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US companies increased training budget by average of 2 percent in 2010, study finds

US companies increased their training investment in 2010, following double-digit budget cuts in each of the prior two years, according to Bersin & Associates’ just-published comprehensive study, The Corporate Learning Factbook 2011: Benchmarks, Trends and Analysis of the U.S. Training Market . Companies on average spent two percent more on training in 2010 than in 2009, with $682 spent per learner. Part of the spending went to hiring additional staff, with training headcount increasing six percent on average. Another portion of these training dollars went to learning technology projects, many of which were put on hold during the recession. The percent of training spending allocated to learning technologies climbed to 10 percent in 2010, nearly equaling its high of 11 percent in 2007.

“This uptick in training spending and staffing is good news for employees and employers,” said Josh Bersin, chief executive officer and president, Bersin & Associates. “It is a clear signal that companies are no longer focused solely on cost-cutting and are looking at developing their leadership and organizational capabilities to win in the marketplace. Leading companies are creating learning environments that include both formal and informal components to build deep levels of expertise and to better align their organizations with business needs. That’s how they’re going to beat the competition.”

The study found that the technology sector led the rebound in investment. Technology firms spent 16 percent more on average on learning and development than in the prior year. Healthcare, retail and manufacturing firms also experienced moderate increases in spending. Banking and government were among the sectors continuing to curtail their learning and development programs, as companies in those industries cut spending four percent to six percent.

Case studies. Among those companies exemplifying the turnaround is AutoNation. After taking quick action to streamline its operations when the economy began to falter in 2007, AutoNation was just as quick to reinvest in its people development when the economy showed signs of a turnaround. The Fort Lauderdale, Fla.-based leading automotive retailer began hiring staff again and moved to more business-focused, specialized training to build deep levels of expertise. This move to more in-depth training has successfully translated into improved business performance. The company sold approximately 9,500 more vehicles through its e-commerce channel than in 2009, despite fewer customer leads, resulting in a 24 percent increase in productivity.

The Cheesecake Factory similarly focused training efforts on core programs that would have the greatest impact on the business, and streamlined the rest of its training programs during the recession. After sales began to improve, the Calabasas Hills, Calif.-based company’s founder and CEO championed a corporate initiative to become a leader in learning innovation within the restaurant industry. The casual dining chain has implemented a video-based social learning platform that uses storytelling and teaching by example, with videos created by the L&D group and by restaurant employees. Staff members report that this innovation has helped them to master the skills much more effectively than reading out of a workbook or sitting through a dry PowerPoint presentation.

Amway’s L&D group became more business-focused by adopting a curriculum that is 100 percent based on competencies to fill performance gaps. The Ada, Michigan-based direct-selling giant also flipped its learning paradigm to focus more on informal learning by implementing on-demand and social learning.

“Companies generally recognize that most learning is informal and learner-initiated,” said O’Leonard. “As a result, many forward-thinking organizations are shifting their focus away from company-driven, formal learning programs to support the natural flow of learning across the organization. ”

Source: Bersin & Associates; www.bersin.com.