Why Companies Should Invest in Professional Development

Key Takeaways: 

  • The latest data show that average spending on learning per employee is $1,267 while average learning hours per employee is 35 hours.
  • More than 60% of L&D professionals globally agree that L&D shifted from a “nice to have” to a “need to have” in 2021.
  • By prioritizing learning opportunities, companies not only make themselves more attractive to existing workers and potential hires, but also become more prepared to tackle the rapidly-changing world of work and industry needs.

You’ve probably heard by now of what people have been calling the “Great Resignation.” The phrase refers to the record number of Americans who have been quitting their jobs over the past year, a phenomenon that is part of the economic disruption triggered by the COVID-19 pandemic. 

As employers’ search for workers reach historically high rates, working Americans have realized that the ball is largely in their court. They now have more power to find a job that pays better, provides more benefits, and caters to their needs and wants. 

What does this mean for employers? It’s time to step up the game and offer more attractive job opportunities. One of the key strategies for attracting new talent, and retaining existing talent, is to invest in professional development. 

“It’s really about being flexible and trying to provide employees with opportunities where you can,” said Bailey Roth, president and cofounder of Redstone Agency. “If you don’t give them the opportunity to grow, they won’t stay at your company or they won’t get any better because you didn’t make that investment in them.

Why invest in professional development

By providing employees with the resources to learn and grow, companies can benefit from greater retention and lower recruiting costs. The Citrix Talent Accelerator 2021 report shows that HR directors believe that ensuring an organization has the latest collaborative technology in place to enable agile learning is the most important factor in recruiting and retaining the best talent. 

Employees confirm this belief, with 88% saying that they look for agile learning opportunities when searching for a new position. Employees who see good learning and growth opportunities at their organization are also much more likely to be happy with and engaged in where they work, making them more productive workers. 

But besides increasing employee retention and engagement, professional development can enhance the overall position of an organization by preparing employees for the new world of work and for leadership positions in the future.

The 2020 World Economic Forum report predicts that the advancement of technology will displace 85 million jobs and create 97 million new jobs in the next five years. By 2025, analytical thinking, creativity, and flexibility will be among the top skills needed, while data and artificial intelligence, content creation, and cloud computing will be the top emerging professions.

“The way we engage and communicate with each other has changed since the pandemic began, so those soft skills have been really important,” Roth said. “But technical skills is an area we’re investing in as well, whether that’s taking an extra course in video production or learning about digital event strategy.”

The pandemic’s impact on the work landscape has made the need to upskill and reskill workers even more urgent. According to the Citrix report, 82% of employees and 62% of HR directors believe that workers will need to hone their current skills or acquire new ones at least once a year in order to maintain competitive advantage in a global job market. Additionally, more than 60% of learning and development (L&D) professionals globally agree that L&D shifted from a “nice to have” to a “need to have” in 2021.

Large, global enterprises have already taken action. Amazon is investing $700 million to help non-technical employees move into more technical IT roles. Accenture is spending nearly $1 billion each year to retrain its workers who are at risk of losing a job to automation. PwC is spending $3 billion to upskill all of its 275,000 employees over the next three to four years.

Small and medium businesses have also made professional development a priority. More than 60% of small and medium businesses globally report that the focus of their learning and development programs in 2021 is upskilling and reskilling. And 66% of middle market companies plan to invest in new skills training for their existing employees.

All this is to say, it has become increasingly clear that if a company hopes to stay competitive, it will need to prioritize learning opportunities. By doing so, companies will not only make themselves more attractive to existing workers and potential hires, but also be prepared to tackle the rapidly-changing world of work and industry needs.

How to invest in professional development

In 2020, average direct learning expenditure dropped to $1,267 per employee—a 3.1% decline from the average of $1,308 in 2019, according to the Association for Talent Development’s (ATD) 2021 survey. But the lower spending was paired with a slight increase in average learning hours, which rose from 34.7 to 35 per employee—likely a result of the rise in virtual classrooms and e-learning opportunities that reach more learners at less cost.

When looking at data for L&D expenditure in 2020, the numbers suggest that smaller organizations (less than 500 employees) should spend about $1,990 per employee or 6.3% of payroll. Midsize organizations (500 to 9,999 employees) should spend about $800 per employee or 1.7% of payroll. Larger organizations (10,000 or more employees) should spend $740 per employee or 0.9% of payroll.

In terms of learning hours, smaller organizations should allocate about 33 learning hours to each employee, while midsize should allocate 37 and larger should allocate 34. 

While it can be useful to follow these benchmarks, which are based on averages from 2020, the aim is to spend enough to guarantee employee satisfaction and growth. According to LinkedIn’s 2021 Workplace Learning Report, employees at companies with high internal mobility stay almost two times longer than those at companies with low internal mobility. One of the key ways to ensure internal mobility is to offer professional development opportunities that will allow workers to move both vertically and laterally within the organization.

“So many companies will make investments in clients and partners, but at the core, our people are the biggest part of what we do,” Roth said. “If our people aren’t invested in, there’s no service—there’s nothing at the end of the day. The people sticking around aren’t growing, so the business isn’t growing.”

Some ways for companies to invest in professional development include increasing the talent development department’s resources, hiring outside learning suppliers, or reimbursing the cost of continuing education programs and courses.

Research from ATD shows that individual development plans are associated with better performance and organizational benefits. These are written plans that lay out the expected skills, knowledge, or capabilities that an individual employee will need to develop in a set time frame.

“There’s no one-size-fits-all policy,” Roth said. “We need to look at each individual and what’s important to them. If there’s someone who wants to grow quickly and shows the ability to do so, then we have to foster and encourage that.”

Another key finding from ATD’s research is that the biggest barrier to developing a learning culture is the lack of time. Organizations that support employees by allowing them to use paid work time to learn are more likely to be high performers. Organizations where senior leaders advocate for learning are also more likely to be high performers. 

Professional development opportunities that prepare employees to fill leadership positions in the future are also incredibly important. These can include mentorship opportunities that pair newer employees with a more experienced mentor, or leadership development programs that provide younger talent the tools to move up and grow their careers.

Email Tammy Kockaya, CMP, CMM, ELI’s Chief Strategy & Growth Officer, to discuss ways ELI can help you identify the L&D opportunities needed for your team for today’s talent market.

We’re also offering a free talent audit and consultation to help assess how your onboarding, training, and professional development program can be more effective. Schedule a time to meet with Tammy.