With the economic recovery in full swing, learning budgets increasing and learning becoming more widely accepted as an enabler of corporate strategy, there is much to be positive about in enterprise education. The stock value of workforce development also is rising amid a growing talent shortage, as organizations are forced to turn their attention to developing talent internally rather than recruiting it externally. Still, despite this good news, learning departments are not immune to the effects of the talent shortage. How are they coping with the increases in demand for their services? Are they staffed appropriately to meet these growing demands? And what could be the potential fallout of a skills shortage within the training industry?
On a bimonthly basis, IDC surveys Chief Learning Officer magazine’s Business Intelligence Board (BIB) on a wide range of topics related to workforce development. The surveys measure the attitudes, interests and concerns of top learning professionals. In January, the Business Intelligence column examined which trends are expected to have the biggest impact on the industry in 2007. This month, 220 training professionals provided insight into how they are staffing their learning and development teams to best meet the growing demands of their companies.
The Audience Gets Bigger
Anyone familiar with the training profession is used to the concept of “doing more with less.” It is almost routine for learning and development departments to declare the need for more resources, people and money. Long gone are the days of Socrates and the “one teacher, one student” model. Today, learning professionals manage many different training activities and are responsible for the development of a wide range of full-time employees. Of the 220 professionals recently surveyed, each was responsible for supporting the development needs of 118 full-time employees on average. Although a significant number in itself, this average does not come close to reflecting the reality for many respondents on the fringe who find themselves the sole learning professional at large organizations. In one extreme case, for example, the respondent reported responsibility for being the sole training professional at a company with 62,000 employees.
Adding to this challenge is the fact that many professionals today are no longer responsible for developing just their own employees. As companies recognize the value of extending training to those outside the organization, a growing number of learning and development professionals endeavor to meet the training needs of their channel partners, suppliers and customers. Past IDC research shows that providing training to the extended enterprise can improve sales, build brand awareness, improve client satisfaction and foster customer loyalty. As Figure 1 shows, internal employees still account for the majority, but customers quickly are becoming a key contingent, representing almost one-third of the training audience.
Learning Departments Understaffed
Another positive measure of the industry’s health is found by looking at the percentage of budget spent on staffing. Generally, the lower this percentage is, the better. It suggests more money is available to fund actual learning rather than the costs associated with running the learning function. On average, CLO BIB members indicate they are spending 36 percent of learning and development budgets on staffing.
In its annual report on the training industry, the American Society for Training and Development (ASTD) estimates the internal costs of training to be about 57 percent of total budget. The discrepancy between these two numbers suggests that, above the costs of staffing, there are still considerable internal costs associated with learning and development such as resource acquisition and tuition reimbursement. In either case, what is clear is that as learning departments become more streamlined and automated, they are able to reach a greater number of employees without having to bring on additional staff, reducing the staffing percentage further.
Not surprisingly, many CLOs are looking to external providers of learning services and technologies for assistance in meeting their organizations’ development needs. As reported in Business Intelligence in November 2006 (see “The Chief Learning Officer’s Investment Portfolio: Beating the Street”), 35 percent of companies plan to increase spending with learning vendors significantly over the next two years. BIB respondents indicate, on average, they spend 27 percent of their budgets with external providers. The activities for which CLOs most rely on third-party providers are content development, hosting services, classroom delivery and vendor management.
Even with outside help, a majority of CLOs do not think they have enough staff to support their companies’ learning initiatives (see Figure 2). As a result, more than half expect to be increasing their staffing levels within the next 12 to 18 months. Figure 3 shows that instructors and instructional designers will be most in demand, followed by content developers and learning technology specialists (respondents could choose more than one answer.)
CLOs Face Their Own Talent Shortage
While the intent to hire is there, the reality is that the talent might not be. Much has been written about the impending talent shortage, and certainly the training industry will not be impervious to its effects. Indeed, as Figure 4 shows, half of the respondents think there already is a shortage of talent available to fill vacant training positions. One survey respondent described the greatest challenge as “finding experienced trainers within the industry who live up to the claims on their resumes.” Further evidence of a possible shortage lies in the fact that 30 percent of respondents said it takes more than three months to fill an open position. If filling vacant training positions continues to be a challenge, then the ramifications for companies could be significant on many fronts.
A shortage of training resources could have an impact on companies undergoing organizational transformation. Process re-engineering initiatives rarely succeed without some investment in workforce education. Faced with a shortage of staff and resources, many of these projects might be put at risk.
Similarly, with the baby boomers expected to start retiring within the next decade, many companies have begun to make significant investments in executive development programs as a means to ready the next generation of leaders for their companies. Again, the quality and availability of such programs would be affected by a lack of resources.
Finally, many companies are looking to employee development as a means to combat the talent shortage itself, but this will be a difficult strategy to execute effectively if training resources already are strained. This potentially could lead to companies having to push ahead with these types of learning and development initiatives using their existing staff levels and simply accepting there will be training deficits elsewhere within the company.
Another likely outcome, given this scenario, is that companies will come to depend even more on third-party training providers. When faced with mission-critical training needs and an overtaxed training function, the reasons to work with external providers become that much more compelling.
Some simply might increase the amount of work they assign to external providers on a project-by-project basis, while others might elect to outsource entire training functions as a means to keep up with the demand. In either case, acquiring resources is expected to be an ongoing challenge for corporate CLOs going forward.
Many verbatim responses from the survey support this view. As one participant put it, “Our greatest challenge is staffing. I have had to implement a development program within the organization to train subject-matter experts who can be called on to deliver specialized training as needed to ‘extend’ my limited staff.”
Another CLO stated, “There is more work to do than we have time to commit. A consulting firm hired by our CFO has fixed a ‘magic number’ for the training staff, and we are not allowed to increase past that number, despite the amount of projects we are expected to deliver.”
Another ongoing challenge affecting the CLO’s ability to meet staffing demands is the perception of the industry in general. While progress is being made, many learning professionals still charge they are not perceived as being as valuable to their organizations as their nontraining peers. This issue can negatively affect both a CLO’s recruiting and retention efforts. As one respondent stated, “Over a period of time, learning team members feel that they are being treated differently compared to their peers and want to move out of the support function.”
For professionals with long-term career aspirations, the industry’s perception can deter their willingness to take on learning-related roles within the company for fear that future career-pathing out of the training function will be a challenge.
Mixed News for CLOs
So, the news for CLOs is mixed. More executives are beginning to recognize learning’s strategic value, and this is fueling the demand for more workforce development services. But finding competent learning and development professionals to fill the need is a growing problem. To secure the budgets necessary to meet staffing demands, CLOs more than ever will need to ensure all learning and development offerings are laser-focused, on-target, aligned to business objectives and of measurable benefit to the organization. Reaching those goals will demonstrate learning’s value to the organization and make it easier to justify requests for increased budget. More important, it will help encourage more capable and career-minded professionals to join and stay in corporate education.
Peter McStravick is the senior research analyst for IDC’s Learning Services group, where he addresses the impact of training methodologies and business models on end-user organizations and tracks market growth and opportunities in the U.S. corporate training market. He can be reached at editor@clomedia.com.
