Fairfield Research and Chief Learning Officer magazine conducted a study of 292 enterprise-level companies. Fairfield surveyed the corporate-learning executives at those companies with regard to what changes they forecast for the landscape of enterprise learning.
Currently, nearly two-thirds (63 percent) of the corporate-learning programs are in-person, instructor-led training programs. Last year, the average enterprise company sent 2,300 of its staff to instructor-led learning programs. Technical staff comprises the largest share of those going to instructor-led training. The average company sent 612 technical workers to instructor-led learning programs within the past year. (See Figure 1).
Type of Staff Number Sent to ILT Programs
Technical Staff 612
Operations Staff 466
Sales Staff 446
Support Staff 269
Financial Staff 161
Marketing Staff 152
Other Staff 194
Enterprise companies are used to allocating and spending budget money on instructor-led programs. Last year, enterprise companies averaged $2.3 million spent on instructor-led learning programs. The steep decline of ILT and the meteoric growth and dominance of e-learning predicted by some pundits the past few years was not realized in the learning marketplace.
In the past year, ILT touched 2,300 staff at each enterprise company. Contrast that with the 706 workers who participated in e-learning at each company. Instructor-led learning touched 326 percent more enterprise staff members than did e-learning. (See Figure 2.)
Also, enterprise companies spent $2.3 million on instructor-led learning while spending significantly less than $1 million ($709,400) on e-learning. In 2002, ILT held a solid and dominating position in the corporate-learning marketplace.
So the current corporate learning market is dominated (63 percent share) by instructor-led programs—e-learning accounting for a modest 19 percent share of learning programs at the enterprise level. But how do industry professionals at the enterprise level project the learning market to grow?
The enterprise-learning market is projected to grow at an annual rate of 4 percent through 2007. The industry feels that ILT will continue to reach nearly as many workers in 2007 as it does in 2002. In 2007, companies project they will be sending 4,368 workers through corporate-learning programs. Nearly half (45 percent) of these workers (1,966 staff members) will participate in the traditional, instructor-led learning programs.
The industry also forecasts that in 2007, one-third (33 percent) of those people (1,441 staff members) will be involved in e-learning. This is a doubling of reach in five years—constituting an annual 20 percent growth rate. (See Figure 3.)
Interestingly, the larger the company, the more e-learning is forecast. Smaller companies tend to forecast more instructor-led learning. For example, companies with 5,000 to 10,000 employees anticipate that in 2007, 56 percent of their corporate learning will consist of instructor-led training programs. Companies with more than 30,000 employees forecast that only 40 percent of their corporate learning will be instructor-led.
Conversely, companies with more than 30,000 employees forecast 43 percent of their corporate learning will be e-learning. Companies with 5,000 to 10,000 employees project that only 25 percent of their corporate learning will be e-learning.
Clearly, the core of the future e-learning market is the very large enterprise company. The hot market for instructor-led learning will likely be the smaller, 5,000-to-10,000-employee company. (See Figure 4.)
High-Potential Opportunities in the Learning Industry
Many would contend that e-learning is the hottest opportunity in the learning industry. However, based on our survey of corporate-learning professionals, another market opportunity may eclipse the learning programs themselves, that being the measurement of the return on investment of learning programs, overall.
Learning ROI is fast becoming a mantra for top executives in enterprise companies. Proving or documenting corporate learning’s ROI through formal research is relatively virgin territory, despite the building hype. Learning professionals were asked whether their companies were conducting formal research that documents the relationship between training and education and people productivity, profits and growth. Only one-third (34 percent) of enterprise companies are currently conducting such research. (see Figure 5.)
The larger the company, the more likely it is conducting such research on a formal basis. For example, only 25 percent of the companies with 5,000 to 10,000 employees conduct formal research on corporate learning’s impact on productivity and profits. Nearly half (44 percent) of the companies with more than 30,000 employees have instituted such research programs.
In addition, learning professionals in enterprise companies were asked if they have arrived at an understanding of the ROI of training and education programs. Slightly less than one-third (32 percent) answered in the affirmative. Contrary to research on the impact of corporate learning, ROI-oriented research is equally absent across all sizes of companies. The vast majority (68 percent) of enterprise companies in the United States appear not to apply the ROI regimen to their corporate learning programs. (See Figure 6.)
The concept here is that two-thirds of the enterprise companies in the United States do no formal research on the impact of learning on productivity and profits. Likewise, two-thirds of the enterprise companies in the United States don’t have an understanding of corporate learning’s ROI at their own business.
This dearth of measurement among enterprise companies poses a huge opportunity for the research-service companies.
Bill Erickson, vice chairman of Kenexa, a Philadelphia-based human resources research company said, “Those numbers don’t surprise me. We work with dozens of enterprise companies, and while ROI is sort of bandwagon cheer right now, not that many companies are really following through and conducting scientific research on training effectiveness. Likewise, it is very difficult to measure learning and earnings in a vacuum. We can readily measure the impact of training initiatives on employee engagement. This, in turn, can be directly linked to specific business outcomes, allowing companies to actually ‘dollarize’ their return on their training and learning dollars.”
Research on corporate learning’s ROI and impact on productivity and profits poses a unique opportunity for service companies and program providers alike. With corporate learning forecast to be a $14 billion industry by 2007, enterprise companies increasingly will have to justify their spending. The average enterprise company is projected to spend $4.5 million on corporate learning in 2007. Learning professionals at those companies will see increasing pressure to provide top management with the company’s return on this multi-million dollar investment in learning programs. Learning and ROI research will evolve from an exception to the rule within the next five years.
Chief Learning Officer magazine and Fairfield Research Inc. sent e-mail to learning and training professionals at enterprise companies in the United States, directing them to a survey questionnaire that was uploaded to one of Fairfield’s CyberSurvey.com sites. The survey was completed and submitted by n=292 respondents. The maximum error range for a study with n=292 is plus or minus 5.7 percent. However, due to the mean-score data utilized (much more stable statistic), the error of the mean is much lower than that of a percentile-response.
Gary Gabelhouse is CEO of Fairfield Research Inc., a full-service market-research company established in 1982 to conduct enterprise-research studies for clients worldwide. Reach Gary by e-mail at firstname.lastname@example.org.
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