Investing in Employees: Smart Companies Are Increasing Their L&D Budgets

Feb 19, 2014

A 2014 report from Bersin by Deloitte, The Corporate Learning Factbook 2014: Benchmarks, Trends, and Analysis of the U.S. Training Market relays some positive information regarding investment in employee development.

It says that businesses increased training budgets by an average of 15 percent last year, reflecting the highest growth rate in this area in the last seven years. It’s also likely that as the economy continues to mend, organizations are able to reinvest in areas that experienced significant cost cutting during the downturn.

At a time when there is discussion of a lack of specified skills in the talent pool, this would appear to be welcome news, particularly because this investment applies not only to short-term training.

Tech firms lead in L&D spending

For mature organizations, this training budget involves identifying capability gaps now and into the future and combats them by developing a “supply chain” of skills to fill gaps in the long-term.

bersin-by-deloitte-2-17-14How much are organizations spending on these increased L&D (Learning & Development) budgets?

On average in 2013, businesses across the United States spent $1,169 per learner. This amount varies by company size and industry, with tech firms leading the pack in terms of amount invested per learner (spending an average of $1,847).

As far as which areas of training and development organizations are focusing their increased budgets on, leadership development takes the largest share, with 35 cents on average of each training dollar going to leadership development at all levels.

This certainly suggests this is an important strategic investment for companies in the coming year. As the study reports, “more than 60 percent of all companies cite leadership gaps as their top business challenge”.

Spending on L&D initiatives is likely to be higher for organizations with a more “mature” L&D function. Those ranked at either 3 or 4 on Bersin by Deloitte’s maturity model spent an average of 37 percent more on training and development than the least mature organizations.

Great workplaces make sure they invest in training

Here at Great Place to Work, we can certainly attest to the fact that organizations on the Fortune 100 Best Companies to Work For list invest significantly in training and development programs.

In 2013, companies on the list offered 66.5 hours of training annually for salaried employees and 53 hours of training for hourly employees, with close to 70 percent of those hours devoted to employees’ current roles and nearly 40 percent focused on growth and development.

Though they display impressive training and development programs, many of these Best Companies cited employee development as remaining an area of focus, with three (3) key areas highlighted — Leadership Development (reflecting the data from Bersin by Deloitte), Career Road-mapping, and Diversity Development.

This investment trend is good news for employers and employees alike.

Developing the next generation of leaders

Employers will have greater inventories of skills in-house and may not have to turn to the marketplace as often – or expensively – in coming years to support basic business operations. Additionally, by providing skills development to younger workers who are arriving with significant skills deficits, employers may be staunching the early talent drain from their organizations.

And, employees of all ages continue to need growing support to expand their knowledge and skill bases as the world of work continues to evolve and certain skills get harder and harder to find.

But the opportunity to develop management and leadership skills may be the most valuable investment for both sides of the employee-management relationship. It prepares the next generation of organizational leaders, it communicates a commitment to employees’ futures and it strengthens the ties between these two sides of the employment equation.

That high performing employers are spending 40 percent  of corporate learning dollars on their future leadership talent would be a compelling component of any employer’s employee value proposition.

This originally appeared on China Gorman’s blog at