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Who knows the ROI on the L&D

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Research reveals half of enterprises don’t measure effectiveness of learning & development.

Research by Thales Training & Consultancy reveals a clear divide between enterprise businesses and small-to-medium-sized organisations in their approach to measuring the effectiveness of their learning and development (L&D) strategy. The study was based on an exit poll among HR decision makers at the ‘World of Learning’ exhibition in late September.

Medium-sized businesses led the way in providing a proactive L&D strategy (90 percent) and measuring success (90 percent); in enterprise only 75 percent had a proactive L&D strategy and only 50 percent of respondents measure the success of the programme. Commenting on the findings, Rachel Kay, Business Development Manager at Thales Training & Consultancy, says: “Many organisations are missing a trick by not having a measurement strategy in place for L&D interventions. In a time of economic pressure it’s more important than ever to be able to demonstrate a return on your investment (ROI).”

The study also showed that medium-sized businesses spent the biggest proportion of their L&D budgets on management development, indicating their hunger to ensure that skills were in place for future growth. Some 60 percent of medium-sized organisations spent more than 20 percent of L&D budget on management development, compared to enterprise businesses, where only 50 percent invested more than 20 percent of total L&D budget on leadership skills.

“It’s encouraging to see medium-sized businesses laying the foundations of their future leadership by investing in management development. This type of L&D intervention can be crucial in ensuring you retain the best talent and ensure the long-term growth of your organisation,” says Kay. As well as looking at where L&D budgets are being spent, the research examined how an organisation’s propensity to outsource was likely to change over the coming months. Around 36 percent of small businesses forecast an increase in spending on outsourcing of L&D, citing changes in budgets or the business structure for their change in strategy.

At the enterprise level, eight percent expected an increase in L&D outsourcing as oppose to the 25 percent of respondents who intend to reduce spending in this area, all of whom said that budget changes were the major reason for their decision. For mid-sized businesses the picture was more balanced, with equal proportions expecting increases or decreases.

Other key findings:

  • Enterprise business (1001+ employees)
  • All but one respondent outsourced some aspect of their L&D delivery
  • 25 percent of enterprises spent more than 33 percent of their L&D budget on H&S training, suggesting that they are being pushed into spending a large proportion of their budget on mandatory training instead of that which would support the business strategy and leadership development
  • 50 percent of enterprises spent 20-40 percent of budget on professional development
  • Mid-sized business (251-1000 employees)
  • 20 percent outsourced all delivery of L&D
  • 20 percent outsourced all procurement of L&D
  • Small-sized business (1-250 employees)
  • 66 percent don’t outsource any L&D
  • 25 percent spend between 21-30 percent of budget on management development
  • Nearly 15 percent would not consider outsourcing L&D because they would not know how to measure ROI
  • Over 40 percent said they have a reactive strategy to L&D
  • Nearly 25 percent have no way or are unsure how to measure L&D programmes

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