolidated (2017) by Organization Size 54.81% 22.12% 30.77% 14.42% 16.35% 43.92% 18.79% 29.05% 9.40% 12.16% 49.06% 33.96% 22.64% 13.21% 16.98% Key to Industry Abbreviations FIRE = Finance, Insurance, and Real Estate 2018 State of the Industry Report 51

56 Conclusion In 2017, direct learning expenditure per employee remained strong, reaching $1,296. This figure is up from $1,273 in 2016 and $1,252 in The average number of formal learning hours remained steady at The data presented in this report can aid organizations in benchmarking their training programs and help them make educated decisions about their training offerings. When using these data, ATD makes the following suggestions: Note that data reported here are averages and participating organizations change from year to year. Don t aim to replicate the data presented. Instead, observe the trends over time and use the information as a benchmark to compare your own data and trends. Use the data reported by industry size and type when available. If possible, look to the tables to review the data by organization and industry type, which will more closely mirror your organization State of the Industry Report

57 References ATD (Association for Talent Development) ACCEL: The Skills that Make a Winning Manager. Alexandria, VA: ATD Press Next Generation E-Learning: Skills and Strategies. Alexandria, VA: ATD Press Bridging the Skills Gap: Workforce Development and the Future of Work. Alexandria, VA: ATD Press. Damodaran, A Margins by Sector. Damodaran Online, Stern School of Business at New York University. January. Gallup The End of the Traditional Manager. Gallup Business Journal, May Gooch, K How 5 Health Systems are Recruiting, Retaining Nurses During an RN Shortage. Becker s Hospital Review, January risk/how-5-health-systems-are-recruiting-retaining-nurses-during-an-rn-shortage.html. Ho, M., and R. Torres Talent Development Is on FIRE. TD, March. /td-magazine/talent-development-is-on-fire. IFEBP (International Federation of Employee Benefit Plans) Educational Assistance Benefits: 2015 Survey Results. Brookfield, WI: IFEBP. ILO (International Labour Organization) World Employment and Social Outlook: Trends Geneva: ILO. IMF (International Monetary Fund) World Economic Outlook Database April April State of the Industry Report 53

58 Research Topics and Trends, 2018 In addition to its annual State of the Industry report, each year ATD conducts extensive industry research and produces reports on topics and trends in the talent development field. This year s research included: Advancing Innovation: High-Performance Strategies for Talent Development Mentoring Matters: Developing Talent With Formal Mentoring Programs Personalized and Adaptive Learning: Shaping Employee Development for Engagement and Performance Needs Assessments: Design and Execution for Success Organizational Performance Improvement: Methods and Skills to Drive Business Success Sales Coaching: Building a Successful Sales Force Upskilling and Reskilling: Turning Disruption and Change Into New Capabilities Lifelong Learning: The Path to Organizational and Personal Performance Change Enablement: Skills for Addressing Change Succession Planning: Ensuring Continued Excellence ATD Talent Development Executive Confidence Index (TDXCI) Each report is available in the ATD Store, and a free whitepaper is available to members. For more information about ATD research reports, visit State of the Industry Report

59 About the ATD Research Center The ATD Research Center is an enterprise-level offering that gives all individuals within an organization fully searchable and downloadable anytime, anywhere access to: all ATD research reports (approximately 10 new reports are added each year) the annual State of the Industry the quarterly Talent Development Executive Confidence Index full-length case studies profiling talent development at selected organizations (20 pages each) brief case studies describing how an organization addressed a specific problem through a talent development program (5 pages each). To learn more about how the ATD Research Center can inform decisions and drive results in your organization, contact ATD Enterprise Solutions at State of the Industry Report 55

60 About ATD The Association for Talent Development (ATD) is the world s largest professional membership organization supporting those who develop the knowledge and skills of employees, improve performance, and achieve results for the organizations they serve. Originally established in 1943, the association was previously known as the American Society for Training & Development (ASTD). ATD s members come from more than 120 countries and work in public and private organizations in every industry sector. ATD supports talent development professionals who gather locally in volunteer-led U.S. chapters and international member networks, and with international strategic partners. For more information, visit ATD s researchers track trends, inform decisions, and connect research to practice and performance. By providing comprehensive data and insightful analyses, ATD s research products, which include research reports, briefs, infographics, and webcasts, help business leaders and talent development professionals understand and more effectively respond to today s fast-paced industry. Maria Ho is the manager of ATD research services and served as the author of this report. She provides oversight and direction for all of ATD s internal and external, industry specific, and market research services. Shirley E.M. Raybuck is a graphic designer for ATD and served as the designer for this report. Melissa Jones is the manager of ATD Press and served as an editor for this report. She edits and manages the production process for ATD research reports and books State of the Industry Report

61

62

63

64 2018 State of the Industry Sponsored by: AMA provides learning experiences in multiple modalities offering a fully integrated learning technology ecosystem to manage the learner experience. All AMA modalities can be delivered on public and corporate delivery platforms, with a seamless and consistent learning experience. AMA s approach to developing and delivering learning journeys is rooted in proven techniques and guided by instructional design anchors to enable participants to practice, adopt, and put their learning to work on the job where it counts most. For more information, visit LinkedIn Learning is the only learning platform designed to meet the needs of modern learners and the demands of modern business. Combining Lynda.com s industryleading library of more than 13,000 expert-led courses with unique LinkedIn insights from more than 550 million professionals, LinkedIn Learning makes it easier to get the right content to the right learners at the right time, and help your people engage, learn, and succeed within your organization. For more information, visit learning.linkedin.com $499.00