Training is a crucial element in ethics and compliance programs. It is essential to help employees understand the expectations and standards of their organization, and regulators place tremendous importance on training. Findings from LRN's 2023 E&C Program Effectiveness Report validate the priority of training, revealing that high-performing compliance programs are more likely to emphasize enhancement and evaluation of training. These programs also make training more engaging and employee-friendly, the report notes. According to Training Magazine's latest Training Industry Report, US training expenditures passed the $100 billion mark for the first time between 2021 and 2022. Let's dig into some key findings about the changes taking place in training costs and priorities.
Corporate training budgets and costs have dramatically increased
The Training Industry Report notes that the 10% jump in training expenditures was fueled, in part, by the significant increase in large companies' budgets, inflation, and organizations continuing to invest in virtual training technologies during the COVID-19 pandemic, as well as starting to return to in-person training and resuming travel. This year, the number of companies reporting increases in their training budgets rose by 12% to 44%. The average training budget for large companies increased from $17.5 million to $19.2 million, while the midsize company budget rose from $1.3 million to $1.5 million. Small companies dedicated an average of $368,891 to their training budgets, up from $341,505. Most budget increases were modest, at less than 16% over the previous year.
Gartner reports that perhaps the greatest need for training among post-pandemic workers is in the youngest employees who are just entering the workforce: members of Generation Z. More than half of the Gen Z employees who responded to a recent Gartner survey stated that their education has not prepared them for work. Consequently, this generation has missed developing some of the soft skills such as negotiating, networking, and speaking confidently in front of crowds, as well as the social stamina and attentiveness required of an in-person work environment. Gartner also notes that company managers are also suffering from a skills gap as they learn to navigate a greater focus on hybrid workplaces and the needs of employees.
Training Magazine's report notes that while management and supervisory training remains a priority, there is a renewed focus on other types of training—including onboarding, interpersonal skills, profession and industry-specific training, executive development, IT/systems training, and customer service training. Currently, most organizations are focusing the highest amount of their training budget on profession and industry-specific training, as well as mandatory compliance training.
Learning management systems, tools, and technologies grow in corporate training importance
As reported in the Washington Post, there are many reasons for companies to invest in employee training, including the ability to attract and retain skilled workers, boost company morale, create consistent work processes, and free managers up from some of the time burdens of supervising workers. Additionally, providing training helps employees to reduce waste, as they are more efficient and less likely to make mistakes. Having a trained team allows for the opportunity to promote from within the company. The article notes that among surveyed employees at top workplaces with strong training programs, 85% feel that management helps them learn and grow.
Organizations spent an average of 16% of their budget on learning tools and techniques, or around $382,729, up from $337,190. In the future, participants of the Training Industry Report stated that the most anticipated training purchases are learning management systems, authoring tools and systems, online learning tools and systems, and content development. Other types of training tools and technologies that corporations plan to invest in include certifications, presentation software and tools, games and simulations, consulting, and courseware design.
Training technology is also a priority for ethics and compliance professionals. In the 2023 E&C Program Effectiveness Report, 76% of E&C professionals said internal systems need upgrading in order to better facilitate training, web-based resources, and data collection. Essential upgrades and those that will save staff time will help E&C leaders be more effective at aligning behaviors with values throughout the organization.
Corporate training priorities are increasing effectiveness, measuring impact, and centering learners
According to the University of South Florida Corporate Training and Professional Education Department, before the pandemic, most workers only had about 24 minutes a week to learn new skills. While the amount of time workers had for training increased 15-fold during the height of the pandemic, the types of training programs available for workers also increased. More than 90% of companies offer some sort of educational benefit program for employees, including tuition reimbursement for degree programs as well as training designed specifically to build on the worker's skill set.
Here are the highest priorities for training in terms of allocating resources in 2023, as noted in the Training Industry Report:
- Increasing the effectiveness of training programs
- Increasing learner usage programs
- Measuring the impact of training programs
Overall, companies spent an average of $1,207 per learner this year compared with $1,071 per learner in 2021. While spending a bit more per learner, companies provided slightly fewer hours of training than last year. On average, employees received 62.4 hours of training per year, compared to nearly 64 hours last year.
The recipients of the highest amount of money allocated by corporations for training are non-exempt employees, Training Magazine noted, accounting for around 41% of a company's training expenditure. Exempt managers and non-managers each accounted for around 25% of the training budget, while executives only garner about 10% of the spend.
The key takeaway
Navigating the post-pandemic world has been difficult for companies of all sizes, but one thing has remained clear: companies who invest in training their employees on requirements, expectations, and standards are better prepared to address the challenges of today's business climate and gear up for the future.
As training budgets and priorities shift, compliance professionals have an opportunity to leverage technologies and emerging best practices to increase training efficiency and impact for all employees. Download the 2023 Ethics & Compliance Program Effectiveness Report to learn how to make your training more effective and learner-centric.
