How Much Should You Spend on Leadership Training? What the Research Told Us

Many organizations spend time in quarters 3 and 4 of the year establishing financial plans and budgets for leadership training and development activities in the new year. It’s always a good idea to benchmark and compare as a way to check your level of competitiveness in developing talent.

Plenty of good data exists to help us understand trends in spending for training activities and to provide guidance on setting training budgets.

Investment in Leadership Training and Development Continues to Rise

According to data from the Chief Learning Officer Business Intelligence Board, “94 percent of learning organizations either plan to increase or keep their level of investment the same in leadership development.”

Organizations who invest in leadership training cite top priorities as:

• Growing their succession pipeline,
• Retaining high-potential employees, and
• Fostering innovation and creative thinking.

Here’s the average spend on leadership development per person (from June - July 2017):

• Less than $1000: 32%
• $1000 - $3999: 36%
• $4000 - $6,999: 18%
• $7000 - $9,999: 6%
• $10,000 and more: 8%

How does your level of investment compare? What training and development content and programs do you have in place to retain and invest in your top talent, and ensure your organization’s success? You may have a limited budget for leadership development, for instance. Sometimes organizations struggle to against a low learning culture, and this can translate into less support for development and less budget. Taking action to create a learning culture can often help. 

Training is Worth the Investment

Now in its 37th year, The Industry Report is recognized as the training industry’s most trusted source of data on budgets, staffing and programs. Their most recent study was conducted from May - July 2018, with U.S.-based corporations and educational institutions with 100 or more employees.

“The data represents a cross-section of industries and company sizes. The figures in this report are weighted by company size and industry. Since small companies dominate the U.S. market, in terms of sheer numbers, these organizations receive a heavier weighting, so that the data accurately reflects the U.S. market.”

What this means to you is that a company similar to yours is represented in the data, and whether you are considered ‘big or small’ the impact of investing in training is paramount.

What the Data Shows: What Other Companies Are Spending on Training

1. Average training expenditures for large companies increased from $17 million in 2017 to $19.7 million in 2018. The number for midsize companies rose $600,000 to $2.1 million in 2018.
2. On average, companies spent $986 per learner this year compared with $1,075 per learner in 2017. Government and military organizations spent the most per learner this year ($1,433), followed by nonprofit organizations ($1,360). Midsize companies spent less ($858) than large ($1,046) and small ($1,096) companies.

Training Magazine estimated in 2017 that organizations spent $1,075 per employee on direct learning expenditure.

Direct learning expenditure typically includes learning and development staff salaries, travel costs, delivery costs (being defined as room rental or technology learning infrastructure, etc.), outsourced activities (experts such as PPS International Limited) and tuition reimbursement.

Time Spent in Training Per Employee is Growing

In summary, while spending slightly less per learner, companies provided almost the same number of hours of training as last year. On average, employees received 46.7 hours of training. Small companies provided the most hours of training this year (61.2). Small services companies had the highest average number of hours overall (81.8).

Spending is increasing in some areas, and the amount of time spent learning and training per employee is growing—which seems to run counter to the trend we see from clients who most often want brief programs and development activities and more support for learning from experience, especially those who are in high-demand roles such as field sales leaders.

Developing Talent with Limited Budget and Coupled with Other Constraints

Organizations have a wide range of budgets for developing talent. They are faced with other talent development challenges such as:

• A need to scale leadership development without losing quality.
• A desire to implement consistent, effective coaching for leaders across a large population, but find that one-on-one coaching engagements are cumbersome to manage and costly to implement.
• Uncertainty about whether their leadership training and other development is effective, and therefore face difficulty selling the investment to senior leaders.
• Investing in leadership assessments, but not seeing a clear connection between what the assessment measures and what is important for development.
• Using virtual facilitated learning to avoid direct costs such as travel, but having hybrid groups of participants, adding complexity to the design and delivery.

PPS International Limited has more than 26 years of real-world experience in supporting talent and learning with organizations large and small.

Start a conversation