This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

April 16, 2014

Global Training Spending Finally Growing Again--Part 1

If you doubted that the economic recovery was here, there is little room for that skepticism now: Spending on corporate training---always a good indicator of economic activity---is now climbing. According to the impressive data in the just-released "2014 Corporate Learning Factbook": spending in the United States on corporate training grew by a notable 15 percent last year--- its highest growth rate in seven years. Corporate training now represents over $70 billion USD in the US and over $130 billion USD worldwide.

As we have so often lamented in the past, when companies slow down, training spending is often the first "expense" to go; what these companies are overlooking is that training is actually an important investment in its people. Once the business recovers, they will need to have trained new hires, sales people, and leaders on the bench. Spending on training is among the most discretionary of all corporate spending areas, so its resurgence is an excellent indication of business confidence.

This significant increase follows two years of increased spending in this area (10 percent in 2011 and 12 percent in 2012), reflecting that companies are finally feeling the pinch of the frightening skills gaps about which we have reported so often.

According to this same report, more than 70 percent of organizations name "capability gaps" as one of their top five challenges, though many companies admit it takes three to five years to train "a seasoned professional" to be fully productive.

We cannot underestimate the magnitude of this skills challenge. According to recent research in the Oil and Gas industry, 60,000 petrochemical engineers are needed by 2016. With only 8775 worldwide, graduating each year, "oil companies have to train, retrain, and jointly educate a lot of energy engineers to grow".

We are pleased that at least a percentage of companies are enlightened enough to have awakened to this critical need. Many more are needed before we will really be able to make a dent in the tremendous need for workforce development. Local workforce investment boards need the support of their communities and companies that take up this challenge should be acknowledged for their support of their communities.

This topic is so important we will cover the other half next week.

Special thanks to Josh Bersin and for this important research. For a full copy of the report, visit

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