The world of work is changing before our eyes. The COVID-19 pandemic has accelerated the digital transformation across many industries as teams change where and how they work. There was a shift in the employment market driven by a high demand for talent, empowered job seekers, and the Great Resignation.
This has introduced many new challenges for organizations and opportunities to stand out against your competition. Investing in learning and development (L&D) can ensure a more successful transition, but you may need to reevaluate your L&D budget to do this right.
Your team is your greatest asset, and investing in their success benefits your business.
In this post:
What is a typical L&D budget?
A typical training budget is around $1,100 per employee annually. Large companies have an average training cost of $722 per employee compared to $902 for midsize companies and $1,433 for small companies.
Nearly half (48 percent) of L&D professionals expect funding for L&D to increase next year, while only 8 percent expect it to decrease.
These budgets are largely shifting toward online learning and technology. Almost 4 in 5 learning and development professionals (79 percent) expect to spend more on online learning, while 73 percent expect to spend less on instructor-led training. And 93 percent of remote human resource leaders who are increasing their L&D budget plan to spend more on learning and training technology (like a Learning Management System).
Why should you increase your training budget?
Almost 7 in 10 (69 percent) organizations have recently increased employee development and are reaping the benefits. Budgeting more for training is a worthwhile investment with many positive returns.
Professional development can close a skills gap
Almost half (46 percent) of L&D pros say the skills gap is wider at their organization in 2022 than in 2021. And 49 percent say executives are concerned that employees don’t have the right skills to execute business strategy.
The skills needed to perform a given role change over time. Research from LinkedIn found that skills for the same occupation changed by about 25 percent from 2015 to 2021 and will likely change by about 40 percent by 2025.
At the same time, new roles are emerging. Most of today’s jobs didn’t exist in 1940, and 85 percent of jobs that will exist 10 years from now haven’t been created yet.
It’s no surprise that upskilling and reskilling are top priorities for learning and development professionals globally. Fifty-eight percent of companies say that closing their skills gap has become a priority since the pandemic began, and 69 percent are engaging in more skill-building than before the crisis.
Investing more in L&D can help you close a skills gap now and prepare for the skills your company will need to succeed in the future. Seventy-nine percent of L&D pros agree it’s less expensive to reskill a current employee than to hire a new one.
Career growth improves employee retention
‘No opportunities for advancement’ and ‘low pay’ were the top causes of employee turnover in 2021. Career development can address both.
Investing in your team members’ professional growth enables them to take on new roles and responsibilities within your organization and earn compensation increases over time. This will make them more likely to stay.
Changing a top performer’s responsibilities will improve the likelihood of retaining them by around 20 percent-even if their title and pay remain the same. And 75 percent of employees who receive promotions will stay with the company for at least three years, as will 62 percent of workers who make lateral moves.
This career-growth investment makes up for itself, as the cost of turnover is estimated at one-half to two times the employee’s annual salary.
Read more: How to Create Professional Development Goals That Work
Workplace learning can help you attract talent
The competition for talent is fierce. There are two job openings for every unemployed worker in the United States, giving candidates the upper hand in the job market.
Many job seekers are motivated by career advancement, so you can stand out by offering learning and development opportunities. A Gallup study found that 65 percent of workers believe workplace training is very important when evaluating a potential new job. And 48 percent would switch to a new job if offered skills training.
Professional development is particularly important for Gen Z candidates. Seventy-six percent of Gen Z workers believe that learning is essential for a successful career, compared to 61 percent of Gen Y, 56 percent of Gen X, and 55 percent of Boomers.
Boosting your learning budget can help you build your reputation as an employer of choice so you can attract more talent.
Talent development improves your bottom line
People are more productive and produce better results when they have the necessary skills and experience to perform their jobs.
Most (71 percent to 90 percent) of employers say skill transformations have had a positive impact on four key company outcomes:
- The ability to realize company strategy
- Employee performance
- Employee satisfaction
- Employer reputation
These are all directly tied to your bottom line, either through cost savings, increased revenue, or both.
For example, satisfied employees are less likely to leave and more likely to go above and beyond in their work. This can decrease turnover costs, reduce lost business opportunities, and improve customer experience and loyalty.
Future-proof your business
Your organization needs great talent to succeed long term. Increasing your investment in training content and learning and development programs can help you attract, retain, and develop the team your company needs to reach business goals and stay relevant.
Want to learn more about how WorkRamp can help you build an effective training program to drive long-term business success? Contact us to schedule a free demo.
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