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Training Is Taking a Beating in Recession, Studies Find

One report notes the U.S. corporate training market shrank from $58.5 billion in 2007 to $56.2 billion in 2008, the greatest decline in more than 10 years.

January 26, 2009
The recession is leading organizations to slash spending on training, two recent studies show.

Average training expenditures per employee fell 11 percent in the past year, from $1,202 per learner in 2007 to $1,075 per learner in 2008, according to a report issued Friday, January 23, by research firm Bersin & Associates.

Bersin said its figures include training budgets and payroll. Bersin also said the U.S. corporate training market shrank from $58.5 billion in 2007 to $56.2 billion in 2008, the greatest decline in more than 10 years.

Bersin’s report echoes a November study by training services firm Expertus and research provider Training Industry. The survey of 84 corporate and government training professionals found that more than twice as many respondents expect training budget decreases rather than increases for 2009.

Forty-eight percent expect their budgets to decrease in 2009, up from 41 percent in 2008. Only 17 percent expect their budgets to increase in 2009. In addition, since 2008 budgets were first approved, far more saw decreases (38 percent) than increases (11 percent).

Bersin president Josh Bersin said organizations funneled money and staff into traditional and “often nonstrategic” training programs in good years.

“When budgets became tight, organizations with a traditional training focus suffered most,” Bersin said in a statement. “Today’s business world demands a combination of formal and informal learning with an emphasis on collaboration, knowledge sharing, social networking, coaching, and mentoring.”

The new reports confirm the old theory that training is among the first things cut during hard times, which today include a U.S. economy estimated to have contracted by more than 5 percent in the fourth quarter, an unemployment rate that rose to 7.2 percent in December and thousands of job cuts announced daily.

Trimmed training budgets also come amid a broader reassessment of employee development. In recent years, experts have argued that workers increasingly see career development as vital in an employer. At the same time, traditional, formal training in classrooms or through computer coursework has come under fire as less effective compared to less-formal modes of training, including on-the-job learning and the use of social networking tools such as corporate wikis.

Peter Cappelli, management professor at the Wharton School of the University of Pennsylvania, has suggested that employees share in the cost of training. In particular, he argues for tuition assistance programs, in which employees invest their time and effort on classes and class work.

The Expertus-Training Industry report found that return-on-investment and business-impact metrics are not often used to evaluate training programs.

“We recommend that organizations make measuring the value and impact of learning a priority,” Doug Harward, chief executive of Training Industry, said in a statement. “This way, training organizations can make better-informed budgetary decisions about which training should be supported and which training needs to be improved.”

In its 2009 Corporate Learning Factbook, Bersin said it found that companies have changed training program priorities; moved to coaching, informal learning, collaborative activities and other less-costly training methods; and increased reliance on outsourcing.

—Ed  Frauenheim

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