You are here:

Request a Demo Contact Us

L&D’s “Pirate Code”: The ATD State of the Industry Report

Bob Little 

March 3, 2017

According to the latest State of the Industry Report (SOIR) from the Association for Talent Development (ATD), the average direct learning expenditure per employee in the U.S. rose to $1,252 in 2015 – the most recent year for which statistics are available – up $23 from 2014.

The report’s authors suggest that, “Organizations shouldn’t 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.” Much like the famed “Pirate Code,” which Captain Barbossa explains in the film Pirates of the Caribbean, the SOIR is “…more what you’d call ‘guidelines’ than actual rules.”

SOIR acknowledges some key trends in L&D, notably:

  • The use of technology-based L&D delivery methods continues to grow, as does the use of informal learning.
  • Mandatory and compliance training is still key.
  • Management and supervisory learning is also key, but isn’t an organizational priority.

According to one of SOIR’s sponsors, The Training Associates, “With constant changes in technology and new learning modalities such as gamification and microlearning making big waves, it’s no surprise that many companies are having a hard time finding the right L&D resources to keep up.”

SOIR’s findings, which include data from 310 organizations, reveal that:

  • Each employee undertook 33.5 hours of learning on average – an increase of just over an hour compared with the previous year.
  • Two-thirds of organizations use on-the-job learning.
  • The average learning expenditure of $1,252 includes the design, administration and delivery costs associated with learning programs, as well as the salaries of talent development staff.
  • The rise in expenditure of $23 (1.9 percent) is above inflation, which was only 0.3 percent in developed countries according to the International Monetary Fund.
  • On average, 28 percent of direct learning expenditure went to outsourced or external activities, such as consulting services, external content development and licences, as well as workshops and training programs delivered by external providers. Meanwhile, 11 percent of expenditure went on tuition reimbursement, and slightly over 60 percent was allocated to internal activities, such as in-house development, delivery, administration expenses, and salaries.
  • The average cost per learning hour available was $1,803, up $51 (or 3 percent) from 2014. According to the report’s authors, “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.”
  • The average cost per learning hour used fell by $2 compared to $82. To explain the difference between learning hours “available” and “used,” if a one-hour class is offered twice a year and five employees take the class each time, then one hour is available but ten hours have been used. These findings are backed up by the average reuse ratio (the number of learning hours used per hour available), which rose to 49.6 – the highest value seen in four years.
  • Information and software (IS) firms spent, on average, $1,586 per employee on direct learning, even though employees in this sector used fewer than 20 formal learning hours each. A smaller percentage of the average IS organization’s learning spend was allocated to outsourced services and tuition reimbursement. This might be because of the specialized learning requirements of people employed in IS firms. In contrast, manufacturers spent an average of just over $500 per employee, almost half of which went on outsourced services and tuition reimbursement. This relatively low average spend could be partially explained by the fact that many manufacturers are based in emerging economies such as China, India and Mexico, where the cost of L&D tends to be much lower than in developed nations.
  • The report’s findings also demonstrated the advantages of economies of scale. Organizations with fewer than 500 workers, for instance, spent on average over $2,000 per employee on L&D, while organizations with 500 to 9,999 employees spent just under $800. The average spend of organizations with at least 10,000 workers was even less, at $700 per employee.
  • Managerial and supervisory content continues to represent the largest proportion of L&D (12 percent). Despite this, the ATD report “ACCEL: The Skills That Make a Winning Manager” found that less than half of talent development professionals believe that developing managers is a priority for their organization.
  • Mandatory and compliance training ranked second (11 percent). Public administration, manufacturing, and finance, insurance, and real estate organizations reported, respectively, that 19, 14 and 11 percent of their L&D activities included mandatory and compliance training.
  • Technology-based methods delivered 41 percent of learning hours used in the average organization – nearly 10 percent higher than in 2008 and over 15 percent higher than in 2003.

The trend towards informal – rather than formal – learning was also apparent, with around two-thirds of organizations using informal learning, and only one in 10 organizations placed little or no emphasis on it.

Moreover, 56 percent of all organizations encouraged employees to share their job-related knowledge and skills with their colleagues. However, only 33 percent of organizations use technological tools, such as social media or collaboration platforms, to facilitate this kind of knowledge sharing.

Leave a Comment

Your email address will not be published. All fields required.

View our Privacy Policy.