If you doubted that the economic recovery was here, there is little room
for that skepticism now: Spending on corporate training – always a good
indicator of economic activity – is now climbing. According to the
impressive data in the just-released "2014 Corporate Learning Factbook,"
spending in the United States on corporate training grew by a notable
15 percent last year – the highest growth rate in seven years. Corporate
training now represents more than $70 billion in the U.S. and more than
$130 billion worldwide.
As we have so often lamented in the
past, when companies slow down, training spending is often the first
"expense" to go. What these companies are overlooking is that training
is actually an important investment in its people. Once the business
recovers, they will need to have trained new hires, sales people and
leaders on the bench. Spending on training is among the most
discretionary of all corporate spending areas, so its resurgence is an
excellent indication of business confidence.
This significant
increase follows two years of increased spending in this area (10
percent in 2011 and 12 percent in 2012), reflecting that companies are
finally feeling the pinch of the frightening skills gaps about which we
have reported so often.
According to this same report, more than
70 percent of organizations name "capability gaps" as one of their top
five challenges, though many companies admit it takes three to five
years to train "a seasoned professional" to be fully productive.
We
cannot underestimate the magnitude of this skills challenge. According
to recent research in the oil and gas industry, 60,000 petrochemical
engineers are needed by 2016. With only 8,775 worldwide graduating each
year, "oil companies have to train, retrain and jointly educate a lot of
energy engineers to grow."
We are pleased that at least a
percentage of companies are enlightened enough to have awakened to this
critical need. Many more are needed before we will really be able to
make a dent in the tremendous need for workforce development. Local
workforce investment boards need the support of their communities and
companies that take up this challenge should be acknowledged for their
support of their communities.
This topic is so important we will cover the other half next week.
Special thanks to Josh Bersin and Forbes.com for this important research. For a full copy of the report, visit http://marketing.bersin.com/corporate-learning-factbook-2014.html.
